A Softening Market?
While soft-goods dealers are optimistic, uncertain times are forcing some changes in how they do business.
For apparel and footwear dealers, uncertain economic times are challenging in many ways. Will your players start cutting back on or delaying tennis apparel and tennis shoe purchases? Will you have the credit you need to stock your shop properly, or expand your storage area? What should your strategy be when ordering product?
The good news for retailers, at least for now, is that tennis participation still seems to be on the upswing, and players, for the most part, still appear to be buying.
“If the influx of new people over the summer is an indication of what’s to come, then we’re expecting another great year,” says Michael Lynne of Michael Lynne’s Tennis Shop in Minneapolis. Lynne says that while people are concerned about what will happen next with the economy, “They don’t seem concerned about buying tennis supplies.”
At Racquet World in Miami, owner Leon Echevarria agrees, and while he’s wary of what may happen on Wall Street, he remains optimistic. Business, he says, has been increasing monthly, both at the retail store and on his website, where sales have been brisk. But, he adds, “It doesn’t mean that business will be good for everyone.”
For instance, in Atlanta, Coach Matt’s Tennis owner Tiffany Grayson says the economy and fuel shortages in the area are already impacting her business. And the suddenness of it all took many by surprise, demanding quick action and savvy decision-making. Grayson says she’s finding that, “People will replace worn-out shoes, but they are willing to forego apparel purchases right now.”
Chris Miller, the marketing director for the Austin-based Golfsmith retail chain, says the tennis business has not slowed for his company, and in fact continues to grow more than the golf business. Golfsmith will soon open its 73rd store (in Palm Desert, Calif., which will include a full-size indoor tennis court); 58 of their stores have a tennis department.
“While we maintain a conservative approach,” says Miller, “we don’t plan on any major cuts, and so far we’ve been pleasantly surprised.” He says despite the economic situation, Golfsmith doesn’t foresee changing its strategy: “We don’t carry superfluous lines in apparel, footwear or racquets in order to rationalize merchandise.” But, he adds, “Managing inventory is crucial to accommodating your apparel and shoes.”
What To Stock?
Echevarria suggests that for smaller retailers, who really need to watch their inventory and bottom line, “A safe bet is to stick to proven brands — ones that have been around for a long time. The smaller companies may have attractive product lines, but they might be seeing more risk in the coming months.”
Bigger shoe and apparel manufacturers are marketing their brands much more aggressively and are offering attractive sales incentives, says Echevarria, and he thinks there could be some fallout and consolidation with some of the smaller makers in soft goods.
Grayson advises caution when ordering. “I’ve cut back my ‘futures’ ordering even though my discount may be greater when ordering further out,” she says. “I would rather pay a couple of extra percentage points and have greater flexibility on ordering quantities that suit my business at the time. So, placing a smaller future order with companies that have good fill-in programs has been helpful for me.”
This back-to-basics philosophy is something she suggests to retailers in a similar predicament. Rather than stocking masses of gift items, eyewear and accessories, Grayson has cut back on these categories and feels it’s better to order these specialty items as demand arises rather than, as she says, “spending lean buying dollars on non-core items I would have spent in the past.”
With the uncertain economic picture, Lynne also advises paying extra attention to reining in your inventory, bringing new looks into the story, varying displays, and re-arranging your stock frequently. “Some things might sell better in another part of the store,” he says, and retailers need to be on top of what’s moving and what’s not. One area that he’s found is doing well in his store is accessories, in all types and colors that have a “go-with” attraction.
Lynne says smaller retailers need to emphasize service. “We give amazing service, which is invaluable to our customers,” he says. “In tough times, you have to go that extra mile and spend more time talking with customers, being more personable — so that they’re buying something besides the products — you have to take the customer to the product and then sell the product.”
Lynne mentions footwear as an area where service is making a huge difference in his business. He offers shoes at suggested retail price, and they’re selling “like crazy,” Lynne notes, even though the big chain stores are offering discounts on the same items.
And regarding pricing, to help everyone maintain margins, Lynne says manufacturers should require all dealers to sell at MAP — minimum advertised pricing — and be more protective of the smaller retailers. “After all, the ‘little guys’ are the ones who initially put them in business,” he says.
Lynne suggests manufacturers take cues from their dealers to determine what kind of clothing and footwear they should produce. “Dealers know their customers’ wants and needs and they can provide more accurate information than a highly paid consultant who is far removed from Main Street,” he says.
“If more manufacturers cut clothing geared to ages 35 to 50, they’d make a killing because that’s where the consistent buyers are,” he says. Right now, “Everything looks alike, and not everyone can wear Nike,” which is geared to a younger fit.
From the manufacturer’s side, Bruce Fendell, vice president of sales for Fila, says that since his company is on the smaller side, “We’re looking at growth regardless of where our positioning is in the marketplace. Prices are a little higher, but Fila has added a lot of value. The important thing is we’re getting product volume out there and retailers seem to be happy to accommodate us with added shelf space.”
For retailers to compete, says Fendell, “the good ones are buying better, sharper. It’s also a question of controlling inventory.” He suggests saving money for off-price opportunities, and consolidating vendors. “Most stores are buying from fewer vendors now, and that makes you more meaningful to the vendors you’re dealing with. Consumers, in turn, are showing loyalty to these stores.”
Giant Nike says business has not suffered, possibly in large part due to exposure the brand gained at the summer Olympics. In the most recent quarter, Nike’s U.S. sales rose 8 percent, and the company says future orders overall are up 9 percent. Dealers, says one Nike official, are “stocking up, and consumers desire to keep up with the latest styles on the tennis court.”
It may be harder and harder to do, but small retailers need to stay optimistic, says Lynne. “Customers can sense your mood,” he says. “If you think things will be bad, then it will be. People don’t want to deal with complainers. It’s all about attitude — you and your employees always need to be upbeat.”
Tips for Competing in Tough Times
- To keep costs down, keep inventories lean and get “back to basics.”
- Emphasize and maximize one-on-one personal relationships with customers, especially if you’re a small retailer. This will help you maintain a loyal customer base.
- Vary displays and reposition stock frequently to make your store look “fresh.”
- Consider flexible hours of operation. Opening later in the morning and extending hours at night may allow you to reach more customers without needing to staff more hours.
- Keep big brands prominent, even if they’re the highest price in their category. People perceive value and will tend to pay for it.
- If you do business online, cross-promote your website with your in-store traffic, and vice versa.
Environmental Green vs. Financial Green
While environmentally friendly trends have been highly touted recently, retailers indicated that in these tough economic times, they weren’t particularly concerned about the issue.
In fact, Miami-based Retail Systems Research identified the biggest concerns for all types of retailers were higher fuel/transportation costs and energy consumption at the store level, despite the move on manufacturers’ part to more globally green initiatives.
In tennis, while some manufacturers have introduced organic materials into their apparel (including a line of official US Open merchandise), at the store level, retailers don’t appear to be hopping on the bandwagon. In fact, some questioned why manufacturers are spending so much money in this area.
“I see no significant return on investment for environmentally-friendly clothing and footwear that may cost more,” says one retailer. “And in these financially strapped times, consumers aren’t that interested, either.” — C.S.
See all articles by Cynthia Sherman
About the Author
Cynthia Sherman is a contributing editor for RSI magazine.
RSI magazine search
RSI magazine articles
- Industry News
- Retailing 125: Plan Your Holiday Gift Guide
- Catching Up With Catarina Lindqvist
- Accessories: Keeping a Grip on the Racquet
- Equipment: Prince Shows New Product, Strategies to Key Dealers
- 30 under 30
- Apparel Preview: All-court game
- Footwear Preview: Running in place?
- Ball Machines Step Up The Game
- Your Serve: Creative Solutions to Filling Open Court Time