Implus recently completed its 19th acquisition in snapping up SKLZ, the leading supplier of athletic performance and skill development training products. The acquisition propels Implus into the sporting goods category and provides a stronger foothold in the fitness accessories category – alongside TriggerPoint, Harbinger, FuelBelt and Perfect Fitness. The deal also augments the company’s positioning as the one-stop-shop solution for athletic, fitness, and outdoor accessories for retailers.
As often happens when broad shifts in strategies develop, the acquisition spree for Implus was born out of adversity. In Implus’ case, it came in the form of the 2004 bankruptcies of Footstar Athletic (Just For Feet, Footaction) and Athlete’s Foot.
“Footstar Athletic and Athlete’s Foot represented 17 percent of our business and they generally went away,” said Seth Richards, CEO of Implus, in a wide-ranging interview with several members of the company’s senior team at the company’s headquarters in Durham, NC. “We realized that if we’re going to continue growing this business at the rate we wanted to grow it, we needed to get beyond insoles and shoe care.”
Seth, who had worked for the company during high school and summers while at college, joined Implus full time post-college in 1994 and took over as CEO in January 2000. At the same time, Todd Vore, who grew up with Seth in Johnstown, PA and joined Implus in 1991, took over as president.
A One-Stop-Shop Model Is Born
The one-stop-shopping proposition originated just after the two took over as retail partners were urging Implus, which then only sold insoles, to get into the shoe care and shoe lace business.
“Some large suppliers in the space just weren’t providing a proper service level to retailers,” said Richards., “There were also some smaller suppliers to the space struggling financially and there wasn’t a stable and cooperative supplier to the industry. So our retailers pushed us to get into that but we really didn’t want to just go into shoe care. We wanted to offer something more.”
Implus heavily invested in developing a suite of category management offerings to support a broader footcare accessory offering, including merchandising solutions as well as backroom and operational support.
“That’s when we really invested in logistics – being able to pick-pack the order by SKU and by store, ship direct to retail, cross-dock, ship in bulk to distribution centers,” said Vore. “And that’s really become the foundation of our company today: Our unique ability to process orders efficiently in any way a retailer would like them to be processed.”
But the 2004 bankruptcies drove home the need to diversify the business.
“The first acquisition was 2006 with the Yaktrax brand and that really opened up our eyes to looking at that accessory business outside of insoles and shoe care,” said Vore.
The Yaktrax acquisition created the Outdoor segment that now also includes DryGuy, Stabil, Little Hotties and ICEtrekkers. In addition to Sof Sole, the Footcare segment now includes Balega, Apara, Airplus, Sneaker Balls, Penguin, Spenco and Forcefield.
The Fitness segment started with the 2009 acquisition of Perfect Fitness and has grown to include Harbinger, TriggerPoint, FuelBelt and now SKLZ. The group also now includes RockTape, a leading provider of kinesiology tape. The RockTape acquisition was announced on October 3.
SKLZ: All About Training
Founded in 2002, SKLZ initially caught on with the Hit-A-Way Portable Baseball Swing Trainer Batting System and has extended into training tools for soccer, basketball, football and golf as well as a broad range of resistance bands, training balls and other workout items.
“They basically pioneered the training category,” said Vore. “It’s a very authentic brand, has very good brand recognition and is known for quality products. The employees that are coming over just love the brand and they’re very passionate about the fitness industry. We really think we’re going to be able to leverage a lot of that passion into our other fitness brands as well.”
SKLZ was put on the selling block by Steelpoint Capital Partners, which first invested in SKLZ in 2013. Implus had followed SKLZ for years and acquiring the brand made more sense as Implus built up its fitness platform.
“What attracted us to the SKLZ brand was it gave us another leg on the stool of our fitness brands,” said Vore. ”SKLZ is all about training. We did not really have any training fitness brands or equipment. So it complemented our TriggerPoint brand, which is all about massage and wellness, very well. It also complemented Harbinger, which is weightlifting. So now we really got the athlete covered from training to recovery with these different series of brands that we have.”
SKLZ also brings Implus into the team channel although Sof Sole socks have been sold to team dealers. But Richards said Implus sees “tremendous room for growth” in the fitness accessories area across channels and SKLZ – with its niche in training – has the “permission to be a bit of a broader brand” than Harbinger and TriggerPoint.
Said Richards, “SKLZ has a much broader customer base so it allows us to address both the team sports side of the business as well as sports training and fitness training elements of the business.”
In conjunction with the transaction, Implus will be adding a new satellite office in Carlsbad, CA, where SKLZ is based, to support SKLZ and the overall fitness segment. TriggerPoint, Harbinger and the rest of the Fitness brands will be moving to Carlsbad.
Bringing all the fitness brands together is expected to deliver numerous synergies around sponsorships, partnerships and collective go-to-market strategies. Said Drew Davies, EVP and GM of Specialty at Implus, “It allows us to build a stronger relationship in those accounts where we’re already doing a nice business.”
Tim Wiseman, SKLZ’s president and CEO since February 2017, is staying on through the end of October as part of the transition. Chuck Rodrigues, Sr. Director of U.S. sales at SKLZ, will run the Carlsbad office.
As in other acquisitions, SKLZ team’s execution is expected to benefit in a variety of ways from economies of scale under Implus’ umbrella. Administrative functions – including HR, finance and operations – will be moved to Implus’ headquarters in Durham while sales, product, marketing and digital will continue to run out of SKLZ’s offices in Carlsbad.
Richards said Implus now has nearly a million square feet of operations globally now with three different facilities in North Carolina, as well as facilities in Hong Kong, Paris, Melbourne, Cape Town and Toronto. Centralizing administrative functions has allowed Implus to accelerate growth with many of its acquisitions by allowing the acquired brands “to focus on what they do best.” He suspects the outcome will be the same with SKLZ.
Richards elaborated, “Entrepreneurs don’t come to work every day saying “I want to go negotiate a contract with UPS.’ They come to work every day wanting to create new product, to evolve a brand, to expand their customer base. And through these acquisitions we try to allow teams to focus in on what they’re passionate about.”
Implus will also take over SKLZ’s sourcing, an area where Implus has built an extensive infrastructure over the years, including 15 individuals based in Asia overseeing quality control and social compliance. The sourcing acumen gives Implus the ability to adjust to the requirements of different channels. Said Richards, “Most of the acquisitions we’ve been able to plug that element into our structure and really streamline it, make it more efficiently and quite frankly deliver a better product to the retailer and ultimately the consumer.”
Two newer areas for Implus where SKLZ should see some benefits is international and digital.
Implus began selling internationally with an acquisition of a distributor in 2010 and it now has offices in Hong Kong, Paris, Melbourne, Cape Town and Toronto.
“We’re now able to ship to most of the relevant geographic regions of the world, either through a distributor partnership or working directly with a retailer or digital entity. We’re able to offer a lot of the same services and brand support that we offer our customers here in the U.S.,” said Richards.
Richards said Implus continues to commit more resources to international regions to achieve both service and pricing parity on a global basis. Richards added, “That’s ultimately our goal and I think that when we achieve that we will truly have a global business. We are still a few years out but we’ve come a long way.”
Digital Platform Built For Retail Partners
SKLZ is also expected to benefit from Implus’ significant investment over the last two years in digital that will build on SKLZ’s own efforts online.
Ryan Cruthirds, EVP and Chief Digital Officer at Implus, said digital has become “one of the fastest-growing areas of our business” with growth across Implus’ brands’ own online platforms, at e-tailers including Amazon, as well as the sites of its wholesale partners such as Dick’s Sporting Goods.
A particular focus has been on ensuring “a good, clean, consistent experience” for consumers regardless of where they shop across the Internet with each site having the “right content, right strategy” for their consumer. Pricing consistency and integrity have been a particular focus, in large part to support independent retailers. Said Cruthirds, “We’ve invested tremendously in brand protection online and ensuring that where you see our brands, it’s the right presentation at the right price. When you do that, everybody wins.”
Finally, SKLZ’s growth is particularly expected to benefit from Implus’ unique approach to channel management. The company attacks the marketplace through five growth areas: Specialty, Independent, FDMC (Food, Drug, Mass, and Club), Digital and International.
The multi-channel is supported by sharp segmentation tactics. Said Richards, “It’s basically ‘Good, Better, Best’ where your food, drug and mass retailer will carry ‘Good and Better’ and be anchored in “Good’, your special retailer generally carries ‘Better and Best’ and they’re anchored in ‘Better’. It’s a very different customer base. A serious athlete is most likely going to a specialty retailer. A serious runner is likely going to a run specialty store. Somebody that’s going out to walk their first 5K is maybe shopping at more of a FDM retailer. So it’s a very different customer, whether its age, demographic or experience level or level of athleticism. Different people shop in different retailers.”
Richards further noted that with past acquisitions, Implus has been able to extend brands through category expansions and adjacencies through its relationships and knowledge of what works in each channel. He thinks SKLZ has a “huge runway” to expand beyond its core offerings in a similar manner.
Indeed, Richards said that if one expertise stands out for Implus, it’s the company’s ability to customize solutions by channel that developed out of the one-stop-shopping proposition.
“We treat the independent retailer very differently than we would work with a big box retailer because they have different needs and different requirements,” said Richards. Those needs may vary greatly across distribution, logistics, merchandising or operations support, or even marketing, such as a rep attending a night run to support a local running store. Said Richards, “Most companies are really focused on one channel but we’re able to look at things through a lot of different lenses.”
Tailored Solutions By Channel
That approach includes having one central contact responsible for the customer relationship rather than having different individuals managing different departments, such as footwear or apparel.
“We know what’s happening across all departments, which is a huge plus for us,” said Davies. “And we work with all different levels – not just the buying team – and treat everybody from any level the same. So we’re ingrained in the other areas of those retailers, which helps.”
At the independent channel, that includes the recent ramp up of Implus’ collective rep team to 20 across the country. The hirings come as other vendors have been decreasing their rep teams with challenging business conditions in recent years. Said Bert Pictor, EVP and GM of Independent Retail at Implus, “Our service model is beyond what anybody else, including the footwear guys, is offering at the moment.”
Pictor noted that the independent channel is a smaller contributor to Implus’ revenues versus Specialty and FDM but remains critical in supporting the “relevance and reputation” of a number of Implus’ brands. Pictor suspects SKLZ’s growth in the independent channel should benefit from Implus commitment to education through its reps as well as their extensive consumer outreach efforts. Balega, for instance, is expected to conduct 240 activations, such as attending marathon expos, in the U.S. this year. Said Pictor, “That’s what we’re trying to do with all our brands nowadays – becoming more consumer centric.
Richards added that being able to order multiple brands in multiple categories from a single vender such as Implus is particularly beneficial to the independent store.
“Having all these brands under one roof is just an immense savings, especially for an independent retailer,” said Richards. “If you look at our shipping metrics, we’ll do about 800,000 UPS packages this year. Turnaround for just-in-time orders are 0.8 days and we’re shipping better than 98 percent complete. So having that backbone and infrastructure is a tremendous advantage.”
The acquisition of SKLZ comes as Implus has continued to steadily grow despite a number of bankruptcies that particularly impacted the company’s core Specialty channel. Today, Implus has more than 500 employees globally with sales recently moving past $400 million in revenue. With roughly half of the growth coming from acquisitions, revenues have been steadily expanding at a 15 percent annual clip.
Vore believes the core sporting goods and outdoor sector has stabilized. Following similar moves that have paid off for Wal-Mart and Target in the mass channel, many of Implus’ core partners are re-investing in brick & mortar in both labor and inventory that Vore suspects will lead to healthier comps for Specially in the future. Said Vore, “I think people have found the comfort zone. They identifying where they can win, and they’ve got to win with service and assortment. That’s what they’ve got to do.”
The growth comes as retailers are increasingly looking at accessories as a traffic driver and differentiator. Richards estimates that 75 percent of purchase across most of Implus’ categories are now destination-driven, up from about half over the last 10 years.
More and more retailers are also viewing accessories as quick-turn, ad-on sale at a high-margin. Said Richards, “It’s almost to the point that $1 of accessories sales is equivalent from a profitability perspective to $2 in footwear or hardline sales. So if a retailer looks at accessories through a proper lens which is profitability and how they ultimately pay their bills, they will often get behind the accessories business in a much more robust fashion.”
Implus’ ever-increasing assortment of accessory brands also helps retailers attack the accessories wall form a single source and Implus has no plans to slow down its acquisition activity.
Implus has looked at about 230 companies in the last five years and remains “very selective” in its search. Said Richards, “Every acquisition we’ve done has come with its own set of assets and liabilities. So we look at everything through from a unique perspective and we look at it everything from an open mind.”
A primary focus includes brands that would benefit from Implus’ synergistic competencies and brand that still has growth potential. Said Richards, “We like companies to have a healthy brand. It doesn’t necessarily mean it’s a healthy company but we want a healthy brand.”
Although the addition of SKLZ and RockTape will again extend the range of potential acquisitions for Implus, the company plans to continue to focus on what it sees as ample opportunities across the accessories category.
“We are in the accessories business,” said Richards. “Footwear, apparel, hardlines and technology are four areas we’re not eager to go into. We want to really focus on our knitting in the accessories space.”
Photo courtesy Implus