By Thomas J. Ryan
A survey of more than 100 run specialty stores across the U.S. from The Running Industry Association (RIA) painted a bleak picture of how independents are weathering the COVID-19 pandemic with the majority forced to close stores and explore furloughs amid steep revenue declines. A few, however, are hoping for some recovery by May.
The survey was sent to RIA members on March 24 with the answers received over the following days. The anonymous submissions were posted on RIA’s website on March 3.
Among the findings:
- 68.4 percent of respondents indicated that their doors are closed. About a quarter (25.2 percent) remain open. Of those, 10.5 percent are sticking with regular hours and 14.7 percent are operating with reduced hours. The remaining 7.4 percent have multiple doors with some open and some closed.
- 49 percent had laid off or furloughed some of their staff, and 21.9 percent have been forced to lay off or furlough their entire staff. A little less than a third (29.2 percent) have been able to avoid lay-offs or furloughs.
- Asked if they are able to pay wages for any furloughed staff members, 62.9 percent said they can’t afford to pay any wages. Another 22.9 percent said they’re having to pay reduced wages with only 14.3 percent able to cover full wages while furloughed.
“If we don’t see some recovery by the end of May, a significant percentage of run specialty retailers may be forced to close permanently,” Terry Schalow, executive director of the RIA, told SGB Executive.
On the positive side, Schalow said the findings show retailers are aggressively moving toward e-commerce solutions to make up for some of the lost revenue in-store sales. But the survey finds the run specialty channel suffered steep declines in March and is expecting steeper declines in April. Many in the industry are cautiously optimistic that sales will show some recovery in May.
When survey respondents were asked about current and expected sales patterns, only 9.7 percent indicated that, as of today, sales for March were up or flat versus March 2019. A total of 23.7 percent indicated sales were running down between one and 20 percent; 25.8 percent saw declines in the range of 21 to 40 percent; 21.5 percent saw declines in the range of 41 to 60 percent and 14 percent were seeing sales running down 61 percent to 80 percent. The remaining roughly 5 percent suffered declines in the range more than 80 percent.
For April, 29 percent saw sales plunging more than 80 percent, 23.7 percent saw year-over-year declines in the 61 percent to 80 percent range, and 20.4 percent saw sales sliding in the 41 percent to 60 percent range.
For May, 8.6 percent saw sales declines of more than 80 percent, 16.1 percent saw declines in the 61 percent to 80 percent range, and 18.3 percent saw sales dropping in the 41 percent to 60 percent range. The widest majority, 26.9 percent, saw May sales declining in the 21 percent to 40 percent range with 17.2 percent expecting flat sales or a gain.
A number of questions explored liquidity issues should current challenges continue:
- Asked If their doors are closed, (or expected to close) and the current situation holds how long could they last before having to consider permanent closure, 31.1 percent said only 1 to 3 months. Among the rest, 27.8 percent expected to last 3 to 6 months before having to consider permanent closure, 12.2 percent eyed 6 to 12 months; and 2.2 less than one month. A total of 26.7 percent were confident that they’d be able to stay in business, at some level, indefinitely.
- Asked how many months of cash reserves they have on hand if their doors are closed, (or expected to close) and considering their current financial obligations, 28.9 percent said only one month. A total of 51.1 percent indicated 1 to 3 months and 15.6 percent said 3 to 6 months.
- Asked how far in debt they’d be willing to get into if they had access to a line of credit or other type of loan assistance to keep their business viable, the widest majority, 42.4 percent, said less than $50,000 while 29.5 percent said between $50,000 and $100,000.
Exploring sales and marketing strategies, nearly all, 96.9 percent have implemented strategies to keep sales flowing while their doors are closed. Of those, 83.9 percent are emphasizing online orders being shipped from stores and 75.3 percent are looking to take advantage of vendor drop-ships. Seventy-two percent are emphasizing home delivery while 68.8 percent are encouraging customers to curbside pick-up or pick-up their purchases outside the store. A majority, 61 percent, are using an e-commerce platform such as Fitted, Locally of Shopify while another 29.2 percent were exploring such options.
Asked how they’re connecting with customers to generate sales, the top answer was social media, cited by 91 percent of overall respondents; followed by sending e-mails, 78 percent; and phone calls, 33 percent.
In conversations, Schalow said his organization is hearing about members scrambling to reinvent ways to conduct business amid calls for social distancing.
“The spirit of cooperation and teamwork has never been higher in the channel,” said Schalow. “As run specialty emerges from the crisis, (and it will come through it), the learnings and creative strategies put in place to connect and service customers during the crisis will remain. I’m certain that a stronger, more competitive channel will emerge. But for now, the focus is getting through this together, and we’ll continue to support those efforts until it’s time to focus on recovery.“
RIA is planning to circle back in a week or two with another survey to provide another update on conditions.
To access the full survey click here.
The survey was launched the same day RIA assembled an online resource guide to assist the run specialty community during the COVID-19 pandemic. The guide, open to members and non-members as well in light of the challenging times, includes information on financial assistance and tax relief, advice on e-commerce solutions, marketing and human resource functions. A Brand Support Reference Guide aggregates many of the extended invoice terms and other concessions brands are offering. The guide can be found at RunningIndustry.org/resources.