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Can Outdoor Specialty Retailers Conquer the Booming Running Market?

The running market has always been hyper-competitive, but new retail challengers from the outdoor world are raising the stakes for players in the space.

For the past three years, the running category has been the footwear industry’s biggest success story. As gyms closed amid the pandemic, a staggering number of people began lacing up their running shoes to head outside — and many are sticking with it.

It’s led to major sales wins for running stores. And now outdoor specialty retailers are looking for a bigger piece of the action.

Last year, for instance, outdoor retail giant REI Co-op announced plans to bolster its running selection and said it would invest in a multiyear strategy to further growth in the category. And the Public Lands banner from Dick’s Sporting Goods considers running an equal priority with outdoor in terms of merchandising.

When Outdoor Retailer made its return to Salt Lake City this week, Matt Powell, senior sports industry adviser with The NPD Group, explained to a room of brands and retailers that outdoor specialty retail has experienced great gains in running, and that he expects the trend to continue.

“Outdoor retailers have figured out that their consumers are running for fitness, to stay fit, and that there’s an opportunity for them,” Powell told FN.

David Progar, VP and GMM of footwear at Dick’s Sporting Goods said the crossover between outdoor and running consumers is greater now than ever before. “There is a new entrant into the outdoor space that is younger and more active, and they’re doing a lot of running and hiking. I wouldn’t say run and outdoor consumers are the same, because we still see hardcore runners out there running marathons, half marathons and 10Ks, but there’s a lot of overlap.”

One recent signal of the merging of channels was seen in November at The Running Event, the market’s leading trade show. The show added an outdoor-focused element dubbed Switchback, and its attendee list included outdoor standouts like REI, Public Lands, Slim Pickins Outfitters and others alongside some of the biggest names in running retail, such as Fleet Feet and Marathon Sports.

“We believe — and our 2022 event confirmed — there is growing overlap between the outdoor and running markets, and combining them under one roof makes great sense. We are committed to building off this year’s event and investing in future growth,” said Christina Henderson, event director of The Running Event.

THE OUTDOOR RETAILER PLAYBOOK

REI Co-op Burbank California Running Shoes
The running shoes section inside REI Co-op’s store in Burbank, Calif.
CREDIT: Courtesy of REI Co-op

These changes come at a time when running shoes are flying off shelves in outdoor specialty stores. According to NPD data, sales for road running footwear in outdoor specialty increased more than 40% in 2022 over last year, and trail running in the channel rose in the mid-teens.

REI’s GM for run, Fan Zhou, told FN that the company’s running business in 2022 was close to twice the size of what it was in 2019.

“What we’ve found both heading into the pandemic and coming out was that increasingly our members were engaging with the outdoors by running. Lots of members coming to us for their hiking backpack, camping tent or sleeping bag were already running,” Zhou said. “That insight was all we needed to say, ‘If our members are using this as a way to experience the outdoors, how can we serve them in a way that feels authentic to REI?’”

The co-op’s strategy includes a broader product assortment, updated digital experiences and community programs. Its commitment to run will also be highlighted by a new in-store experience. REI is currently testing shop-in-shops in three California doors — Tustin, Burbank and Manhattan Beach.

“We’re testing what a running shop within REI looks like. This means moving things that may be scattered across our stores and consolidating that into one area,” Zhou said. “Within that space, if we bring the right fixtures to highlight products, tell stories about those products and those brands, we will be able to drive a compelling experience.”

Zhou said apparel and footwear will be together in the spaces, as well as must-have accessories, such as hydration packs.

To bolster the store experience, REI’s in-house brand also unveiled the Swiftland Running collection, a range of apparel and accessories for men and women that Zhou said has been in the works for more than two years. “It’s inspired by trail running. And more importantly, the line is incredibly sustainable and the sizing is inclusive,” he said.

Meanwhile, for Public Lands, Progar said one its priorities since launching its first store in September 2021 was to make running unique and special relative to the balance of outdoor retail.

To deliver on the objective, he noted the retailer focused on product assortment, service and — perhaps most important for the modern active consumer — the presentation.

“We wanted to create mini brand shops so we can showcase the best and have a robust, broad offering from brands like Hoka and On and Salomon. We also wanted to make it easy to shop and navigate, which is why we have, for example, trail running positioned adjacent to hiking because we’re seeing a lot of cross- over,” Progar explained.

This approach appears to already be paying off. Progar said Public Lands consumers often leave the store or check out online with more than one pair of shoes. “For someone shopping at Public Lands, they may buy a Hoka Clifton to run 3 miles in the morning in the city, but they’re also buying a Salomon SpeedCross to hit the trails the next day going up a mountain or on the Appalachian Trail,” he said.

There’s increased interest in running from independent outdoor retailers as well. Curt Smith, president of Bozeman, Mont.-based Schnee’s, said it has increased its open-to-buy dollars when it comes to running products. However, with Bozeman Running Co. within walking distance, Smith said Schnee’s is addressing a different type of runner.

“There are people who won’t go into a running store because it’s for runners,” Smith said. “Run is a lifestyle now. We’re playing off the lifestyle piece more than the actual run piece. Do we sell to runners? Yes, but they might not be as hardcore.”

To capitalize on the lifestyle trend, Smith said Schnee’s has paired products from high-heat brands within the store, such as On footwear with Vuori apparel.

What’s more, Smith said Schnee’s will continue its strategy of displaying running footwear in multiple areas of the store during the warmer months.

“To get the biggest assortment, we’re diversifying our merchandising and we’re committing more space to it during the right seasons. We’ll have it double displayed, so we’re putting them in front of customers two times. That might be alongside outdoor lifestyle, not just run,” he said.

THE RUNNING INDUSTRY REACTION

Altra Mont Blanc
Altra Mont Blanc.
CREDIT: Courtesy of Altra

This increased investment in run has brands in the space excited. Saucony president Anne Cavassa told FN, “The more people that are running is better for everyone.” And Altra president Todd Dalhausser agreed: “The rising tide raises all boats.”

But specialty running stores are expressing some concern as outdoor retailers make more inroads into their category.

Casey Jermyn, owner of Bozeman Running Co. in Montana, pointed to issues around pricing and promotions. “With the outdoor stores that want to enter the market, they typically don’t focus on run all year. They look to clear out their product at the end of the season as they shift to ski. This creates an overflow of off-priced trail footwear and gear in our market,” he said. “This isn’t healthy for the running industry or the outdoor industry. In this situation, no one wins.”

And Scott Dvorak, owner and founder of Charlotte Running Co. in North Carolina, worries about how this trend could impact smaller independents. “If any of these outdoor specialty retailers have deeper pockets, they could be able to out-market and undercut us, making it difficult to compete,” he said.

Despite that, Dvorak does see some opportunity. “This could bring new customers to our business if we can find ways to differentiate appropriately,” he said. “It could open the door to new collaborations and partnerships with the outdoor specialty retailers — partnerships that could allow us to reach new customers and different geographic regions that we don’t currently serve.”

For his part, Jermyn believes it all hinges on brands taking a measured approach. “I would hope that our vendors would look into markets before opening up outdoor shops. I would have to think in some areas maybe it’s needed, if they don’t have a run specialty store.”

Opening outdoor specialty accounts is a smart addition to any brand’s retail strategy, but Dalhausser agreed that they should be especially judicious when selecting new partners.

“Consumer patterns continue to migrate and change through these massive macro environment changes we’re living through. They’re ever evolving,” he said. “The question is, ‘Is this in an environment that makes sense for our brand?’ Not every distribution channel accessible to us is going to be right.”

The exec explained that Altra’s strategy will continue to focus on specialty retail channels — whether running or outdoor — that have a strong service-oriented model.

For Saucony, Cavassa said the brand is thinking about segmentation, offering various style, price point and color perspectives to offer differentiation to its retail partners. This perhaps is best illustrated through Saucony’s pinnacle product.

“The Endorphin Collection has been extremely successful for us over the last couple of years, and within the collection is a plated racing road shoe. That likely is not going to outdoor specialty. However, we’ve expanded it to include a plated trail shoe. That would [naturally] end up in outdoor specialty,” Cavassa said.

Stringent segmentation is also part of the plan for Altra. “We have to be strategic, we have to be focused and we have to think about that consumer differently than how we think about that run specialty consumer,” Dalhausser said. “A bit of segmentation is appropriate. For us, we find those marriages between trail shoes and road shoes, and we recommend those as part of the assortment.”

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