Survival Of The Fittest

America’s specialty running shoe retailers continue to survive, and in many cases thrive, despite the rise of online commerce, big-box store discounts and a tough economy. How are they doing it?

On Nov. 5, the day before the 2011 ING New York City Marathon, I visited the New Balance Experience Store, which opened in August, on 5th Avenue and 20th Street. It’s a swanky establishment with theater acoustics, bleached hardwood floors, brick walls and full-spectrum lighting setting off Lifesaver-colored displays of apparel and shoes. Near the back of the store is the New Balance Testing Center, which houses a treadmill for gait analysis and a lane of synthetic track that extends through a corridor and into a crash pad.

The coolest thing: At the front of the store in what looks like an elaborate DJ booth is an operating shoe-building lab, which showcases that New Balance continues to make some of its shoes in the U.S. During my visit, a young man named Carl was making NB 880s. He would wrap fabric around a last and center it on a foam midsole, checking featherpoints to ensure the alignment was exact. From there, the shoe-in-the-making went through several machines, including one called a sole press, exposing Carl’s creation to 126 degrees F and 45 PSI. He then used a “delaster” to pop the shoe off the last and showed me the completed product. My inner shoe geek emerged; watching Carl glue the shoe together was a highlight of my day.

The New Balance Experience store is a corner running shoe store on designer steroids.

More from Competitor.com: Once A Running Shoe Salesman

I recall how the dynamics of business in the early aughts applied plenty of pounds per square inch to specialty running shoe stores. The discounts offered by big-box retailers were one thing, but the rise of discounts on shoes sold through the Web was another. As a former specialty running shoe sales guy, I will tell you that it’s a depressing feeling to spend a half hour or more playing matchmaker with a customer and their perfect shoe only to hear them ask, “Can you write down the name of that shoe for me? And the size?” It happened to me plenty of times—at my feet would be four or five pairs of shoes that needed to be re-boxed and returned to the stock shelves. I watched customers walk out knowing they were going home to order the shoes online for a $5 discount.

There were big-box stores, mail order and then the new potential enemy: the concept store. Some time ago, when I worked at Hoy’s Sports, a running shoe store in San Francisco, Niketown came to the city. It resembled a theme park more than a shoe store. I recall the first time I stood in the running department. There was a glass case that contained six-time Ironman champion Mark Allen’s open logbook. The apparel hung sensationally in lighting that was surely done by Steven Spielberg. If you asked to try on a pair of shoes, a space-age elevator machine delivered them from the depths below the store. I descended down to the first floor on escalators, awash with music and imagery, and thought about the good old running shoe store in which I worked, where it just so happened we sold our share of Nikes. I remember thinking, “How are we going to compete with this?”

How are we going to compete with this?

Since then, online commerce has become an even greater giant, and Nike has other concept stores to ward off, such as the New Balance Experience Store. Yet, I know for a fact that specialty retail stores continue to stay in business. My question is, how is this possible?

Back in New York City, after watching a pair of shoes being made right before my eyes, I walked downtown to Jack Rabbit Sports.

Located on 14th Street, a block and a half west of Union Square, the store’s logo, a funky yellow rabbit, bounds across a black background running, cycling and swimming. The rabbit is also cast in a yoga pose.

Just inside the door is a broad chalkboard calendar that runs to the ceiling. “Novemburrr!” is written at the top and various workouts and informational sessions for the month, such as “Marathon Info Sessions” and “Urban Trail Runs” are listed in the spaces. The chalkboard calendar is an extension of the myriad training programs, from 5K to marathon schedules to swim programs for all levels—all reminiscent of the types of clinics and programs that running specialty retail pioneer Garry Gribble instituted in his running sports stores for runners and triathletes in the Kansas City, Mo., area many years ago.

Near the rear of the Jack Rabbit store is the shoe wall and a sign-in desk if you would like help from a salesperson. Video screens and cameras are hooked up to a series of treadmills for gait analyses. The sales people are friendly and numerous. The store is busy.

Under the duress of having to compete with big-box retailers and online commerce, Jack Rabbit Sports is an example of how specialty retail running shoe stores have evolved in the last 15 years in order to survive and, in a number of cases across the country, thrive.

In 1978, as a teenager, Luke Rowe sold his first pair of running shoes at a store called Racquet and Jog in the Washington D.C. area. After serving in the U.S. Army, he returned to the specialty running retail world, eventually moving to Brooks and working his way up to vice president of sales. Since 2003, he’s worked for Fleet Feet, a national chain of specialty running shoe franchises, and is now the VP of business development. I asked Rowe about the competition facing the neighborhood running shoe store.

“These things do hurt,” he says, speaking about big-box stores and online dealers. “In tough economic times like these, the online operation can simply drop the price. Running shoe stores that have been hurt have not been prepared.”

I asked him what sort of strategy Fleet Feet has implemented to remain competitive.

“For us, it’s been about education and staff training,” Rowe said. “We look at these things as the lifeblood of our business. Four and a half years ago, we conducted a study and realized that our sales staff didn’t have the confidence in their knowledge that they wanted.” Since then, said Rowe, Fleet Feet has been aggressive about training its on-the-floor sales force in topics such as biomechanics, injury prevention and recovery—issues in which customers often want guidance. Rowe adds that successful running shoe stores take pains to make sales floors more inviting and inclusive as opposed to resonating any sort of running elitism. “We want our stores to be warm and welcoming,” he says. “We don’t want our staff talking about their 10K times.”

The Customer Experience Is Key

Amanda Charles is the general manager of the Boulder Running Company in Colorado, which has stores in Boulder, Denver, Colorado Springs and Littleton. Charles is also struggling to compete with the rise of Internet shoe sales, as well as other threats. “I think about that a lot lately and I believe it comes down to the customer experience in the store,” Charles said. “That’s why people come to a local store.”

Charles explained that one of Boulder Running Company’s mandates is to develop a sense of community. “It’s about emotional connection. We’re there to help our customers believe in themselves,” she said. “Our message is that if you run even just once or twice a week, it’s OK to think of yourself as a runner.”

To help build its running community, the Boulder Running Company, like many specialty running shoe stores these days, holds a variety of group runs and walks during the week. There are also clubs designed to encourage kids to participate. Most famously, the Boulder Running Company sponsors Jack Quinn’s Tuesday night runs, a weekly event that draws upwards of 800 runners of all kinds, held at the Jack Quinn’s Irish pub in Colorado Springs.

The Boulder Running Company is also looking to lure raw newcomers. For example, a common barrier of entry into the running world is obesity; an overweight person can simply be too heavy to run without joint pain. The Boulder Running Company now holds boot camp-style workouts, in the fashion of P90X and Crossfit, to help newbies get fit enough to run.

“We have one woman who has lost 110 pounds this way,” Charles said. “The cool thing about this is that we’re creating runners. Soon they start showing up for other events, such as their first 5K.”

Supporting The Community

Of course, supporting the community has long been a key role played by running shoe stores, and in places with relatively small populations, this role is even more critical to business survival. Recently, in my hometown of Cedar Rapids, Iowa, I stopped by Running Wild, a small specialty store managed by Jim Dwyer. Looking around the store I saw a treadmill next to a huge poster of Steve Prefontaine, two shoe walls and a sign tacked to the wall that caught my eye.

“To those of you who will be purchasing your running shoes online, ask yourself two questions: 1) When was the last time you saw your Internet shoe company sponsor a local road race that you like to run? 2) When was the last time you saw your Internet shoe company support fitness and running in your local schools? To those loyal customers of Running Wild, THANK YOU!”

Dwyer said his main strategy for competing with Internet discounting and big-box stores is customer service and the basics of a proper shoe selection and fit. But he also said that he takes this value outside of the store with clinics presented at local companies and corporations, where the rising costs of health care insurance have prompted businesses to encourage healthier lifestyles.

However, despite all of their best efforts, specialty running stores will still have to relinquish a percentage of shoe and gear sales to the behemoths. “No business is ever going to have the right to 100 percent of customer dollars,” Fleet Feet’s Rowe said. “Perhaps some percentage of runners will only buy their first pair of shoes from us.” Rowe says that this is business—you take that first pair of shoes sold as a positive, and continue improving and doing things well to build on it.

One thing is for sure: If there’s a specialty running shoe store around the corner, and its business is successful, you know they have something good going on.

This piece first appeared in the December 2011 issue of Competitor magazine.