Specialty Running Retailers Dish on Business, Brands & More.
Specialty Running Retailers Dish on Business, Brands & More.
Runners who are training for that next big race, no matter the length, require discipline and the ability to weather the elements and stay the course.
In many ways, the same can be said for the run specialty retail business, which has faced positive and negative impacts from a global pandemic, inventory shortages and gluts, and a steady stream of challenges to maintain the channel’s vitality and growth in recent years. The run specialty retail channel, which enjoyed a strong start in 2023 due to a mild start to winter on the East and West coasts, is forecast to grow by high-single or low-double digits this year, according to Terry Schalow, executive director for the Running Industry Association (RIA). This spike comes on the heels of epic growth — from 2020 to 2021, it’s estimated that sales in the overall run specialty channel rose in the 20 to 30 percent range.
Heading into the important spring/summer season, certain brand inventory shortages and excess product from others appear to be easing. Shop owners are crediting some vendors for tackling these issues head-on and are warming to brands who are mixing up their assortments and showing renewed commitment to the segment. (Puma is one such brand that was namechecked positively by a few running retailers we recently spoke with). Hoka, a heavyweight in the specialty running category, is said to be currently delivering on close to 100 percent of fill-in orders for many of its run specialty customers, up from levels as low as 10 to 20 percent previously. On, which delivered 80 percent sales growth in North America last year to more than $735 million, is promising to deliver 42 percent currency-neutral overall revenue growth this year as it tightens its focus on running and younger consumers and eyes further expansion into tennis. Nike, vowing to make noise with a more tightly focused, updated line-up of running shoes over the next 6 to 18 months, is already creating category buzz with updates to its Vaporfly concept despite recent brand inventory woes that are expected to subside greatly by June 1. But the Swoosh is estimated to have only 3 percent of its overall business generated by the run specialty channel today, one industry expert opined.
Brooks Running, which recently announced plans to invest $10 million over the next five years in Future Run, an initiative to support youth in the U.S. and help them discover the benefits of the run and its community, grew its global revenue by 6 percent in 2022 to $1.2 billion. The Berkshire Hathaway-owned brand and Hoka, owned by Deckers Brands, are collectively said to control approximately 45 to 50 percent of the U.S. run specialty channel today. New Balance, Wolverine Worldwide-owned Saucony, Asics and On are battling it out for the third, fourth and fifth slots in the channel with some industry observers betting on Asics to solidify its top spot in the second tier of run specialty brands this year, helped by a refreshed line-up of models. Asics’ FY22 sales in North America increased by 22 percent to $787.2 million, fueled by strong gains in the performance running segment.
Kris Hartner, owner of Naperville Running Company, told us that in his stores, Asics is “looking strong” and cited the Japanese brand’s GEL-Nimbus 25 as “a hit with a strong cosmetic look” and a “soft, bouncy comfortable fit.” He added that New Balance is “holding its own” and preparing for “some really nice” updates in 2024. Other cited “hot styles” in the channel include the updated Clifton from Hoka and the On Cloudsurfer. Hartner also estimated that 50 to 60 percent of his customers purchasing either Hoka or On styles are switching from other brands, a trend that suggests market share declines for other labels.
Meanwhile, Puma’s recent re-emergence in U.S. run specialty channel is said to be related to the brand’s expanded range of styles and double-downed commitment to the segment. The other German brand, Adidas, is on the comeback trail and is expected to have some fresh running innovations for Spring 2024.
“Puma has re-entered the performance running scene in a strong way by offering high quality shoes at very affordable prices,” remarked Will Henry, buyer at The Running Well Store in Kansas City. “This has helped our clients out a lot because they’re getting shoes that, in my opinion, are worth more than what Puma charges for them.”
Business & Price Points
During the first quarter, as average selling prices (ASPs) remained steady despite a stream of promotionally priced styles, the number of units and dollars spent on running shoes rose by 13 percent, RIA’s Schalow told us.
Consumer sentiment about the economy and a possible U.S. recession has some experts in retail circles suggesting more customers today are looking to “trade down” in price point and product features when making a footwear purchase. That scenario doesn’t appear to be widespread in the run specialty channel.
“We have some customers trading down, although not as many as you’d think,” Henry noted. “While prices on our top-of-the-line shoes have gone up, so has the quality. When customers feel the quality differences, they’re usually willing to pay an extra $10 a pair. However, newer customers are much more aware of the prices.”
At Naperville Running, the store will regularly buy closeouts of a Top 10 style and put new and closeout versions side by side on the sales floor, Hartner said. “This one is $100, it was $135. The current version is $135. And it’s up to you,” describes Hartner. “A lot of people still want the new one. What’s new and cool? But a lot of people are like, ‘Oh, wow, that’s really nice. Thank you. I’ll take the $100 version of the shoe.’”
Amidst a price point discussion, it’s clear that quality product is what helps specialty retailers stand out. “We have not dropped our standard of premium product, premium staff and premium service,” remarked Thomas Morgan of Footzone in Bend, OR. “This is a game we can play quite well and while sale product has always been a small part of our strategy, we’d rather showcase our strength and create value rather than expect less based on market forces.”
At The Running Well Store, the biggest inventory challenge lately has been obtaining the right volume of color options in stock. “Many of our vendors have kept good inventory on a variety of color SKUs while also informing us which ones are booked and selling at higher rate so that we can gauge popularity ahead of time,” remarked Henry.
On the Shop Floor
The service level offered by retail run specialists remains an allure to the channel for both runners and non-runners alike.
“Our primary focus is our customers and listening to their needs,” Tammy Zito from Palmetto Running Co. in Bluffton, SC, told us. “This is where our team makes sure that it is providing an experience for the customer that includes making sure they are educated on his or her purchase. This may take more time, but we are 100 percent invested in providing that service.”
Apparel remains a tougher sell for the run specialty channel today, which has forced some run specialty retailers to narrow their offerings to fewer brands, while trail running is said to be on the rise among some consumers in the channel.
“Not just trail shoes, but trail-inspired apparel and accessories,” suggested Morgan of Footzone. “It’s a top to bottom identity for new and seasoned trail runners alike, even when they aren’t running. Fresh technical products as well as fresh looks are what keep that consumer engaged.”
The Running Well Store’s Henry has an optimistic outlook for the remainder of 2023, much like many of his colleagues in the business. Recession or not. “We’re greatly looking forward to it with loads of new and updated shoes being released, new store group run formats, and a grand opening for our flagship store,” he said. “The rest of 2023 should be a blast!” n