January 2007 - SportsOneSource.com

PSR_0107
1/19/07
5:16 PM
Page 1
Performance
Sports
ts
RETAILER
News and Information for the Running and Triathalon Market
A SportsOneSource Trade Publication
NSGA REPORT:
Footwear ASP’s
Rise 3.6% in 2006...
Preliminary data from “Sporting Goods
Market in 2007,” a report published annually
by the National Sporting Goods Association,
indicates that the average price point for athletic footwear rose 3.4% in 2006 to $42.16 from
$40.78 in 2005. In 2005, NSGA said the average price point rose 2.3% from $39.87 in 2004.
The preliminary data, which reflects the
broader information that will be made available in May in its “The Sporting Goods
Market in 2007” report, is based on a consumer study of 100,000 U.S. households. The
data closely mirrors the year-to-date point-ofsale data compiled by SportScanINFO, which
reflects a 3.0% increase in ASP’s in athletic
footwear. The SSI data reflects the retail calendar, which runs from February through
January, while the NSGA data is based on a
calendar year. The delta here may be found in
January 2006, where ASP’s rose sharply versus the previous January, based in large part
on the launch of Nike’s Air Max 360 product.
Those numbers are not included in the fiscal
2006 numbers recorded by SSI.
The SportScanINFO data indicates that the
average selling price for athletic footwear is
$45.77 for the YTD period, compared to
$44.44 for the comp YTD period in 2005.
The NSGA data shows that males aged 18 to
24 paid the most for athletic footwear, spending an average $61.82 per pair. Among
females, the highest average price point was
$46.39, also in the 18-24 age group.
January 2007
Nike Inc. Posts Solid Fiscal
Q2 Sales Growth...
Nike, Inc. reported that global sales, excluding the benefits attributed to a weaker dollar,
increased approximately 9% on a currency-neutral basis during the company’s fiscal second quarter. The U.S. region saw solid growth, driven by higher sales to “most major
wholesale accounts.” The footwear business, which was up 8.4%
for the quarter, saw mid-single-digit growth in units sold and
“continued expansion in average price per pair.”
By the numbers, total revenue increased 10% to $3.8 billion from $3.5 billion for the same period last year. U.S. revenues increased 8% to $1.4 billion versus $1.3 billion for the second quarter of fiscal 2006. U.S. athletic footwear revenues increased 8% to $879.4 million; apparel revenues increased 10% to $475.4 million; and equipment revenues increased 2% to $63.2 million.
Net income grew 8% in the quarter to $325.6 million from $301.1 million last year with
diluted earnings per share increasing 12% to $1.28 from $1.14 last year. U.S. pre-tax income
was basically flat for the period, with the revenue increase for the quarter offset by lower
footwear and retail gross margins and marketing investments in football, LBJ, and Nike+.
Management said the Nike brand was outpacing the growth of the overall market behind the
success of performance running, Jordan, and the sports culture product lines. Apparel growth
for the period was fueled by a 26% increase in revenues in Nike branded performance apparel.
The company reported worldwide futures orders for athletic footwear and apparel, scheduled for delivery from December 2006 through April 2007, totaling $5.6 billion, 7% higher than last year. Nike brand futures for the period were up in units and dollars for deliveries through April, but management said that average selling price growth was moderating.
U.S. owned-retail saw an 11% jump in sales for the period, with Niketown stores posting a
slight increase in comp store sales. NKE ended the quarter with 264 outlet stores, with 96
Nike brand outlet stores in the U.S., 62 in Europe, 37 in Asia, and 20 in the Americas region.
The company appears to be focused on outlet growth as their primary option for moving
close-outs. They said that outlets should move about 70% to 80% of close-outs. When
asked about the full-price retail business being built by adidas and Puma, management said
they were more focused on being a strong wholesale partner for their retail accounts and
downplayed their growth in that end of the retail business.
INSIDE PSR:
■ Annual Fall Footwear Preview: next season's road
running footwear and next year's trail running footwear
■ Retail Profile: Portland Running Company
■ Vendor Profile: High Gear grows with New Balance
licensing deal
■ The Doctor’s Office: What is comfort?
PSR_0107
1/19/07
5:16 PM
Page 2
Performance
Sports
ts
EDITORIAL
RETAILER
Editor-in-Chief
Judy Leand (646-654-5058)
jleand@sportsonesource.com
News and Information for the Running and Triathalon Market
CONTENTS
Managing Editor
January 2007
Kris Versteegen (704-987-3450)
kris@sportsonesource.com
Contributing Editors
Lou Dzierzak, Andy Kerrigan,
Matt Powell
ADVERTISING
Group Publisher
James Hartford (704-987-3450)
james@sportsonesource.com
Associate Publisher
Samuel Wender (646-654-4464)
swender@sportsonesource.com
News
3 ■ Fleet Feet 2006 comps increase 17%…
■
4
■
5
■
Account Managers
Robert Z. Feiner (646-654-4991)
rfeiner@sportsonesource.com
SBI sells Fila business…
Sam Selvaggio (646-654-7465)
sselvaggio@sportsonesource.com
adidas and Reebok footwear factories shut down…
■ Mizuno sponsors ING Georgia Marathon
■ Garmin stays busy in first week of 2007...
■ Industry companies on Fortune’s best to work for list...
Saucony and HIND thrive under Stride Rite ownership
Brooks hires two new top executives
■ Pearl iZUMi parent signs deal with National Academy of Sports Medicine
■
Feature
Performance Sports RETAILER's Annual Fall Footwear Preview
6
8
Next season's road running footwear
President & CEO James Hartford
Chief Information Officer Mark Fine
VP Research & Development Gerry Axelrod
Director Information Management Ruben Desangles
Manager Database Operations Cathy Badalamenti
VP Business Development Bill Bratton
Director Business Development Neil Schwartz
Regional Business Manager Barry Gauthier
Controller, HR Manager Carol Wexler
Next year's trail running footwear
Other SportsOneSource Titles:
Sporting Goods Business
Hunting Business
Outdoor Business
The B.O.S.S. Report
Sports Executive Weekly
Footwear Business Update
SGB Update
Specialty Market Update
Departments
10 Retail Profile: Portland Running Company
12 Vendor Profile: High Gear grows with New Balance licensing deal
14 The Doctor’s Office: What is comfort?
© SportsOneSource, LLC
PO Box 480156 | Charlotte, NC 28269
704-987-3450 | fax: 704-987-3455
12
PSR_0107
1/22/07
10:12 AM
Page 3
SBI Sells Fila Biz
to Fila Korea
Yoon, the chairman of Fila Korea, was
originally the CEO of Fila Asia when
SBI bought the brand. In 2005, he completed a successful management buyout
of Fila Korea. In a prepared statement,
he said, “We are very excited to acquire
the world-wide Fila business. Fila is
widely recognized as one of the premier
global sports brands and we believe it
has tremendous untapped potential. We
look forward to working closely with
Fila’s talented management team and
regard the existing employees as a valuable asset of the business.”
In a 2005 interview, SBI CEO Steve
Wynn said that the underlying mission
of SBI was to “build a portfolio of
sports brands that interact with the market in different categories at different
demographics for different purposes.”
To do this, SBI acquired not only Fila,
but also Cloudveil and Motionwear. In a
prepared statement, the company said
that it would be keeping both of these
brands following the sale of Fila.
However, Mr. Wynn has also been quoted saying that they are looking at other
possibilities as well.
Performance Sports RETAILER
Fleet Feet franchise owners and employees
from more than 60 stores around the country and 30 running apparel, shoe and
accessory vendors gathered for the threeday Winter Franchise Conference in
Phoenix, AZ. At the conference, company
president, Jeff Phillips said that Fleet Feet
celebrated its 30th anniversary in 2006
with more than $62 million in sales and a
17% comp store gain.
The conference culminated with Fleet
Feet’s annual industry award ceremony
where the company honored Brooks Sports
as the Outstanding Apparel Vendor of 2006
for its growth in sales to Fleet Feet stores,
as well as its customer service, product
quality, shipping and overall commitment
to the Fleet Feet organization.
In addition, Champion Athleticwear introduced its Pink Ribbon Award for Retail
Excellence and named Brett Lamb, owner of
Fleet Feet San Francisco, as the first annual
recipient. Balega Sports awarded its second
Induna Award to Bobby Biles, owner of Fleet
Feet Carrboro, NC. The Induna Award is presented annually to a member of the Fleet Feet
community for charitable contributions.
Biles was recognized for multiple community service initiatives including hosting
events with various charities as beneficiaries, facilitating the purchase of track equipment for disadvantaged youth, the donation
of closeout products to benefit the local
school system in the Carrboro area, as well
as his support of the Leadville (Colorado)
Legacy Project.
Biles Receiving Induna Award
From l to r: Bobby Biles,
Fleet Feet francisee in
Carrboro, NC and
Russell Clark, CEO, Balega
Sports International.
Brooks receiving Apparel Vendor of the Year Award
From l to r: Emily Davis, Brooks brand manager, Fleet Feet,
Inc.; Jen McCormick, customer service specialist, Brooks
Sports; Roger Dyksterhuis, western regional manager,
Brooks Sports; Lara Dittoe, apparel product line manager,
Brooks Sports; Craig Vanderoef, product manager, men’s,
team, and accessories, Brooks Sports; Rick Wilhelm, vice
president of SRA sales, Brooks Sports; Luke Rowe, VP of
business development, Fleet Feet, Inc.; Jim Weber president
& CEO, Brooks Sports. In Front : Mike Billish, eastern
regional manager, Brooks Sports.
Specialty NEWSwatch
After roughly three and a half years of
ownership, Sport Brands International
Ltd. (SBI) has entered into a definitive
agreement to sell the Fila brand to its
Korean licensee, Fila Korea, headed by
Mr. Yoon-Soo (Gene) Yoon. While the
purchase price was undisclosed, sources
close to the deal estimate it to be worth
roughly $350 million to $375 million.
SBI originally bought the Fila brand for
$351 million in 2003.
The sale is structured as a sale of SBI’s
subsidiary, Fila Luxembourg, which
holds the rights to the worldwide use of
the brands and trademarks of FILA.
Since acquiring the brand, SBI has been
working at cleaning up its distribution
and getting its product out of discount
and off-price retailers.
Fleet Feet 2006
Comps Increase 17%
Brett Lamb receiving Champion Award
From l to r: Jeff Phillips, president of
Fleet Feet, Inc.; Luke Rowe, VP of
business development of Fleet Feet,
Inc.; Brett Lamb Fleet Feet franchisee
in San Francisco, CA; Barry Shain,
business development manager
for Champion; and Greg Rouse
of Champion.
3
PSR_0107
1/19/07
5:16 PM
Page 4
Specialty NEWSwatch
adidas/Reebok Factories
Shut Doors in Indonesia…
Two Korean-owned, Indonesiabased factories, PT Dong Joe
Indonesia and PT Spotec, which
produced footwear for adidas and
Reebok, closed last year following financial difficulties and the
owners leaving the country, according to
sources at adidas. Both suppliers were in a precarious financial state and were unable to
obtain further credit with the banks, resulting
in the ultimate closure of the factories.
In addition, PT Tong Yang Indonesia will be
closing shortly. Due to the closure of the factories, adidas had a short term impact on its ability to deliver Reebok footwear product,
according to the sources. Some orders were
already dual sourced and the
other orders were switched to the
second source. All remaining
products were reallocated to
other suppliers in Indonesia,
Thailand, Vietnam and China.
According to a source at Reebok, the
three factories were forced to close due to
financial difficulties and poor management. “They over extended their borrowings and could no longer finance the purchasing of materials, payment of wages
and therefore were unable to continue production.” Prices paid to all three suppliers
were said to be competitive with industry
standards by the source.
Mizuno signed a multi-year contract to
be the Official Footwear and Apparel
Supplier of the ING Georgia Marathon
and Half Marathon. This is Mizuno’s
largest running sponsorship to date. As
part of the agreement, Mizuno will be
providing each participant in the 2007
ING Georgia Marathon with a high performance Mizuno DryScience technical
t-shirt and also providing each of the
approximately 2,000 race volunteers
with branded t-shirts.
Industry Companies on Fortune’s Best
To Work for List...
Timberland, Nike, REI and W.L. Gore
all landed spots on Fortune’s annual
“Top 100 Companies to Work For” list.
W.L. Gore, REI and Timberland have
been included in the list every year
since its inception in 1997, while Nike
first appeared on the list last year at
#100. Nike jumped up several spots this
year to #69 and passed Timberland,
which landed in #78. REI landed at #27,
while W.L. Gore was the only sporting
goods company in the top ten at #10.
Companies are selected for the list based
on the results of a random survey of
employees, along with company-supplied
information on culture, philosophy and
benefits. The employee survey is designed
to evaluate a company’s policies, practices
and philosophies, and accounts for twothirds of the scoring.
Garmin Stays Busy in First Week of 2007...
Garmin was quite busy during the first week
of the New Year, closing two separate acquisitions. The first was Garmin’s former
French distributor, EME Tec Sat SAS, which
the company acquired for an undisclosed
sum, and the second was Digital Cyclone,
which Garmin acquired for $45 million in
cash. Both deals are expected to be accretive
to GRMN earnings for fiscal 2007.
Following the acquisition, EME will
change its name to Garmin France SAS.
The company will retain its management,
sales, marketing and supporting staff, consisting of approximately 50 people, and
will continue to be located at its current
4
Mizuno Sponsors
ING Georgia
headquarters in Nanterre, a suburb of Paris.
Digital Cyclone, or DCI, is located in
Minnetonka, Minnesota and employs approximately 20 people including management, marketing/sales and product development. It will
operate as a subsidiary of Garmin Ltd. The
company will retain its management, R&D
and supporting staff and will continue to be
located at its current Minnesota headquarters.
Garmin management said that DCI has
been an “early mover” in the location based
services market offering weather solutions.
The company delivers weather models to
consumers through partnerships with several national and regional wireless carriers.
Mizuno has also partnered with the
Big Peach Running Co. on the
“Registration to Race Day” series,
which is intended to help all who are
participating, or considering participation in this first-time event, or those
who are simply planning to stay fit
through the coming months. Each
month leading up to the race, Big Peach
Running Co. will host a clinic that will
cover a critical component related to
race day preparation.
“We are proud to partner with Mizuno
USA, Inc. and look forward to working
closely with their dedicated and passionate staff, helping to ensure a most
successful and exciting inaugural event.
Their commitment to the sport of running and our community, with a ‘hands
on approach’ is a perfect fit with the
ideals and vision of the ING Georgia
Marathon and Half Marathon” said race
director, Victoria Seahorn.
As part of their arrangement with Big
Peach Running Co., at each clinic, runners will have the opportunity to test
Mizuno running shoes. Runners can let
the Big Peach Running Co. know in
advance what size and model of Mizuno
performance running shoes they would
like to take out for a free test run from
the store, and the shoes will be ready for
them upon their arrival.
Performance Sports RETAILER
PSR_0107
1/19/07
5:16 PM
Page 5
Saucony and HIND Thrive
Under Stride Rite Ownership
The Stride Rite Corporation,
parent company to Saucony
and HIND, had a rather successful fourth quarter this
year, with both sales and
income increasing. Saucony
and HIND in particular were called out by management as strong performers during the quarter.
The company overall reported that total net sales
for the fiscal 2006 fourth increased 15.3% to
$151.8 million from $131.7 million in the yearago period. The company posted net income of
roughly $632,000 for the fourth quarter, or two
cents per diluted share, compared to a net loss of
$3.1 million, or eight cents per diluted share, in
Q4 last year.
Saucony sales, including Hind, were up 7.8%
to $17.9 million in Q4 from $16.7 million in the
year-ago quarter. The vast majority of the success with Saucony was with specialty running
dealers. Management said
that Saucony continues to
“enjoy success and market
share growth in the specialty
run business” and the initial
reactions to new technical
product for 2007 have been “very positive.”
SRR said it anticipates growth in this market, but
they are also updating and broadening product
offerings of the less technical and athletic
lifestyle products.
For the full year of 2006, total sales at Stride
Rite were up 20.2% to $706.8 million with
Saucony and HIND reporting over $89 million in
revenues. Since Stride Rite did not own Saucony
and HIND for the full-year last year, comparisons
were not made available. During the year, the
company improved its gross margins by 190
basis points to 40.8% causing net income to
increase nearly 40% to $34.3 million.
Brooks Hires Two New Top Executives
Brooks Sports, Inc. added a new executive vice
president and COO, David Bohan, and a new
vice president of human resources, Sydney
Johnson-Gorrell.
Both
Bohan and JohnsonGorrell assume their new
posts at Brooks’ corporate
headquarters in Bothell,
Wash., a suburb of Seattle.
Bohan is responsible for directing Brooks’
global finance, operations and sales. He brings
experience in developing and implementing
financial strategies, growth plans and reporting
and control systems. Bohan first joined Brooks
in June 2001, but left the company in 2005 to
help grow Seattle-based sportsman gear company C.C. Filson as COO/CFO.
Johnson-Gorrell is responsible for Brooks’
human resources activities including recruitment, compensation and benefits, as well as succession planning, training and culture-driven
programs. She comes to Brooks with a great
track record as a senior level human resources
professional as vice president of human
resources at Shurgard Self Storage, a $500 million dollar company with 650 stores and senior
vice president of human resources at Hasbro’s
Wizards of the Coast.
Pearl iZUMi Parent Signs Deal
With National Academy of Sports Medicine
Nautilus, Inc., the parent company of Pearl iZUMi, inked
a partnership with the National Academy of Sports
Medicine to provide research and training support for
new fitness products and introduce new education programs
for fitness professionals. The NASM partnership
involves two basic components. Nautilus and NASM will
conduct scientific research on new fitness innovations,
allowing the company to use NASM’s research-backed
expertise as it develops new products. Also, Nautilus and
NASM will offer affiliate marketing relationships for
NASM-certified personal trainers.
Performance Sports RETAILER
PSR_0107
1/19/07
5:16 PM
Page 6
Specialty FEATURE
Performance Sports Retailer's
Footwear Preview
Road
The bread and butter for any performance
running shop are the high-end running
shoes. This is the reason customers keep
coming back season after season. Whether
it’s the former collegiate racer who still
runs through five or six pairs of shoes a
year or the beginner who is looking for a
comfortable, lightweight shoe to train for
his or her first 5K, they all expect to see the
latest technology first on the wall of their
local specialty shop.
Each season, the market is practically
flooded with new offerings and new
brands, each promising to revolutionize the
market. After sifting through dozens of
running shoes, the editors of Performance
Sports Retailer came up with a short list of
flagship models that will keep customers
coming back next season.
Pearl iZUMi syncroFloat 2
This latest update to last year’s syncroFloat
is designed for the efficient runner looking
for minimal pronation control. Pearl iZUMi
uses their proprietary controlSyncro
Cushioning “Run Tuned Suspension”
system with a SKYDEX Heel crash pad to
keep any road feeling smooth, while high
rebound forefoot foam provides
better energy return. For late
night runs, 360° reflectivity
offers additional safety.
Saucony ProGrid Omni 6
The ProGrid Omni 6 was designed to balance control
and cushioning. In the heel, ProGrid with Saucony’s
proprietary Respon-Tek and the SRC Impact Zone
combine to deflect impact, and set the foot up for a
smooth transition. The Dual Density (Moderate) or
Triple Density (Ultimate) Impulse EVA provide a customizable level of medial support for two different
degrees of overpronation.
6
Performance Sports RETAILER
PSR_0107
1/19/07
5:16 PM
Page 7
Karhu M1 and M2
The designers at Karhu used a simple, minimalist
design to catch the eye on the shoe wall, while
transferring this philosophy to the technology inside
the shoe as well. Both shoes use similar cushioning
technology, with KarEVA throughout the midsole
and a unique hourglass shaped forefoot cushion,
but the M1 adds a state of the art carbon fiber plate
to provide pronation control, while the M2 is
designed for neutral runners.
Brooks Trance 7
This new flagship trainer uses nearly every
technology in Brooks’ deep bag of tricks. In
the heel, HydroFlow ST-XL absorbs impact
complimented by an additional forefoot
HydroFlow zone. Brooks’ new midsole
material, MoGo, which was introduced last
year, is used throughout the length of the
midsole.
Engineered
Stable
Pod
Construction keeps the foot rolling in a stable, natural gait.
Saucony ProGrid Triumph 4
The ProGrid Triumph 4 is designed for neutral
runners looking for extra cushioning. The shoe
combines Saucony’s ProGrid technology with
its proprietary Respon-Tek material to create
long lasting cushioning and a seamless feel
“from heel impact through toe-off.”
New Balance MR/WR1223,
New Balance's latest high mileage trainer is
designed to provide stability and cushioning for the moderate overpronator. The
Abzorb FL, Abzorb SBS and a full length
Abzorb Strobel board work together to provide enhanced cushioning and shock
absorption for a comfortable ride.
Performance Sports RETAILER
7
PSR_0107
1/19/07
5:17 PM
Page 8
Specialty FEATURE
Performance Sports Retailer's
Footwear Preview
Trail
Trail Running is becoming more prevalent at specialty running
stores. As new designs evolve, the days of gluing aggressive lug
patterns onto the bottom of a road running shoe are quickly disappearing. At the same time, ultra-marathons are becoming
more common than ever as runners are learning that 26.21875
miles can just be the beginning of a race, if they so choose.
New Balance MT/WT1110
New Balance recently partnered with
Gore-Tex for the first time to create the new
MT/WT1110, an off-road trainer designed to
provide cushioning and stability. The 1110 is
the first New Balance trail shoe to feature
the waterproof-breathable GORE-TEX XCR
membrane. Abzorb FL, a full-length absorb
midsole material, offers shock absorption,
an engineered seamless upper is designed
to help prevent blisters and a gusseted
tongue keeps debris out of the shoe.
Inov8 Flyroc 310
Inov8 uses a very unique, low-profile
design to keep a trail runner’s feet closer
to the ground in a more stable position.
The Flyroc 310 is designed for off road
racing in extreme muddy conditions where
aggressive traction and stability can mean
the difference between winning and just
finishing the race.
8
Performance Sports RETAILER
PSR_0107
1/19/07
5:17 PM
Page 9
Pearl iZUMi synchroSeek
The trail version of the synchroFloat offers more support,
better protection, and every piece of proprietary technology
its road running cousin offers in a package that is only 0.2
ounces heavier. The new high abrasion seamless mesh
construction helps prevent blisters, while the high PI carbon
rubber perimeter with high-grip interior and new outsole lug
design offer an improved on- and off-road ride.
Merrell Cruise Control
The Cruise Control is an extension of
Merrell’s “race” line of trail running shoes.
It uses a protective forefoot design with a
gaiter hook and a gaiter strap channel at
the arch bridge; a forefoot ventilation and
drainage system; Marrell’s proprietary
Dri-Lex comfort zone lining for moisture
control; and Vibram Resolution Dual
Density outsoles.
Keen Wasatch Crest WP
This waterproof, breathable trailrunner
uses Keen’s proprietary S3 heel support
structure, eVENT Waterproof barrier, an
integrated 3/4 length stability plate and
asymmetrical eyestay to keep feet dry
and stable.
GoLite Storm Dragon
The Storm Dragon is designed specifically as a shoe for the
rugged terrain, high altitudes and cold temperatures found in
many of today’s more extreme ultra marathons. The unique
suspension technology supports, which molds to the terrain
under the foot, protects feet and provides secure footing. A
mid-foot support strap securely holds the foot, while a
removable gaiter prevents snow, water and debris from
entering the shoe.
Performance Sports RETAILER
9
PSR_0107
1/19/07
5:17 PM
Page 10
Retail Profile:
Specialty MARKETwatch
Portland Running Company
by Lou Dzierzak
I
n 2000, Dave Harkin’s job description
at the Portland Running Company
changed from manager to owner. His
wife Paula launched a road running event
company and the couple put their ideas to
work. “When we looked at the future of the
store we knew that not only would we have
to make a really great running specialty
shop, but we had an opportunity to do
something unique,” recalls Harkin.
Harkin opened a second store shortly
after taking control of the company.
Since then, sales have increased 10-15%
each year. Harkin says, “When we purchased the store it was a $1.5 million
operation, now we’re approaching $3
million. We think we are managing the
changes in our market well and with two
stores maintaining good relationships
with our vendors.”
10
Like performance specialty retailers
across the country, Portland Running
Company defines its best customer as the
committed runner. “Our customer base is
consistent with what we see across the
country. Because of my wife’s Run with
Paula events, we have significant women’s
business,” offers Harkin.
Pursuing doctor referrals helped add to the
sales figures, but it also reminded Harkin
who the main customer really is. He
explains, “We’ve had to change pretty significantly, almost circuitously. We enjoyed the
doctor referral business, but the growth of
the serious runner who really embraces the
sport has grown so significantly that we have
to make sure we don’t forget our roots.”
Harkin adds, “When I go around the
country I hear people talk about walking
and women’s business and that’s great. I
think it’s fresh in their minds because it’s
new to their market or has the highest
growth rates, but our biggest asset is still
the committed runner, the person who is
definitely event-minded for charity or to
meet personal goals. That’s where I see
the real growth.”
The Portland Running Company attracts
new runners as well, but they are different
from beginners in the past. “With the
amount of information out there, people
are familiar with the terminology much
more so than they were ten years ago. In
1997, it wasn’t like we were just getting
starting off with specialty running or gait
analysis. It had been around for a long
time, but the amount of people who had
never heard the word pronation was huge,
probably 75% of our customer base, even
the experienced runners.”
Internet resources have narrowed the
information gap. Harkin continues, “Now
Performance Sports RETAILER
PSR_0107
1/19/07
5:17 PM
Page 11
people go online and do research, however
misguided it might be, and come in armed
with the terminology. The beginning runner actually isn’t behind the times as we
might have guessed and certainly not like
they were ten years ago. They come in and
have an idea of what they might need.”
Harkin and his staff are careful to create
a relationship rather than a single sale.
“We don’t throw around words like
pronation, suppination, overpronation.
The game in our store isn’t to show people how much we know, but to show them
how well we can listen to their problems.
We spend more time than ever with our
staff making sure we are ratifying our
customers’ beliefs. Our goal is customer
“
service, that’s what’s going to keep us
surviving in this business, not how much
we know about gait evaluation. We have
to deliver that in a nice wonderful service-oriented package.”
The store carries a variety of shoe brands
including adidas, Asics, Brooks, Mizuno,
Nike and Saucony. Monetarily, the biggest
sales growth is in accessories. “GPS or
heart rate monitors are easily the most profitable area that we can help people expand
on their basic equipment,” he says.
While some specialty retailers look to
new product trends to add sales and customers, Harkin takes a more conservative
approach. “You don’t want to change your-
self and lose your current customer base. I
think that’s a huge challenge for people
who bring in hiking, biking, volleyball or
anything else they think will help the business grow. They run the risk of beginning
to alienate people who are just looking for
a running shop.”
Not to be misunderstood, planning for
and managing growth is Harkin’s first priority. “When I talk to most small shop
owners they get caught up with inventory
management and the employee stuff.
That’s just plain business. If the brains in
your operation are spending their time on
human resources and inventory management or computers, they aren’t really out
where you need to be.”
When we purchased the store it was a $1.5 million
operation, now we're approaching $3 million. We think
we are managing the changes in our market well...
”
With two stores in a competitive market,
Harkin spends significant time mapping
future growth strategies. He reports, “Our
biggest challenge is determining how we
want to grow. If you have one shop and you
think you’re the best, there is such transience around, people have more resources
to bring in the same products and replicate
what you do. You have to figure out how to
grow whether it’s to expand physically or
to expand your marketing efforts.”
Ben Evans,
manager of the
Scholls Ferry
location, performs a
field gait evaluation
of a customer.
Performance Sports RETAILER
Reflecting on past success and future
opportunities, Harkin says, “If you are
maintaining growth you are probably doing
a good job. There’s a big push from a lot of
companies to come into our market to capitalize on the running boom. A lot of us
have enjoyed phenomenal growth; as much
as 15-20% annually in years when we
haven’t done much. We think ‘wow we’ve
got it right.’ But I think what we had is a
small lull before what will be deemed a
storm. There’s product everywhere. We
have to figure out how to deliver our message and product in a unique way that
speaks volumes to the normal person.”
11
PSR_0107
1/19/07
5:18 PM
Page 12
Vendor Profile:
HighGear Brings New Balance
Fitness Monitors to Market
by Kris Versteegen
Specialty MARKETwatch
I
12
n September of 2006, New Balance
signed a licensing agreement with
Asheville, NC-based HighGear USA
for a new category for the brand. The
agreement calls for HighGear to handle
the design, development and delivery of
New Balance Sports Monitors throughout
the United States. Many running specialty retailers may not be familiar with HighGear, because the
brand originated in the outdoor industry even though it quickly
took market share away from several higher-priced competitors.
The company reported triple-digit growth throughout its first
several years, as outdoor retailers realized that their customers
were looking for outdoor-related electronics such as altimeters,
MP-3 players and heart rate monitors.
High Gear’s founder and president, Mike Hosey, says that he
couldn’t pass up the opportunity to work with a brand like New
Balance. “We were looking for ways to develop a formula to
build our business. We were looking for ways to build a bridge
from what we currently do to build an extension to that as
opposed to jumping the ocean and getting
into something totally unrelated. So the
fitness market was really a natural progression for us,” he said. “It’s a much bigger market than the outdoor segment.
The sport timing market is a $1.7 billion
market and 10% of that is heart rate monitors. Just the amount of people who participate in fitness related recreation represents an enormous opportunity.”
In launching the new line of New Balance products, Hosey
says that they will eliminate all pure fitness products from the
HighGear line and brand them as New Balance products so that
they will be able to speak to two different consumer demographics. “One of the things I realized as we evolved with our fitness
products is that we were already looking at segmenting our
product line to speak more directly to the fitness consumers and
the outdoor consumers separately. Even though there is a good
deal of overlap between the consumer bases, we feel that the
consumers do vary to some degree and as such we need to speak
to them differently,” says Hosey. “One thing that really
impressed me was the demographic mix of the New Balance
®
Performance Sports RETAILER
PSR_0107
1/19/07
5:18 PM
Page 13
customer. They have a real knowledge of
how to break down their product line to
talk to a wide variety of customers, from
the toddler to the teenager, college student,
young adult and all the way up through the
senior citizen.”
The products will be broken down into
three categories. The first is designed for
the customer that is new to fitness activities, such as a walker or a beginner runner,
and falls into a $20 to $80 price range.
Hosey describes it as someone who is trying to obtain a certain fitness level. The
products in this category include pedometers and HighGear’s proprietary “HRT”
watches that use two-finger touch technologies to give users their heart rate without a chest strap.
“The simplicity of the monitoring
equipment is the most important part,
whether it’s for our fitness-level customer or our training level customer,
they definitely want it to be relatively
easy to access the information,” says
Hosey. “The styling of the product also
needs to be superior. Design in products today has become more important
than ever.”
The New Balance brand of fitness
monitors will launch with 14 SKUs initially for delivery in 2007 and will then
double in size as High Gear plans to roll
out an additional fifteen SKUs for delivery in 2008. Unlike many electronics
companies, HighGear has a history of
Mike Hosey, founder and president of creating specialized, gender specific
The second category is specifically tar- Asheville, NC-based High Gear
devices with distinct style and features.
geted towards runners who hit the road or
Hosey says,” We are also very conscious
trail three to five times a week. The line includes chest-strap of the fact that we need to address the gender issue as well.
heart rate monitors and more advanced timing and training tools Particularly in wrist-worn equipment, too often manufacturers
that range in price from $70 to $80.
have taken this unisex approach. As a brand, you want to walk a
fine line in being able to appeal to both genders, but our female
Finally, the training line is designed for very active individuals customers, with smaller wrists and a desire for something more
who are trying to maintain a specific level of fitness and train fashion savvy and ergonomic, the look of the product is even
for different events. This line includes heart rate monitors with more important. That’s very much so on the top of our minds as
more feedback features. This is the line that Hosey sees as hav- we look at our current products and our future products.”
“
The simplicity of the monitoring equipment is the most
important part, whether it’s for our fitness-level customer
or our training level customer, they definitely want it to
be relatively easy to access the information...
ing the most opportunity for product extensions and new technological innovation. Specifically, the company will be introducing speed & distance products that use accelerometers to
measure all aspects from heart-rate to calories burned to the
average pace of a given workout. The line will also include body
audio products that combine these advanced feedback features
with music.
”
New Balance fitness monitors will primarily be sold through
sport-specific specialty retailers, but Hosey says that they will
also be available through sporting goods stores, catalogs, and
online. High Gear will be working closely with New Balance to
develop the marketing message and merchandising of the new
products and to build a cohesive image between New Balance
footwear, apparel and electronics.
Three of the recently launched New Balance fitness monitors
(from left to right): the HRT Mini with strapless, touch heart rate
technology, the N5 Max heart rate monitor, and the Vent Mini
running watch.
Performance Sports RETAILER
13
PSR_0107
1/19/07
5:18 PM
Page 14
What is Comfort?
by Paul Langer, D.P.M.
A
Specialty MARKETwatch
sk ten customers what comfort means to them in
terms of footwear and you will get 10 different
responses. Most who have fit shoes learned quickly
that comfort is so subjective that it is almost impossible to
define. Scientists have not unlocked the secrets of comfort,
but they have made some interesting discoveries that offer
insight into how we perceive comfort.
It is important to keep in mind that our gait is as unique as
our voice. We all have certain “movement patterns” that are
influenced by our neurologic connections, muscle balance,
joint range-of-motion, bone alignment and previous
injuries, among other things. Even culture and mood influence the way we walk or run. Studies done at the Human
Performance Lab at the University of Calgary suggest that
if a shoe works with our movement patterns, it will feel
more comfortable and help us move more efficiently, which
delays fatigue and makes us less vulnerable to injury. If a
shoe works against our movement patterns it will feel less
comfortable, make us fatigue sooner and make us more vulnerable to injury.
In another interesting study at the University of Calgary,
researchers gave test subjects 5 pairs of shoes to wear and had
them rate the shoes from most comfortable to least comfortable after running in them. They then tested the runners VO2
max on a treadmill with each subject wearing each of the 5
shoes. The results of the treadmill test showed that the runners were most efficient (higher VO2 max) in the shoes that
they had rated as most comfortable. The results of this study
suggest that runners possess some sort of inherent sense of
efficiency that is linked to what they perceive as comfort.
I always remind my patients when trying on shoes to trust
their instincts about comfort – emphasizing that if one shoe
feels natural or less conspicuous than another shoe, then it
is probably working with their gait. I can offer suggestions
on fit, size and stability features, but beyond that I insist
that they try to listen to the signals their body is giving them
about comfort.
Other concepts to keep in mind about comfort: Comfort is
relative and is influenced by comparisons and activity (which
is why I never advocate buying shoes from catalogs or the
internet). Researchers have shown that comfort is best
assessed by making comparisons – a bad running shoe will
always feel comfortable when compared to a leather dress
shoe. Comparing at least 3 good running shoes is important in
helping a runner determine which features they find comfortable. In terms of activity; standing, walking and running are
all dramatically different from each other. The most comfort-
14
able shoe for standing isn’t always going to feel as comfortable when running. Runners cannot properly evaluate a shoe
until they have run in it.
Paul Langer is a podiatrist and serves as a clinical
faculty member at the University of Minnesota
Medical School.
Advisory
Board
He is a member of the Clinic
of
the
American
Running
Association and is the author of Great Feet For Life:
Footcare and Footwear For Healthy Aging.
Performance Sports RETAILER
PSR_0107
1/19/07
5:18 PM
Page 15
Do you know what your
customer (and competition) knows?
The competitive advantage…
> MORE TIMELY
> MORE CHANNELS
> MORE DETAIL
A Service of the SportsOneSource Group
For more information, contact SportScanINFO at 704.987.3450 or e-mail SportScan@SportsOneSource.com
PSR_0107
1/19/07
5:18 PM
Page 16
RUNNING SPECIALTY CONFERENCE
SAVE THE DATE
THE ELITE Running Specialty Conference, 3rd Edition
JUNE 11-13, 2007
The Venetian in Las Vegas, NV
Co-located with SGMA Spring Market
THE ELITE Running Specialty Conference
is an excellent blend of panel discussions,
presentations, and open dialogue with the ultimate
purpose of sharing ideas to improve the specialty
running channel. The program functions in a positive,
proactive spirit of cooperation between top retailers
and manufacturers.
ng
w Spri uct
e
N
e
e
S
rod
nning P
u
R
8
0
20
A
at SGM et!
Mark
Spring
Attendance is by invitation only.
For retail invitations please contact:
Michelle Libby at 561-615-0240 x237
retailinvites@SportsOneSource.com
For sponsorship opportunities please contact:
Sam Wender at 646-654-4464
swender@SportsOneSource.com
The Elite On-Line Resource Center:
www.eliterunningconference.com