Monday, April 19, 2004

Outdoor retail world's little guys embrace

Expect to profit from big-box surge

The Indianapolis Star

INDIANAPOLIS - All around Ron Stolz's modest little ski shop near Castleton, Ind., the big guys are sliding in. Dick's Sporting Goods. Gander Mountain. And Galyans Sports & Outdoor's second area store.

"Every time somebody else comes to town and sells a tube or a pair of combo skis, that's something we didn't sell," said Stolz, owner of Skier's Edge. Stolz has come up with a seemingly unlikely strategy to ward off lost sales: Move his store - only miles from the rivals - even closer to them.

Stolz figures if you can't beat them, join them. So he's scouting a higher-profile retail spot nestled right among the giants.

It can only help his sales, he said, because what the chains don't have in specialty equipment and service, he does.

"We're the guys who really know our stuff," Stolz said of his store and the dozens of other independently owned sports and outdoor shops in the Indianapolis area.

That seems to be the way of thinking among the little guys, who say they aren't convinced that the outdoor retail chains flocking to Central Indiana will hurt them.

Less than two weeks ago, Pittsburgh-based Dick's opened stores in Castleton, Greenwood and Avon and has others planned for the area around Washington Square Mall and Carmel. Galyans is building stores this year at I-465 and West 86th Street and in Plainfield. Minneapolis-based Gander Mountain recently announced it will open its first Indianapolis store by May.

And yet another major outdoor retailer, according to retail analysts, is scouting the area. Springfield, Mo.-based Bass Pro Shops, known for its massive hunting and fishing stores, is said to be looking in the area. It already has plans for its first Indiana outlet, a 280,000-square-foot superstore in Clarksville across the Ohio River from Louisville, Ky.

As for the Indianapolis location, the retailer won't give details. "All I can tell you is we're looking at places all over the country right now," said spokesman Larry Whiteley.

Sitting in his tiny fly-fishing shop, Jon Widboom smiles at the thought of this burgeoning outdoor retail hub.

"Dick's is right across the street here. It's great. It's the best thing that could have happened to us," said the owner of FlyMasters. "We make our money on service and skill, and they don't offer that at the big boxes."

Widboom predicts Dick's and the other chains will draw the sportsmen to the area, and when they don't find what they want in those stores, they'll show up at his.

"The big-box guys? Their staff can regurgitate information the sales reps have schooled them on," he said. "They can sell you a fly-fishing outfit as long as all they have to do is scan the bar code."

At FlyMasters, the workers not only ring up sales, but also give lessons on tying lines and know just what product should be purchased, he said.

Dick's argues it can compete with that.

"On the specialty front, we feel that our individual departments do very well when compared to the smaller, specialty stores," said Jeffrey R. Hennion, senior vice president for strategic planning at Dick's. "We cater to the same customer base, from the beginner up through the avid enthusiast, and provide a broad range of high-end products."

In addition, Hennion said, Dick's larger size allows strong relationships with vendors that mean lower prices.

"Our stores within the store compete very nicely against any specialty player," he said.

Still, there's something to be said for a smaller specialty shop when it comes to service, said Larry Weindruch, spokesman for the National Sporting Goods Association in Mount Prospect, Ill. "A long-held truism is that the specialists cannot compete with price, but they can compete with expertise within their area of specialization - and they play that up," Weindruch said.

In fact, outdoor sales at specialty stores rose 2.9 percent to $1.7 billion in 2002, according to the Outdoor Industry Association. They did especially well selling specialized items like lumbar packs and three-season tents, the association said.

The chain counterparts recorded outdoor sales of $3.2 billion, down 2.8 percent.

It doesn't surprise Weindruch that the Indianapolis local shops are OK with the new guys coming in.

"What happens is, the big stores generally make a big splash with advertising, promotion," he said. "People want to go see them. But when people get into a sport and they really want specialized expertise, it's likely the specialty stores are the ones who will have that."

People comparing kayaks or high-tech climbing shoes - or customers like Brad Hughey of Carmel, an avid backpacker, camper and kayaker - will go to those stores first.

"I like dealing with these smaller outfitters because they know their stuff," said Hughey, 43. "I'll pay a little bit extra to know I'm getting the right thing for the right use."

Hughey, an assistant scoutmaster, shops an outdoor store about once a week. He and his sons, 18-year-old Justin and 13-year-old Joshua, go on about eight trips a year to sites in Indiana, Kentucky and Tennessee.

"It does you no good to go into a Dick's or Wal-Mart if you're not getting the right thing," Hughey said.

His store of choice is Extreme Outfitters in Carmel, opened less than a year ago, which caters to everyone from day hikers to hikers of the Appalachian Trail and the West Coast's Pacific Crest Trail.

The store offers highly technical gear for hiking, backpacking, climbing and kayaking - brands consumers won't find at the chain counterparts, said Dean Barkley, who owns the store with his wife, Jane Burwell. "We're where serious people buy," he said.

There's plenty of room for his store and the new guys, Barkley said. "I don't think there's a finite piece of pie out here," he said. "How many restaurants come to town? Do people stop eating?"

Burgeoning business

The specialty outdoor retailers are holding their own against the chains - which continue to expand throughout the country.

Specialty outdoor sales

$1.7 billion / Up 2.9percent

Notable sales trends / Change
Lumbar packs / Up 36.0 percent
Child carriers / Up 21.5 percent
Sunglasses / Up 6.0 percent
Sports sandals / Up 16.0percent
Three-season tents / Up 11.8 percent

Chain outdoor sales
$3.2 billion / Down 2.8 percent

Notable sales trends / Change
Apparel / Down 11.4 percent
Footwear / Down 4.8 percent
Equipment sales / Up 4.2 percent
Daypacks / Up 47.0 percent
Child carriers / Up 33.0 percent

Note: Annual sales figures as of June 2002 (most recent data available).

Source: Outdoor Industry Association

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