Like many retail channels, run specialty continues to face challenges reaching today’s increasingly digital consumer.
But is it even worse? Trained to offer personalized service at the store level, many stores are still making an awkward shift toward engaging the consumer that wants to interact and purchase online, according to interviews with a number of executives attending the industry’s premier race, the Boston Marathon.
While many still believe there’s more runners than ever, today’s younger runners also enjoy spin, Crossfit and other workout activities and aren’t into competitive races as much. Meeting the needs of the less run-centric and more social consumer is also demanding adjustments.
Overall, the industry’s sales have been sluggish for the past two years and are still seen as trending flat to slightly down. And the digital shift is far from the only factor slowing what had been steady double-digit comps in the years beforehand. Other factors include the pricing pressures caused by the liquidations of Sports Authority and other chains, over-expansion directly in the run specialty channel in certain markets, and a shift away from performance-oriented run models toward more casual ones as part of the athleisure trend.
But what’s causing the biggest concern is the shift toward digital retailing, since it requires the biggest adjustment for the local running shop.
“We saw this last year where a lot of accounts really struggled with the consumer shifting to some online purchases and changes in consumer behavior and athleisure coming along, but the great thing is the really strong retailer and the really strong brands are doing well,” said Pat O’Malley, president at Saucony, at his company’s booth at the event’s expo. “So for us, that’s been a real positive and the retail partners that are set up in a way that they can handle that change and shift in the retail environment are doing well. But there’s some other guys where we have to do some things to help them get through these tough times.”
Encouragingly, O’Malley noted that while consumers are headed online, Saucony has found that 73 percent are looking for information and many are looking to find a store where they can try on product. He also said Saucony’s performance models are “starting to show some really good signs of coming back,” while the brand’s introduction of more fashion-oriented silhouettes have been well received.
O’Malley said that while a few storms led to a rough beginning of the year for some accounts in the northeast, “the start for us has been good. We’ve had a good first quarter and really positive signs going into the rest of the year.”
Keith Hanson, co-owner of Michigan’s Hansons Running, notes the run specialty channel has continually adapted over the years.
“My group runs used to have 50 people and the slowest person was running 8-minute miles,” said Hanson. “Now I have 100 with the fastest person running 8-minute miles.”
Hanson, who was at the Boston Marathon on behalf of The Hansons-Brooks Distance Project team members, including star runner Desiree Linden, said he still has a “blast” working with elite runners but also now loves working with the person looking to get healthier.
“It’s pretty cool to see a 45-year-old guy or gal come in who’s overweight and you start a running program and they come to your runs every night and a year later they’re a different person,” said Hanson. “They’re even a better parent, and that’s a blast to see that you can change lives.”
Still, he said community engagement has become “more critical” than it was 15 years ago and believes the convenience aspect of online shopping can’t be ignored. In that vein, Hansons Running is working to support online delivery to nearby homes.
Noting that one of the regular attendees to his group runs brings his homebrewed beer to pass out after the run, Hanson also agreed that the social component to running is bigger. His stores partner with vendors and sometimes have barbeques after group runs to further engage the local community.
Hanson readily admits he doesn’t understand why younger consumers will text long messages rather than just call. Or even why consumers take the time to order online and then pick up at the store when they can just drive to the store. But he said stores have to adapt to new consumer behaviors.
“I’m 52 years old and I don’t think the same way as a 22-year-old,” said Hanson. “I don’t have to get it to adapt to it.”
John Rogers, owner of Fleet Feet Maine Running, said one big problem is that running product has reached a “commoditized state” with core brands being sold across retail. That’s forcing stores to look at their business efficiencies closer than ever while making the adjustments required for digital commerce.
“What we have to do is continue evolving our engagement with our customer, from a digital, community and in-store experience view,” said Rogers. “We have to manage our inventories, be right-sized for our businesses and commit to operational excellence. We have to find unique vendor partnerships that will benefit both parties and work toward satisfying the consumer together. No one is in this alone, but those businesses that are taking the steps to engage locally, digitally, experiential wise and operate efficiently and evolve will be positioned well for the future.”
Hoka brought out its largest expo booth for the Boston Marathon and was able to showcase its first stability shoe and its new recovery shoe, Ora. Isaac Alvear, brand manager at Hoka One One, believes part of the problem with the run specialty channel is that many of running’s major brands are facing challenges segmenting their legacy product as they seek growth.
“Hoka continues to be a very bright spot and validates the need for run specialty to cherish and incubate more of these brands like a Hoka or On that are adding continued freshness to the mix,” said Alvear. “The days of just hammering your Brooks, Asics and Saucony are over. If run specialty as a channel is going to stay vibrant, they have to invest and prioritize with the specialty brands. And we’re validating that because we’re gaining significant market share every month.”
While Hoka has opened up distribution to Dick’s, Alvear said the brand is still reliant on specialty to tell its story. At the same time, he credited Marathon Sports, the Boston-based run chain, with its aggressive push into online selling and believes other specialty shops will have to rededicate more resources to reach the online buyer. Said Alvear, “If they want to stay relevant, they’ve got to really invest in e-commerce.”
Vic Addaday, owner of Addaday, the maker of massage rollers, recognizes that his product works largely an upsell tool at a store after someone comes for a core product, such as footwear. Said Addaday, “Runners don’t wake up in the morning and say ‘I’ve got to get to the store to try that massage tool.’”
But he believes run specialty shops can do a better job showcasing their broad lineup of massage tools, compression products, insoles and other more ancillary products. Said Addaday, “You spend all this time outfitting your store with this wonderful product but the customer sees maybe 15 percent of it, if that.”
He also agreed that run specialty stores have to raise their game at the store level to better compete with the convenience offered by online shopping as well as with bigger retailers in the running space.
“I think we really have to define our value at the fit bench,” said Addaday. “That’s where we ultimately will win. When customers walk into specialty run stores we really have to demonstrate what the value is more so than ever before, and if a person at a big box is doing a better job than specialty than that inherently becomes a problem.”
Duncan Finigan, head of marketing for Oofos, the recovery footwear leader in the space, believes the stores offering a “special service,” including knowledge and community support, are continuing to do well. But the best ones have figured out a way to connect to their online customers as well as those in-store. Said Finigan, “We learn as much from our social media fans as we do from our independent specialty customers telling us what their customer needs.”
David Spandorfer, co-founder and CEO of Janji, the running apparel brand, believes the running industry had been able to ignore the consumers’ shift to online because sales were steadily expanding for most at a double-digit clip. But it can’t anymore with the ongoing sluggishness.
“When there was a rising tide, it really did lift all boats, but as soon as running plateaued you saw some of the stores that really had financial difficulties really suffer,” said Spandorfer.
Spandorfer believes run specialty not only has to adapt to the shift of consumers purchasing, researching and communicating online, but also to Millennials in particular “wanting more experiential experiences when they shop.”
Indeed, the nightly run may not be enough. Janji, for instance, for the second-straight year opened up a pop-up on Newbury Street to connect with Janji fans attending the Boston Marathon. The Boston-based firm also hosts workout classes and special runs, such as a recent 4 x 1 twilight relay. Finally, a particularly innovative event is Janji’s weekly Runners Tales, which Spandorfer described as similar to a Ted Talk where runners talk for five minutes about their journey as a runner.
“Those talks have been very popular and they carry a lot of meaning that goes beyond any sale,” said Spandorfer.
At Topo Athletic, the running footwear brand that launched in 2013 with a focus on ergonomic design, domestic sales last year were up 65 percent over 2015, and Q1 2017 sales were up another 65 percent, said Tony Post, CEO and founder. Despite the brand’s dealer base being only slightly larger than the prior year, Topo’s backlog is up three times.
“Any resistance we see in the market is driven more by dealers who are over-stocked, over-assorted and just not in a position to bring in new brands,” said Post. “Sadly, many are not able to take even 10 percent of their open to buy to try something new because they are too overbought in the same old things they’ve been buying. It’s too bad, because the consumer is much more willing to try something new — especially if it solves a problem or makes the experience better.”
Post said that although the market has become more competitive, brands that make good product at a good value will do well.
“At Topo, we only choose to sell one big box retailer, REI,” adds Post. “We don’t sell any of the national chains or mall stores, and we limit our presence online. I think our independent base of dealers really appreciates that. We focus on specialty run and specialty outdoor distribution, and work hard to deliver a good build quality and value.”
Altra founder Golden Harper said his brand likewise continues to generate strong sales with fast-turns at many accounts, but the gains are being limited because many shops have become more conservative with buys in the current climate or they’re “sitting on other stuff.”
Harper also noted that while some chains are struggling, others are doing well, including his family’s store, Runner’s Corner in Orem, UT, which is generating double-digit increases. He believes some stores remain “stuck in the way they do things” and aren’t adapting to a consumer that’s become more knowledgeable due to the vast information available on the internet as well as learnings from the minimalist phase. Indeed, he meets many runners who now purchase online because their local running stores advised them not to purchase the minimal or alternative models such as Altra they read about on the Internet.
“The consumer base has evolved farther than the stores have evolved,” says Harper. “There’s a lot of great stores out there that aren’t doing that, but the majority of stores are in that vein.”
Alberto Benarroch, marketing director at Zensah, the compression specialist, noted that while some accounts are “still doing great,” overall ordering has been more conservative. He observed, “There’s uncertainty and I think that’s why people are being a little more conservative, whether with orders or bringing new product in or bringing new things.”
He’s hopeful that some closings should reduce the overall competitive pressures. He noted, for example, that the city of Naples, nearby Zensah’s headquarters in Florida, had three running stores within a two-mile radius. He said, “There was a lot of running stores and now it’s just kind of coming back to a nice maintainable level.”
Doug Storer, CEO and founder, Night Runner, a device that clips onto shoes to light up the path ahead for night runners, launched last year and does the majority of its sales online but has about 55 smaller accounts across the country. An appearance on the Shark Tank show last fall particularly boosted sales.
Storer said the company has been “a little bit insulated” from the troubles facing overall retail, including the collapse of Sports Authority, since his focus in the launch has been on specialty. Said Storer, “We want to get it out to a wider distribution, but we’re a small company and we need to be careful.”
Photo courtesy Boston Marathon
