Running Leads the Pack in Down Economy

AUSTIN, Texas — During a year when most of the footwear market lost ground, the specialty running sector managed to pull ahead.

Propelled by consumer enthusiasm for the sport, key retailers and industry observers surveyed by Footwear News during and after the Running Event, held here last month, reported sales increases in 2009.

“We’ve always seen in a recession that running has done well, and the underlying idea of running for fitness is very strong,” said Matt Powell, an analyst for SportsOneSource.

Powell noted that Saucony, Nike, New Balance and Asics had been performing well in the mass channel — a performance mirrored in the independent retailers, along with Brooks and Mizuno, stores told FN.

Parker Karnan, the new head of the Independent Running Retailers Assocation, estimated that sales in the channel — approximately 750 stores doing an average of $900,000 a year — rose 5 percent to 6 percent last year.

That number looks good compared with most retail segments, but it doesn’t stack up to the 15 percent year-over-year growth the channel had seen for the previous five years. While footwear was a solid performer for most stores, soft apparel sales and weakness in accessories dragged down some retailers.

With that in mind, storeowners told FN they are not being complacent as they look to 2010. One major focus will be attracting new customers with fresh marketing initiatives, social media and increased medical outreach, and retailers also will pay more attention to their bottom lines.

Lee Silverman, president of the three-store Jack Rabbit Sports chain in New York, estimated that his store would be up in the mid-single digits for the year, but added that to grow the business more in 2010, he would make his first foray into television advertising. “It seems archaic in some ways,” he explained, “but everyone watches TV.”

The ads, which feature customer testimonials, will begin in spring and continue into summer. They target “people who shop at other stores, but even more so, people who don’t know there’s a running store at all,” Silverman said. “It’s about getting a new audience. [In prior years], I didn’t spend a whole lot of money on ads because I thought a lot of business came from word of mouth. [But now] I’m trying to accelerate the word of mouth.”

John Rogers, principal of Portland, Maine-based Maine Running Co., said TV advertising, which he introduced in 2009, was a cost-effective way to grow sales. (And grow they have: Sales in his original location rose by more than 40 percent, and Rogers opened a new store in nearby Brunswick, Maine.)

“Cable news networks are a relatively inexpensive way of advertising in Portland,” Rogers said. An investment of $1,000 a month for 120 spots, he said, was a way to create awareness among runners who would not see the store’s seminars or events. “Sixty percent of runners don’t run races,” he said.

New advertising avenues are also on the agenda for Mike Cosentino, a founder of the four-store Big Peach Running Co. group, headquartered in Atlanta.

With sales projected to be up 7 percent to 10 percent for 2009 (but still behind plan) and with a goal for 10 percent to 12 percent growth in 2010, Cosentino said new areas such as outdoor ads and year-long radio campaigns are possibilities for the stores. “We never really took our foot off the gas relative to marketing [this year]. We didn’t really pull back,” he said. “But hopefully, we’ll be able to be more aggressive going forward. We’re not going to try to be profitable by saving money.”

And for some retailers, increasing their involvement with social media applications such as Facebook and Twitter will be more important next year.

Ben Rosario, co-owner of St. Louis-based Big River Running Co., said “disappointing” results from previous marketing efforts, including radio, TV and direct mail, have given him new incentives to look online for 2010. With lots of traffic on its Website, Rosario said the company will be increasing its presence on Facebook and Twitter. “I’d rather stay up to midnight creating a Facebook event page than pay a few thousand dollars [for an ad],” Rosario said.

In addition to pumping up marketing, many stores are expanding in nontraditional ways.

Rosario said Big River had hired a new employee to develop relationships with local school sports teams — an area that has the potential to be a $300,000 business two or three years down the road, he said.

Medical referrals are another source of big potential. Runners Performance, a group of three stores based in Bay City, Mich., will host its first medical professionals night in the new year, with giveaways, gait analysis and a party for the doctors, orthopedic surgeons and other medical personnel. Co-owner Bill Thompson said the store has inked a partnership with a local hospital that lets employees make purchases through a payroll deduction process.

Runners Performance hopes to add other health facilities to the program, which could encourage customers to buy and spend more. Even more ambitious, Thompson — who is a kinesiotherapist trained to help with rehabilitation — is turning his stores into wellness destinations. This spring, he contracted with a massage therapist to set up shop in his Saginaw, Mich., location and plans to do the same in his other stores in 2010. But what’s more, Thompson intends to build a physical therapy center in the Saginaw store this spring. It could cost between $50,000 and $100,000, but would pay off by bringing in extra business.

And with real estate costs down almost everywhere in the country, expansion is another possibility for many stores.

While some retailers were adversely affected by the changes to the retail market, others were able to take advantage. Silverman said his latest store, which opened on the Upper East Side of Manhattan in April 2008, would have been out of his reach before the downturn. “I was able to rent a space I never would have been able to get at all, let alone get at the price I got it for,” he said.

And though the market shows some signs of rebounding, retailers said there are still deals to be had in 2010. Cosentino noted that rents in his area were still down as much as 40 percent from their peaks. “Real estate is cheap right now,” he said, adding that expansion is an option for his company. “There are some markets in the greater Atlanta area that we’re more serious about than we have been in the past.”

Looking ahead, retailers are banking on their new initiatives and increased customer spending to spark growth. “I’m very upbeat for 2010. People’s confidence is back, or at least they’ve settled in,” Silverman said.

Rogers agreed. With operational efficiencies and new initiatives, including the new store, Maine Running Co. is planning to be up around 10 percent next year. “I don’t see any reason we can’t grow,” he said.

And Karnan is forecasting a boost for the segment as a whole, possibly 8 percent or 10 percent. “The wind is still in the back of this market,” Karnan said. “Wellness is top of mind, older consumers are looking for shoes to fit their feet and running events are growing. It can be a $1 billion channel in the next five years.”

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