Get in the Game!

There is little doubt that the era of big time sports has been upon us for quite a while. Nothing stirs passions amongst North Americans like a great inter-state rivalry or an intra-divisional clash of teams from different (or even similar) geographic regions and/or cities. I acknowledge that there may be more passionate fans globally when it comes to the “beautiful game” of football (or soccer as it is called in North America), but I want to focus on the retailing efforts of a couple of the big name, major sports leagues that North American fans tend to revere. I also acknowledge North America’s efforts surrounding Major League Soccer (MLS) and the merchandising and marketing muscle of professional wrestling and NASCAR.

Because of the passion and the amount of money now involved in today’s big league sports (Major League Baseball (MLB), National Football League (NFL), National Basketball Association (NBA) and National Hockey League (NHL)), marketing these leagues is very big business and there is no expense spared in order to position or “brand” their league and logo to the general population. Admittedly, hockey ranks behind the “Big 3″ but this means they are required to create even more buzz and energy surrounding their product because of their standing.

That is why I find the stores that two of these leagues have built and operate within blocks of each other, fascinating (I have yet to see an NFL or MLB store).

The NBA store, which is on very tony and very expensive 5th Avenue has been around for a while and is certainly a full expression of the game it serves. It is noisy, packed with merchandise and offers a variety of activities which provides just enough entertainment. Anything related to the selling of NBA logo merchandise is pretty well available somewhere in this store. It takes a while to meander the entire place on two floors and there are interesting little rooms to explore. I have never been disappointed with respect to being in stock in any type of player or team jersey I have asked for or even in an obscure NBA logo item like a Timberwolves lunch box. They had it.

The contrast is evident when you then head a block west to Avenue of the Americas (6th Avenue) into the shiny new NHL store “Powered by Reebok”. I am not sure what the arrangement was between these two titans but the store is not a good reflection on either brand, especially when you compare it to the NBA store. You would think these guys would have gone to school on that basketball emporium.

The NHL store is a stark, white room with an exceedingly high ceiling, with very little merchandise available. There are the requisite large screen televisions blasting the NHL Network feed to anyone who cared (mainly the staff). The mezzanine in the back of the store (almost like a balcony) houses the studio for NHL Commissioner Gary Bettman’s XM Satellite Radio show.

The merchandise assortment was pathetic, but then again, hockey is not the most popular sport in the U.S., so why carry much merchandise if you aren’t going to sell it. Correct me if I am wrong, but the goal of these types of stores is not necessarily to become cash cows, but to be brand beacons. Am I mistaken? This is an incredible opportunity to show Americans from all over the U.S. and tourists from all over the world (as Manhattan surely is a magnet for all of those) what the NHL is, where it has been and where it is going through their merchandising. Yes, all leagues have internet presences (and a dictatorial attitude surrounding the look and feel for some of the leagues – hence the importance of branding online at least), but the one place with the league name on the door, where customers can physically interact with the brand and the product is their very own store. The NHL flat out blew it.

My cousins visited both stores in Manhattan recently. Their sons are huge hockey fans from “Hockeytown”, U.S.A. (Detroit, reigning Stanley Cup Champions). All one of the sons wanted was a particular player’s sweater from an “Original Six” team. No stock was available and they couldn’t even make one up for him. What is the purpose of the NHL store, if they cannot satisfy the fans desire for basic merchandise? Not to mention, there was no breadth or depth to the assortment and the visuals were lousy. This should be a hockey fan’s nirvana. All my cousin’s son wanted to do in Manhattan was visit the NHL store. They walked out empty handed. But they walked over to the NBA store and loaded up with stuff. Does that tell you anything?

The NHL have clearly missed another opportunity to brand themselves as belonging in the big leagues when it comes to marketing and reaching out to their fans. Maybe instead of Reebok’s money, they should spend some of their own so that hockey fans can get a similar retail experience to basketball fans.

TheRetailTherapist

Invasion of the Blanket Snatchers (Part II)

Is it Deja Vu all over again or just a continuation of the saga of the Hudson’s Bay Company (HBC)?

No one’s really sure. Although it certainly makes me think of the movie “Groundhog Day”: Wealthy American purchases Canadian iconic retailer and names a senior American retail executive to run the show. Repeat. Again.

It hasn’t worked before so why does anyone think it will work again?

They really should change the script.

I happen to understand that things were at least more profitable these days under the late American Jerry Zucker’s reign. But no one really knows for sure as it is a private entity. One thing is for certain, the dilemma of what to do with an out-of-date department store concept and a second fiddle of a discount chain (whose stores come in so many different shapes and sizes) is still not resolved. Everyone wants to talk about real estate values, but they only actually own one location in downtown Toronto. There may be some favourable terms negotiated on some of their leases but the landlords won’t just let them sub-lease at the drop of a hat.

The Bay department stores haven’t really changed that much. Their exclusive apparel licensing arrangement with U.S. department store giant Federated (or Macy’s I forget which) may be terminated seeing as Lord and Taylor is now stepping into HBC’s deerskin slippers. The aisles are still crowded, the merchandising is a bit boring and every other retailer, specialty and big box alike, has taken market share from them. There is no compelling reason to shop at The Bay.

Zellers is another story. Wal Mart has absolutely decimated all retailers that deemed to play even remotely in their arena. Now they are coming after another Canadian icon, in groceries this time. G-d help Loblaws.

Zellers, with about 380 doors, caters to that same audience and has been unable to gain any traction like Target has been able to glean south of the border. Their stores are still uninspiring, their mix is eclectic at best and a lot of their stores are way too large for their markets.

If anyone has a shot, I guess a real estate expert and his already burgeoning retail empire might be all that’s left to try and salvage this beast. They were quoted as saying that this is not a real estate play (although everyone who has looked at this seems to claim that’s where all the value is) and that they can probably open 12-15 Lord and Taylor stores in Canada. Where, pray tell, other than maybe 2 in Toronto, 1 in Vancouver, 1 in Calgary and 1 in Montreal (if it’s even worth it to translate everything for one store).

I certainly wish them luck but I have thought for a long time that Zellers needs extra cool factor and wow merchandising and The Bay should look at the Japanese department store model which actually rents out space in their stories high stores to the best, hippest and most productive specialty retailers and makes a very tidy profit doing so. If you aren’t productive (and we are talking close to $2000/sq.ft. minimum) they terminate your lease and replace you with someone who is more so.

Maybe that is what we should do with the new owners…they should have 12-24 months to become productive or their time in Canada should be terminated…

TheRetailTherapist

Golfers’ Disneyland

It’s not often my thirteen year old son gets excited about a retail establishment. He doesn’t particularly like shopping (although his Mom and Dad do) and he can’t wait for it to be over most of the time. However, when it has to do with sporting goods or athletic shoes, he is interested. What I didn’t count on was the incredibly positive reaction to one particular store we walked into in Scottsdale, Arizona.

I was on a bit of a mission since I always enjoy going into golf stores to see what the latest equipment looks like and maybe I can pick up a putter that will finally allow me to reach my true potential . So, off we went to visit a few golf stores. We walked into Golfsmith, a 40 year old retailer from Austin, Texas which has a rich history and genuine heritage in club making. It is a nice store, about 15,000 square feet and it carried a more than adequate assortment. They had a couple of hitting stations at the back and a club making area where you can oversee the making of your very own set of clubs.

We looked at a few things, obviously didn’t feel very inspired to buy, but we also knew we wanted to check out different stores. Back in the car we went and drove not 5 blocks to something called PGA Superstore. When we walked in, I think my teenager’s eyes almost fell out of his head. The place was enormous at about 100,000 square feet. It was a golfer’s Disneyland. There was so much activity and buzz inside that store, you were swept right into the heart of the store. You didn’t know where to look first.

On the right hand side were at least a dozen hitting stations with real live lessons being conducted by teaching professionals. There was a full aisle for each hard goods manufacturer to show off their latest merchandise and more than enough room to show last year’s as well at very attractive prices. Everything was “Supersized” in this store. More bags, more club covers, more umbrellas than I had every seen anywhere.

On the left hand side was all apparel. Aisle after aisle of every make and label you can name. From high end down to basic utilitarian corporate golf apparel. The prices seemed to be holding although there seemed to be rotating promotions based on each label or manufacturer.

At the back, they had the largest indoor putting green we had ever tried and we spent a good 30 minutes on that green. All the while, the Golf Channel is blasting across the airwaves with dozens of high definition televisions scattered around the store so no matter where you are, you have a great view of the action. They had concierge services for booking tee times and golfing vacations and the staff and the vast number of customers all seemed immersed in the golf experience. This is what experiential retail is certainly all about.

You felt like you transcended to a different place when you walked into and around the store. It felt like you were being inspired to try new things and explore different avenues in and around the game of golf. It had everything you could ask for, for any golfer. It might also inspire some non-golfers to take up the game based on just one visit.

For my son and I, it was refreshing and motivating. He now is prouder to be taking up the game and has taken his interest level one step higher because of that one visit. As for me, well, I have always loved the game but I have now seen a re-birth of experiential retailing (the likes of Build-A-Bear and American Girl are also part of that resurgence) and am excited about the possibilities. I am a tad concerned about the financial model for this size store, but if they are able to manage it properly, this could be dynamite.

My eldest son and I can’t wait to go back for another exciting ride at PGA Superstore, and we may even bring the whole family next time.

TheRetailTherapist

Ubiquity is Everywhere

It didn’t come as a total shock to anyone (even its customers) that Starbucks announced they were closing over 600 stores in the United States (of 11,000). This may seem like a lot of stores to write off and a lot of people to lay off, but in the scheme of things, less than 6 percent of their portfolio is not that significant. However, symbolically, it is huge.

What this really means is that the strategy of putting a Starbucks on every street corner has not worked over the long term and that like anything else, too much of a good thing is, well, too much.

Starbucks is not the only culprit who headed down this strategic path. Gap Inc.’s Gap Brand also committed way too many stores and in sizes too large to be able to sustain a healthy dose of productivity. Whether it was in Manhattan where you see their blue box signs on virtually every other street corner or in every mall in addition to street locations nearby. Not to mention the fact that it seemed that every location Gap had opened a store, the very same parent company would open an Old Navy store, which sold product very similar to that of Gap’s at 30 percent less. This has created about half the problems the company is still enduring. Their new CEO Glenn Murphy has already stated that they will close stores and downsize their portfolio.

It is a delicate balance between replicating your offerings in as many places as possible to leverage your infrastructure and maximize a brand’s potential and profits, and reaching some sort of diminishing returns over the long run as one location cannibalizes another and productivities start to wane and the leverage starts to roll backwards.

My preferred approach is that taken by Urban Outfitters. Their deliberate, measured approach to expansion, more fueled by the development of different concepts than by an over saturation of any one concept including their namesake brand and ever-popular Anthropologie. Although Wall Street may not have been their biggest fan because of their somewhat cautious approach, it ensures that their productivities remain high, their concepts remain destination oriented and their offerings remain special.

My sense is that with the slowdown in retail spending that is currently taking place, those that remain selective in their expansion plans will emerge more successful and better able to ride out the storm as they will have fewer weaker store performers.

It is also about time that specialty retailers take cues from their more sophisticated larger box cousins, who have spent an inordinate amount of time and resources to analyze and develop a sensible and practical long term real estate strategy. It is not only about replication, it is also about avoiding the traps of over-expansion and misplaced ego.

The more special you are, the more shock-proof you become in any kind of environment.

TheRetailTherapist