This issue of Sports News will look at the career paths of three big box sporting goods executives.
"I loved retail sales from the day I could speak. I found out that to buy something and sell something to somebody was easy and exciting. I get a rush out of seeing a good purchase of a good product. I get excited seeing how the product is sold--how the customer reacts. I also taste the agony of defeat when the customer rejects my product." (1)
After serving two years as president of Diana Shops, Smith was appointed chief operating officer of W. R. Grace's sporting goods chain, Herman's. Peter Grace, head of the corporation, told Smith to develop a big box store, which he did reluctantly, expecting it to fail. However, the store (called Total Sports) was an immediate success. More were built, but then Herman's was sold and the new owner abandoned the idea.
Having spent eight years with Herman's, Smith left in 1987 and started The Sports Authority with $100,000 of his own money and additional funding from venture capitalists.
In 1990 the company had eight stores and was sold to Kmart. In 1992 Smith said, "This is the hardest five years I ever dreamed I would spend in my lifetime. I wouldn't even dream of doing it again." (2) In 1994 Kmart decided to sell The Sports Authority, which was then taken public.
Smith is known as an aggressive retailer. "We want it all and we're going to go after it. I think we've used every inch of space that you can possibly humanly use in the selling of merchandise." (3)
In contrast to other big box sporting goods chains, The Sports Authority doesn't offer play/entertainment areas in its stores. "You know, I find that today's consumer wants value and perceives value as being in stock, having a fair price -- you know, if a customer wants an amusement park, they go to an amusement park. ... Sometimes we have demonstrations going on, we have an athlete show up at a store signing autographs, but that's very unique for us." (4)
The Sports Authority had, as of October 1997, 180 stores and $1.2 billion in annual sales. The average store is 45,000 square feet.
Ruttenberg started his own business by importing Levi's jeans and selling them to stores from his car. As he was paid, he'd buy more. By age 26, he was traveling around the world buying apparel for resale. His next move was to open his own store.
By 1977, South Africa was in political turmoil and Ruttenberg, then 34, decided to emigrate to the United States. He and his family were only allowed to take $30,000.
After looking at a number of larger towns, Ruttenberg settled in Birmingham, Alabama because the cost of doing business there was more affordable. He used $10,000 of his money on a house down payment and $20,000 to open a 2,500 square-foot mall store. His first year sales were $200,000. Although his retail style was not particularly suited to the American South, he lived frugally and made a profit every year. "We roughed it for five to seven years building the business.... By the 10th year, we developed it into a great little business, heading toward $4 million in annual sales." (5)
In 1987, when his lease was up for renewal and the mall owner asked for more money than he was willing to pay, Ruttenberg closed his store. He decided to buy property, pay for his own building, and find ways to lure people away from the malls. "Not one thing was well planned in those early days. I'd say 90 percent of the things we tried didn't work. But the 10 percent that did, we still have in practice." (6) Ideas which worked were an in-store restaurant, a glass-walled basketball half-court, neon lights, music, and video walls.
When Ruttenberg established the first Just For Feet store in 1988, his goal was to achieve $2 million in revenues the first year. He reached it in two months.
By 1993, there were two Just For Feet stores in Birmingham, three franchises in other cities, and a high profile Las Vegas store. About that store Ruttenberg said, "The exposure and the store's sales volume have really put us on the map. ... We get customers from all over the world." (7)
Ruttenberg decided to expand even further. To raise money he took the company public in 1994. "When we started the big store format - and even before - I stood in the store. I did the buying, selling, advertising, merchandising myself. For many years, I stood there with a group of young people around me tweaking this concept until it was absolutely perfect. That's when we decided to go public. We knew our business. We had a terrific concept, and we were debt-free. I never cashed in. We used the proceeds from our public offering for expansion." (8)
Grand openings are treated as major events. "We spend a quarter of a million dollars on each grand opening. They're spectacular. We've hit some unbelievably high sales numbers." (9)
Most of the stores are in the South. "We tend to do the best where the sun shines. When it gets cold, people wear shoes other than athletic shoes, but down here just about everybody wears them all the time." (10)
Ruttenberg's wife, two sons, and daughter all work for Just For Feet. The company employs more than 8,000 people. New employees attend the three-week Just For Feet University to learn procedures and the company culture.
"We have problems like everyone else, but we take care of our problems right away. When is a retailer busiest - on Saturday and Sunday. These are the days we work because we're retailers. You won't see us at a lot of functions. We're busy being involved in our business, taking care of stores. Personally, I meet with the head of every single department every day to find what the problems are. ...
"We carry almost everything that's made. ... People tell us they call 10 different cities trying to find a New Balance or Asics or Saucony shoe. All they have to do is walk into our store and get everything they want, including Nike. There's no way to compete with us. ... We don't get three-time turnover, but we get a customer for life." But even with the wide selection, "our top two brands account for 55% of sales." (11)
"I have a different agenda as far [as] the way I think retailers need to go. A lot of the key elements of a Just For Feet store have nothing to do with shoes. We think it's important for people to just come in and have a good time. One of the secrets to our success is having a lot of smiling faces on the floor." (12)
Just For Feet was ranked by Fortune magazine as the sixth fastest growing publicly-held American company in 1997. It had grown from five stores when it went public to 67. For awhile it was a Wall Street darling, but as of August 29, 1997, the stock price was 56% lower than it had been a year earlier.
In 1978 Oshman and Lubetkin divorced. He stayed on at the company and serves as president and CEO. (Their two children also work for the company.)
In 1979 Oshman became a member of the board, but didn't become actively involved until 1989. "I didn't know enough about the whole industry to make the kinds of corporate and board decisions that were really necessary. The only way that I could really evaluate our management and our strategy was to start to come to the office every day." (14) In 1993 she became chairman.
As she learned about the industry, Oshman saw an opportunity to sell to women. Consequently she has pushed for more focus on female athletes, both in her stores and within the sporting goods industry. Since 1991 the stores have stocked women's items in every product category where they are available. "She's had a very significant effect in getting manufacturers to provide female merchandise that they weren't doing," said Lubetkin. (15)
In 1996, the company had a total of 129 stores. Twenty-seven were SuperSports USA stores, which generated 65% of the company's sales. (16) As of August 1997, Oshman's had 37 SuperSports USA stores and had closed or was closing all but 31 of its smaller stores. The big box stores, which average 70,000 square feet, feature batting cages, golf simulators, putting greens, basketball half-courts, racquet sports areas, and inline skating areas.