Running Insight 5.15.18 by Running Insight

RUNNING INSIGHT EXCLUSIVE

Anne Cavassa is taking over as president at Saucony.

Interview with New Saucony President Anne Cavassa Focusing on Product, Branching Out and Staying Consumer Obsessed.

BY JENNIFER ERNST BEAUDRY

a ucony has a new president — and she’s already breaking new ground. Today is Anne Cavassa’s first day on the job as the president of the Lexington, MA-based running brand. A merchandising and marketing vet, Cavassa comes to the firm (a division of Rockford, MA-based Wolverine World Wide) after spending three years at Seattle-based Brooks Running, where she most recently served as Chief Customer Experience RUNNING INSIGHT ® is a registered trademark of Formula4Media, LLC. © 2018 all rights reserved. Running Insight is published twice each month, is edited for owners and top executives at running specialty stores and available only via email.The opinions by authors and contributors to Running Insight are not necessarily those of the editors or publishers. Articles appearing in Running Insight may not be reproduced in whole or in part without the express permission of the publisher. Formula4Media, LLC, P.O. Box 23-1318, Great Neck, NY 11023. Tel: 516-305-4709.

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Officer. The exec has a deep resume at athletic and outdoor market firms, serving as senior director of merchandising for North America at Timberland, and GM of US retail for Nike’s Niketown stores. She also did stints at Ibex, EMS and Reebok. At Saucony, she is the first woman to hold the top spot at the company in its 120 year history. “[Anne] is a merchant, and she’s really strong in design,” said Richie Woodworth, president of the Wolverine Boston Jeff Nott....................................jnott@formula4media.com Jeff Gruenhut...................jgruenhut@formula4media.com Christina Henderson..... chenderson@formula4media.com Katie O’Donohue..........kodonohue@formula4media.com Sam Selvaggio.............. sselvaggio@formula4media.com Daemon Filson......................dfilson@formula4media.com

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Interview with New Saucony President (continued) Group. “And she’s a magnetic personality. One thing that helps define great leaders is to set a strategy, be decisive, understand the consumer and pull everyone along with them. And I think she’ll be great at that.” Cavassa assumes the presidency at a moment of transition for the brand. Sales were down in the mid-single digit for the first quarter of the year, and Wolverine President, Chairman and CEO Blake Krueger said carryover drag from fit and quality issues in 2017 would hamper sales into the second half of 2018, with only low-single-digit growth forecast for the year. NPD analyst Matt Powell said Saucony is facing similar headwinds to other performance athletic brands in the mass market. “The nature of fitness has changed and the brands and retailers haven’t made that adjustment,” he said. Noting that the brand was still a top brand in the run specialty channel and a top-10 brand in the mass market retailers, he said accelerating growth in a flat market would be the challenge. Woodworth said Cavassa is taking the reins at the brand at an auspicious time. “At Saucony we’re right in this reset, and I think that reset goes back to our roots, which I would describe as owning the core in the running business and the consumer that lives in that world,” he said. “Again, it’s no secret, we’ve lost some marketshare there, we’ve had some issues around fit, but it’s completely fixed and we’re back on upward swing. She’s coming in at a great time to accelerate things.” Speaking exclusively to Running Insight, Cavassa sounds off on the importance of the RSA channel, new opportunities and her priorities at the brand. As you take over the top spot at Saucony, what are the big-picture industry issues you’re thinking about? a9 var Kin y con Sau

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Cavassa: “What’s top of mind for me is women. The women’s market is driving growth and no surprise there, because she embraces performance and style and all of it, right? There’s not a separation. And then the price compression as it relates to the running industry — and it crosses far beyond running — but that’s really challenging for a true performance brand. This isn’t unique to Saucony, but it’s definitely a

challenge that we have to solve.” What opportunities are most promising for the brand as you join?

“Honing the product engine will really be a main focus, and then extending the brand in places that make sense for an innovative running brand. We’re looking at trail running, we’re looking at women’s, and then of course Originals. And we’re really, really staying committed to the performance core and innovation.” Brands across markets are trying to balance their own digital direct sales efforts with their retailer partnerships across different channels, specialty run included. How will you be evaluating and creating that balance?

“Today it’s all seamless, right? The consumer wants product where they want it, when they want it. And operationally that’s challenging, especially for brands that have a history that is brick-and-mortar and wholesale. That shift [to a more seamless model] has to happen; the consumer is demanding that. We have strong partnerships in specialty run and will continue to drive those and defend that core and get back to thought leadership there. Being on the forefront of innovation for runners will certainly benefit the channel, and everywhere that runners shop. I think we have an opportunity in existing channels to have stronger presences and more product. That is priority A-No. 1, for sure. From there, we’ll be digging in as a team and identifying where we’re go in the future.” Sales in the performance world have been challenged — by and large, it’s smaller firms like Altra, Hoka and On Running that have seen share gains. What’s your plan to get growing?

“I don’t think it’s going to be an easy task. With smaller brands there’s motivation and they’re very nimble and they aren’t defending a core — they’re going after the future. Saucony’s in a place where we’ll be doing both. Running and even runners have been slow to demand beautiful product because it’s such a functionally based [purchase]. They’ve been willing to say, ‘I’m going to buy this shoe whether I like the look of it or not because it’s going to help me.’ But that is old thinking. Saucony has made humongous strides in the past years and they

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Interview with New Saucony President (continued) have some really gorgeous footwear. [Going forward,] honing and driving Saucony design will be the focus.” You mentioned the Originals business as one that has potential for the brand. As you consider the opportunities in the lifestyle market, will you focus on heritage lines or on the lightweight, versatile styles that blend performance and casual that have done well for brands like Nike and Adidas?

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“The Originals business is very strong. It extends that relationship with the runner and the consumer, and we’re finding we have really strong business [there] in Europe, especially in Italy. There is opportunity in Saucony Originals within the existing strategy where it sits today, and there’s growth within what already exists. But that crossover, versatile product you mentioned? I believe that every good brand right now is really focused on consumer insights to find out what the opportunity there is — including Saucony. We will really dive hard into that, because I feel the answers to those questions take the brand into the future, and that’s where the innovation will happen.” You have a deep background in apparel, an area in which Saucony — like most performance running brands — has seen mixed success. What elements are going to be critical to growing that category?

“It comes down to Saucony’s unique point of view on product itself and really honing in on a design aesthetic that’s unique to Saucony, that you cannot purchase anywhere else. And when I say design, it’s about technology and design and

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pricepoint and all of those things together. It’s about the product line. It’s also about convenience and where you shop and how you shop. Buying apparel now is like going grocery shopping: You can get it anywhere. So I really want to step back and answer that questions specifically for Saucony as to what the most appropriate growth strategy and positioning for Saucony is, and where the brand wants to go.” What drew you to the Saucony brand?

“Saucony has 120 years of this history of innovation and being really focused on trying to make life and products better for people in the community. That history of innovation is exciting, and positions them really well to be relevant with runners. There’s this really rich history of storytelling and connecting emotionally. I’m a brand geek, I absolutely love brands and I adore Saucony’s.” What’s your first priority as you start today?

“I want to begin with connecting with the team. Saucony has an incredible, passionate, committed team, and I want to get to know them and allow them to get to know me. I want to get to know the retail partners and the players for Saucony, and really understand the uniqueness of this brand. I’m in learning mode. I’m really inspired by Saucony and I want to share that, I want to spend time igniting that fire and continuing that passion and inspiration for our brand. I feel blessed. I love the sporting goods industry, I love running, I consider myself a runner, and I’m looking forward to combining that consumer obsession with a growth engine and driving thought leadership.” n

RUNNING INSIGHT

THE PUSH AND PULL OF PACKET PICKUP O

BY DANIEL P. SMITH

ver two days last November, upwards of 2,000 people entered the doors of Fleet Feet Sports Pittsburgh as the store hosted packet pickup for the EQT Pittsburgh 10 Miler, one of the city’s most popular road races. Some people hustled in and out, eager to accomplish a precise mission. Others perused inventory, inquired about the store’s new fit id 3D scanning system and some even purchased products. Regardless of the register printout at the end of those two days, however, Fleet Feet Pittsburgh owner Bob Shooer considered EQT packet pickup a success. “The benefit of packet pickup might not be monetarily, but rather in the buzz and exposure we get,” Shooer says. Many running shops across the country echo Shooer’s sentiments, viewing packet pickup as a way to attract eyeballs and propel in-store traffic. Yet, those prospective benefits do not arrive without some challenges. Packet pickups can overwhelm a store, pull staff away from retail duties, require a financial outlay tied to race sponsorship and potentially sway public perception of the store. For years, the prevailing thought in the run specialty channel was that running stores should chase every packet pickup they could find. (And with 30,000 road races in the U.S. each year, there is no shortage of packet pickups to go around.) Increasingly, however, some running shops are turning a critical eye to the practice, attempting to be more mindful, strategic and decisive in their dealings. Seeing the value …

Packet pickup at Track Shack in Orlando.

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Few running shop owners claim as much experience with packet pickup as Betsy Hughes, co-owner of the Track Shack in Orlando. Track Shack has hosted packet pickups since the late 1970s and Hughes remains bullish on packet pickups, particularly those tied to

RUNNING INSIGHT The Push and Pull of Packet Pickup (continued)

Packet pickup crowd at Fleet Feet Pittsburgh.

offbeat events such as color runs and obstacle course races that attract a different clientele. In hosting packet pickups, Track Shack has an opportunity to introduce its store to new customers and add to its expansive database. “Our business has continued to be steady and I have to say that packet pickup is a part of this,” Hughes says. At the four-year-old Ridgefield Running Company in Connecticut, owner Megan Searfoss hosts about 10 packet pickups each year, often placing tables on a patio to avoid clogging up her 1,400-square foot store. “Even as cramped as we are, I wouldn’t say no to packet pickup,” Searfoss says. “Right now, we’re paying for impressions on social media – and that’s just people looking at a screen. With packet pickups, we get them into our physical store, which is half the arm wrestle we’re all trying to do.” Ditto for Mitch Allen, co-owner of the three-store iRun Texas chain in San Antonio. Across its three units, iRun Texas holds about 25 packet pickups each year. “Even if a customer doesn’t shop, having them here is the big sell, especially if they’re new faces,” says Allen, adding that he directs staff to engage with every visitor during a packet pickup event. “Too often, I think staff just say, ‘You can grab your number back there,’ but that’s a missed opportunity we’re working harder and harder to address,” Allen says, adding that sales at packet pickup events have been trending upward at iRun Texas with the increased focus on staff-guest interaction. 10

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… while seeking a better way

While John O’Neill, manager of the Colorado Running Company in Colorado Springs, acknowledges the traffic and visibility packet pickups can bring, he’s become increasingly reflective about such endeavors. Last year, O’Neill’s shop lost three packet pickups and sales in those three months jumped double digits over the previous year. O’Neill typically paired packet pickup for one of those races, the 1,200-runner Garden of the Gods 10 Mile, with the Colorado Running Company’s annual anniversary sale. “And we were only up 20 percent those three days,” O’Neill jokes. “We didn’t have crowds in the store, but we did have buyers and because our staff didn’t have to worry about packet pickup, they were able to help customers. That was a recurring theme with the other packet pickups we lost as well.” Hosting nearly 20 pickups in his store last year and questioning the ROI, O’Neill altered his packet pickup protocols. Rather than writing a flat-rate sponsorship check, O’Neill paid 50 cents for every registered runner and then an extra 50 cents for each race participant entering his store during packet pickup. He then tied promotional codes from each race to sales on his POS system to track ROI. “The results were mixed, leaning more toward a poor ROI,” he says. That data in hand, O’Neill’s now attempting to be far more strategic with his dollars and packet pickup offerings, specifically favoring races that attract “more invested runners,” such as long-distance races or trail events.

“If I were a new store, I’d be trying to get every packet pickup I could simply for the exposure,” he says. “But we’re 18 years in now and I’m not convinced packet pickup is as important and valuable to us as our charitable contributions, store runs and the events we host.” Others, meanwhile, are becoming equally careful not to overextend themselves. Track Shack hosts about 20 packet pickups each year, most of those tied to Track Shackowned events. For the few packet pickup events not owned by Track Shack, Hughes has been particularly selective, knowing a shoddy race can reflect poorly on her store. Furthermore, Hughes makes any external partner sign a contract stating they will man packet pickup and adhere to store hours. She also does not pay for the right to host packet pickup. “We have the space and offer it up,” she says, adding that she assigns specific staff to packet pickup and others to the retail floor during packet pickups for Track Shack’s own events. “I don’t want staff leaving the sit-and-fit experience to go get someone a bib number.” Searfoss, meanwhile, does not execute any financial sponsorships, though she pledges to actively promote a race in her 6,000-person newsletter, on social media and at fun runs. She also provides bags and awards. “And there hasn’t been a race yet that hasn’t taken me up on this,” Searfoss says. “In today’s environment, I just think we all have to pay attention to where our time, energy and money are going.” n

RUNNING INSIGHT

MINIMUM WAGE RAISES:

Four Takeaways From Retailers Who Have Been There

What to Expect If Wage Hikes Are In Your Future / By Jennifer Ernst Beaudry

t was born in the fast-food industry, but the 2012 launch of the Fight for $15 campaign has come to have ramifications for employers across the board in the United States. While the federal minimum has been fixed at $7.25 per hour for almost a decade (higher wages can be mandated at the state or local level), areas across the country have seen wages lift. On January 1, 18 states raised their minimum wages to some degree, and New York, California, Washington, DC, and Seattle, among others, have all instituted progressive annual raises that will put the minimum wage at $15 (or the equivalent in benefits) in the next few years. The same effect is being seen in Canada: In Ontario, the provincial minimum wage rose to C$14 from C$11.40 on January 1, and will rise again to C$15 on Jan. 1, 2019, and Alberta is planning to raise its minimum wage to C$15 in October. 12

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And while a growing number of retailers will be affected by state or local-level changes, some think shoe shops will avoid the biggest effects. “I’m not sure that minimum wage increases will hit shoe retailers too hard,” said Andy Polk, SVP of the Footwear Distributors and Retailers of America trade group. According to Polk, the average hourly earnings in shoe stores were $17.13 in February. “Some stores in certain areas of the country may see an impact, but on a whole, shoe stores will not see much since wages are well above average.” But stores in areas with wage raises say that’s the not the whole picture: There are other, real effects that an increase in minimum wage has on the local labor market. Here, stores sound off on their top takeaways.

RUNNING INSIGHT

Minimum Wage Raises (continued)

1. Rethink Salaries Upstream Even if no employees in your shop are directly impacted by a minimum wage hike, salaries that once sat comfortably above minimum wage may no longer look so attractive to both current job holders and prospective hires. Dick Johnson, president, chairman and CEO of Foot Locker, flagged the effect of the raises on more senior-level employees as an organizational challenge in an interview with Running Insight. “It is the reality, with unemployment being fairly low, that you’re competing in a tighter pool of candidates,” he said. “When you get [wage increases] in part-time jobs and the first tier in that market, it forces compression up the local food chain to management ranks.”

2. Account for the Hidden Costs Retailers who have raised wages say it’s not just the hourly employee outlay that needs to be accounted for: It’s all the costs that go with it. Peter Mohr, president of the Kitchener, ON-based Shoetopia Footwear chain, said that taxes on the higher salaries as well as increased mandated paid vacation and sick time under the new law (sometimes but not always an additional workplace benefit passed in addition to the raise in employee salaries) have had an outsized impact. While many of Mohr’s employees across Shoetopia’s three suburban stores were making above minimum wage, the provincial rise has led other staff members to ask for raises as well. “Our wage costs have gone through the roof,” he said. “It’s not just the minimum wage, it’s employee taxes . … Everything’s exponentially larger.”

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Minimum Wage Raises (continued) 3. Get Efficient Lynn Bourque, owner of The Runners Shop in Toronto, said that as an urban store in a high cost-of-living area, most of her small cohort of employees are salaried. And while she has one employee who will need a raise to stay competitive after the second adjustment in the minimum next year, she said the only employee directly affected by wage hike is her teenage daughter, who helps out occasionally in the store. Where it will most affect her, she said, is in the staffing decisions she makes for race expos and events, when she hires groups of often-teenage staffers to ring up merchandise and work the expo floor. “I need to become better at getting people working for me; as an employer, that’s a skillset I need to hone for myself.” To Bourque, that means advanced planning to make sure she has useful, productive tasks that employees can tackle during slow moments — and making sure she’s clearly communicating what those tasks are and her expectations around them. It also means being more decisive about sending hourly employees home early (once they’ve met their minimum hours) if they aren’t needed.

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4. Think Outside the Box Shoetopia’s Mohr said maintaining high levels of service means cuts or changes to staff levels on the floor or in any customerservice positions are out of the question. Instead, he said, he’s going to explore software options for outreach and follow-up that require less manual labor and less oversight, and will look to automate as many backend processes as possible. He’s even considering exploring having some data entry and similar work outsourced to a firm overseas, where, he said, the hourly prices are about half what they are in his region. “We need to outsource and automate and find efficiencies in every place that before we never really looked at before,” he said. “You have to open up all of the different things.”n

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Running Shorts a giveaway on its website through May 21 for a single entry to the Mount Marathon Race. The race has been held since 1915, and Altra will be its first ever footwear sponsor. Altra’s preferred shoe to tackle Mount Marathon is the King MT 1.5 trail shoe.

Altra King MT 1.5

Altra Signs As Official Footwear Sponsor of Mount Marathon Race Altra is the official Footwear Sponsor of the 91st Mount Marathon Race in Seward, Alaska. Called the “Olympics of Alaska” by locals, Mount Marathon attracts thousands

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of visitors, expanding the population from 3,000 to around 30,000 in a single day. The race begins and ends in downtown Seward, where spectators line the streets. The annual event is held every July 4th, with new racers selected via lottery. Altra is hosting

JackRabbit Gets Clever JackRabbit Sports has acquired Clever Training, an e-commerce provider of fitness gear and technology. Founded in 2002, Clever Training has expanded from servicing triathletes to providing a curated product selection to fitness enthusiasts across multiple sports and activities. This expansion has been led by industry leading e-commerce operations under the banner www.clevertraining.com. “Clever Training is a perfect addition to our company to further our commitment to offering the most complete product offerings and experiences to the active lifestyle enthusiasts,” said Bill Kirkendall, CEO, JackRabbit. “I look forward to working together with the Clever Training management team who collectively have 40+ years of e-commerce experience and a passion for active living. A united Clever Training and JackRabbit company will best serve existing and future consumers dedicated to fitness and overall well-being.” Clever Training will continue to operate under the current executive management team of Andrew McSwain, Bill Gustin, Jarod Harper and Matt Seymour from its Seminole, Florida corporate headquarters. “The Clever Training management team has thoroughly impressed us with their ability to reach and inspire their dedicated customer base. This acquisition is the latest milestone for the JackRabbit family that has included the rebranding of our store portfolio, acquisitions of two new flagship stores, the launch of Rogue Training and a rapid expansion of our e-commerce capabilities through this acquisition. We remain interested in further e-commerce and retail store acquisition opportunities,” stated Brad Holtmeier of CriticalPoint Capital, which owns JRS.

RUNNING INSIGHT

Running Shorts (continued)

Scott Jurek

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Pro-Tec Renews Deal with Jurek Pro-Tec Athletics announced the sponsorship renewal of Scott Jurek, the utra running star who has been a Pro-Tec Elite Athlete for the past 14 years. The brand credits Jurek with contributing greatly to the expansion of the brand into the running market. Jurek has relied on Pro-Tec’s line of supports and massage therapy to keep his body recovering from the many ultramarathons in his noteworthy running career, most recently conquering the Appalachian Trail and setting the Thru-Hike Record in 2015 in a little over 46 days and 8 hours. Scott used a variety of Pro-Tec products to achieve his FKT of the Appalachian Trail. “One of the most prevalent injuries on the trail for thru hikers is Tibialis Anterior tendonitis/tendonosis,” explains Jurek. “It can be excruciating and most problematic on steep, long downhills. It presents as a squeaky or grating type sensation while flexing the foot and ankle up and down. I wore Pro-Tec Athletics’ Shin Splint Compression Wraps preventively starting on Day 2 rather than waiting until I developed the injury. They became an essential part of my kit, I ended up wearing them every day for the rest of my journey.” In 2012, Jurek authored the autobiography “Eat & Run.” In April of this year he released “North: Finding My Way While Running the Appalachian Trail” to take readers along his journey.

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Running Shorts (continued)

STABILicers Run

Implus Acquires Leading Winter Traction Brand Implus is adding to its stable of brands with the acquisition of 32 North Corporation d/b/a STABIL, the maker of STABILicers, Stat-A-Rest and STABIL Turf performance footwear traction

products. S TA BI L w i l l b e integrated into Implus’ cu r rent por t fol io of leading traction brands which includes Yaktrak, SnowTrax by Yaktrax and ICEtrekkers. In conjunction with the transaction, Implus will maintain STABIL’s sales operation based in Biddeford, Maine, with fulfillment transitioning to Implus’ headquarters in Durham, N.C. STABIL will operate as a subsidiary of Implus, which is majority owned by Berkshire Partners, a Boston-based investment firm. STABIL represents the seventh acquisition for Implus since Berkshire’s investment in the company in April 2015.

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Running Shorts (continued)

Brooks will donate $10 from each footwear sale and $5 from each apparel and accessory sale to the 2018 Special Olympics USA Games. The Brooks USA Games Ghost 10 and apparel are available for purchase on brooksrunning.com and at select retailers as of May 15.

Brooks Celebrates Special Olympics USA Games with Limited Edition Line Brooks is celebrating the 2018 Special Olympics USA Games and all Special Olympics athletes with the launch of the limited-edition USA Games Ghost 10 shoe and collection of apparel and accessories. A statement of inclusion, the collection draws inspiration from the USA Games logo which is symbolic of the iconic torch, the water around Seattle as well as the joyful sweat and tears of the Special Olympics athletes, volunteers, families and fans. The 2018 Special Olympics USA Games will be held in Seattle July 1-6, 2018. More than 4,000 athletes will compete in 14 Olympic-type team and individual sports. Brooks will donate $10 from each footwear sale and $5 from each apparel and accessory sale to the 2018 Special Olympics USA Games. The Brooks USA Games Ghost 10 and apparel are available for purchase on brooksrunning.com and at select retailers as of May 15. In addition to the limited-edition gear, as a partner for the 2018 Special Olympics USA Games, Brooks will support this event by providing hundreds of volunteers for the event and offering a free pair of performance running shoes to USA Games athletes. Brooks sponsored athletes Andy Bryant and Colleen Bryant will compete in the USA Games; Andy in the 3,000- and 5,000-meter runs and Coleen in the 1,500- and 5,000-meter runs. n

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RUNNING INSIGHT

Brands Moving Forward After Mixed Results

izuno will focus on turning around its business in the Americas and growth in Asian markets over the next three fiscal years as it aims to grow its topline footwear business by nearly 20 percent over the period to the equivalent of about $593 million globally. In FY17 ended March 31, the Japanese company improved its profitability by more than 586 percent to $43.6 million despite a topline decline of 1.8 percent to about $1.65 billion. In the Americas’ region, where the company worked to rebuild its organizational structure and improve its inventory management system to mitigate losses, Mizuno’s total revenue declined 14 percent to the equivalent of $189.7 million. Regional footwear sales were down 25 percent to $71.1 million but annual apparel revenues jumped more than 9 percent to $31.9 million. At ASICS, sluggish sales in the U.S. wholesale channel contributed to a nearly 27 percent decline in the market in the first quarter ended March 31. Americas’ revenues were off 27 percent to $201.1 million as running shoe sales dipped nearly 21 percent to $194.7 million on a currency-neutral basis. n

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Recognizing stores for their achievements in community support, customer service and in-store experience. Awards Celebration: June 22, 2018 Mill City Museum Minneapolis, MN

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