Competition Gaining on Running Gear Stores

By JAN ELLEN SPIEGEL
Published: February 7, 2008
Some of the stores are seemingly no bigger than a closet and their wares fairly limited. But for a generation, specialty running stores have managed to survive — even thrive — around the country despite competition from the big chains and online and mail order outlets.

These small stores may be at a turning point, though. They face newly invigorated competition from bigger players looking for a piece of their profitable action. Chief among them is Road Runner Sports, a 25-year-old mail order (and now Internet) powerhouse based in San Diego. The company is opening its 19th store this month, and its president and chief executive, Michael Gotfredson, has a goal of 100. The Road Runner stores offer the same personalized service as their specialty rivals but are far bigger (8,500 square feet of selling space, on average) and have a more extensive inventory.

At the same time, the specialty running stores are, in effect, graying. Some of the pioneers of the genre got into the business more than 30 years ago, and are now close to retirement age, many without a succession plan.

“I think a lot of specialty stores are at a critical juncture,” said Tom Raynor, chairman and chief executive of Fleet Feet, which started in 1976 and now has 80 franchised stores nationwide. His company, he said, has a mechanism in place to help retiring owners of stores. But, he added, other small-store owners “don’t have any good viable exit strategy.”

“The hope that they’ll sell the business for a million bucks and retire to Tahiti is not reasonable.”

For the time being, though, the small running stores are strong.

According to a survey by the Leisure Trends Group in Boulder, Colo., there are more than 700 specialty running stores representing about 450 owners around the United States. In 2006, they accounted for $596 million in sales. Figures for the first half of 2007 showed a 12.4 percent sales increase over the period in 2006.

“The species is strong,” said Mark Sullivan of Formula 4 Media, founded in 2005 to harness what he and his partners saw as a huge potential in specialty running stores. The company helped start the Independent Running Retailers Association; it publishes a newsletter and holds an annual conference and trade show called the Running Event, which has grown by about 40 percent to 600 participants in its two years in existence.

“Right now as a class of trade, running specialty is hot and has been hot for the last three years. If you opened a running specialty store in the last three years and you could walk and chew gum, you would do O.K.”

But Mr. Sullivan agreed, “It’s about to stiffen up.”

Gary Muhrcke, who won the first New York City Marathon in 1970, was one of the first people to ride the early wave of interest in running into the running business — selling shoes from the back of his van in 1976. Now 67, with a thin runner’s body and a shock of gray hair, Mr. Muhrcke owns Super Runners Shops in Manhattan and in Huntington, on Long Island. Personal service with shoes, in particular, he said, is the reason for his longevity.

“I can’t see the shape of a person’s foot over the phone,” he said. “I can’t do a gait analysis over the phone. I can’t look at a person’s body structure or size or whether they’re bowlegged over the Internet.”

He added, “The basic reason why we’re still here — we’re needed.”

Still, he said, he would entertain offers to buy his stores, “without a doubt.”

Mr. Gotfredson of Road Runner Sports said he believed that his stores and catalog dovetail, more than compete, with small stores. But specialty running store owners are generally not happy to see Road Runner coming.

“It’s a fact of life some people will do anything to save $3 so they’ll come to our store and get fitted and then go up the block and buy it there,” said Leanore Gallardo, whose flagship Metro Run & Walk in Falls Church, Va. — one of three she owns in the Washington area — is about to face a Road Runner Sports a mile away. “Only a fool would not be concerned,” she said.
It complicates plans by Ms. Gallardo, 62, to sell her store and retire. “It’s a concern that I think about every day of my life,” said Ms. Gallardo, who has already had one sale fall through.

That is why Julie Francis, 49, who opened a store in 2001 called soundRunner With No Boundaries in Branford, Conn., told her son Preston, 24, that he had five years to decide whether he wanted to take over the business. He runs a recently opened second store in nearby Madison.

Ms. Francis, like virtually every owner, vendor, industry analyst and runner, attributed the success of specialty running stores to three factors.

First is the running shoes — the most important product running stores sell, accounting for about 60 percent of sales. Stores have made their reputations on the ability to fit customers personally and properly.

“I was running actually in the wrong shoes for years, and I was getting injuries all the time,” said Sarah Vaughan, 52 of Hamden, Conn., who said she had bought shoes at chains like Sports Authority before trying soundRunner five years ago. “They looked at my foot and the shape of my foot and the kind of running that I do and they put me in the right shoe and I’ve been injury-free since.”

Second, the stores have adapted through the years to a broader clientele of fitness runners and walkers, half of whom are women. They are not just for elite runners anymore.

Data from the National Sporting Goods Association for 2006 found that 20.6 million people identified themselves as frequent or occasional runners and 68.9 million as frequent or occasional walkers.

The specialty stores have also assumed a role in their communities, sponsoring races, clinics, training, medical referrals and social networks. Consider, for example, Saturday mornings at Common Grounds, the coffee shop next to the soundRunner in Branford, which is usually crowded with three dozen runners of all levels socializing after group runs.

“You’re getting the whole package there,” said John Febbraio of Guilford, Conn., 55, who started running after his wife began three years ago through a clinic at the store. “Everything you need — advice and merchandise and friendship.”

A fellow coffee drinker, Jerry Turk, 49, an ultra-marathoner, said he liked the training camaraderie the store provided, but tended to buy his equipment online from Zappos and Sierra Trading Post. “It’s availability and price,” he said, pointing to his feet. “This particular shoe I couldn’t find anywhere else.”

But vendors like Asics, Nike and Brooks say they still see the specialty running store as the best market for their products.

“It’s introducing our brand to people a pair of feet at a time, and that usually happens at a specialty store,” said Jim Weber, the president and chief executive of Brooks. He said the company places 80 percent of its products in specialty stores. “Over the last 10 years,” he said, “our bad-debt losses have been large accounts and almost none in specialty running shops.

“No one does it better than a running store.”

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