Fleet Feet Sports, a running shoe chain that boasts 144 stores nationwide, has embraced – and prospered from – the notion that running shoes aren’t just for the marathoners among us.
Ed Griffin, who along with his wife Ellen owns two Fleet Feet franchises in the Syracuse, N.Y., area, relishes the popularity of the “No Boundaries” class for novice runners offered by stores throughout the Carrboro-based chain.
“This year, we’ll see over a thousand people that will go from the couch to being able to run a 5K in our No Boundaries program,” Griffin said.
Needless to say, many of those 1,000-plus people are destined to become Fleet Feet customers.
In addition to the No Boundaries program, which typically lasts 10 to 12 weeks and costs from $75 to $125, Fleet Feet stores offer a host of other classes: marathon and half-marathon programs, speed classes, walking classes, yoga classes, “urban fitness” classes and more.
Fleet Feet isn’t just peddling shoes, apparel and accessories these days.
“We’re selling a healthier, more active lifestyle,” said Robyn Goby, vice president of franchise development.
It’s all part of the chain’s “inclusiveness” strategy, which it initiated more than a decade ago. So is the company’s proprietary fitting process, which is designed to make sure customers leave with the right shoes, in the right size.
“Really, it’s about being able to attract any age, gender, fitness level,” said Jeff Phillips, president and CEO, who flirted with a 4-minute mile when he ran at Virginia Tech. “We have a lot of customers who come in who wouldn’t self-identify as runners. They may be a beginner. They may be a walker. … They may be simply looking for a proper fit so they can have a really comfortable pair of shoes. Running shoes can provide that.”
Inclusiveness has been paying off for Fleet Feet. The privately held chain, which was acquired from former owner Tom Raynor in 2012 by the company’s executives and Raleigh-based Investors Management, has added 43 stores – a combination of franchises and company-owned outlets – over the past two years.
That growth helped pushed revenue to $152 million last year, up 9 percent. Revenue in 2013 also rose 9 percent.
“We’re going to be adding about 20 stores this year,” said Phillips, 54. “We don’t see any reason why we can’t continue to add stores at this pace.”
Growth in same-store sales has averaged more than 10 percent over the past decade but slipped to a 4 percent increase in 2014. Phillips attributes the deceleration to a host of franchisees that opened additional stores in their localities – 14 over the last two years. That typically cannibalizes store sales in the near-term but positions them for growth over the long haul.
Fleet Feet, which officially moved its headquarters from California to Carrboro in 2003, employs 40 workers at the new downtown headquarters it moved into in November.
When the company was founded by two women in 1976, programs such as No Boundaries would have been unthinkable. It initially focused on hard-core runners — at the time, mostly young men.
When Raynor bought the company in 1993, he recognized that to continue to be successful Fleet Feet needed to appeal to women as well.
Today, women account for 58 percent of the chain’s shoe sales and 70 percent of clothing sales.
A vibrant market has contributed to the chain’s fortunes. The nation is in the midst of what Running USA, a trade group for the sport of running, has dubbed the “second running boom.”
It cites data compiled by the National Sporting Goods Association showing that 42 million Americans run or jog more than six days a year, up 70 percent from 2004.
Running USA CEO Rich Harshbarger said the current boom in running accelerated when the recession hit because it’s a low-cost way of staying fit.
“Running is probably the most accessible sport,” he said. “All you need is shoes and time. There are really low or no barriers to entry.”
In addition, the sport has evolved from what was once a mostly solitary endeavor into a social activity with the proliferation of marathons, half-marathons, 5Ks and their ilk – many of them sporting a catchy theme.
“We continue to see more and more events … zombie runs, superhero runs, music runs,” Harshbarger said.
Reeves McGee, a managing director at Investors Management, said when the firm was weighing whether to invest in Fleet Feet, it was impressed by both its fiscal health and the intangibles.
Fleet Feet stores have made it their mission to become “part of the fabric of their communities,” McGee said. “It really makes them a different kind of company.”
Griffin, the Syracuse franchise, said one of his stores features a 1,500-square-foot “community room” that, among other things, serves as the pick-up spot for race packets – which include essentials such as race numbers and timing chips – “for almost every running event in the Syracuse area.”
For a recent event, “we had an additional 3,000 people come in our doors on Friday and Saturday to pick up their race number, race shirt and registration info in our community room,” he said.
The Griffins also have an employee who focuses on “corporate fit” clinics, where the stores take shoes and inserts to an employer’s site. Some employers even subsidize running shoe purchases, Griffin said, because they “are recognizing the relationship between health insurance costs and employee wellness.”
The store recently went to Carrier, the maker of heating and air-conditioning equipment and a major employer in the region.
“In a five-hour session, I think we fit over 65 people,” Griffin said. “Those are people who didn’t come into our store. It’s additional business for us and yet we provided a great service.”
Seven of the stores that Fleet Feet has added over the past two years are independents that converted, including a pair of former Off ’N Running stores in Greensboro and High Point.
John Dewey, the owner of those stores, said he was doing well on his own but chose to convert in the summer of 2013 with an eye toward kicking his business up to the next level with Fleet Feet’s help. He’s been pleased with the results, especially with the resources Fleet Feet provided that have enabled him to operative effectively with less inventory – a major cost-savings – and the ability to compare notes with other franchisees.
Given that other franchisees are on the same team, so to speak, “they’re not tight-lipped about what is working for them,” Dewey said.
None of Fleet Feet’s franchisees are absentee owners. The company demands that franchise owners be actively involved in running their stores.
“We believe that if you want to be successful, you have to be part of your community … and a leader of your store,” Goby said. “If you can’t create that store culture with that positive energy, the customers will know.”
At the same time, having company-owned stores – 29 of its 144 outlets are company-owned – gives the company some credibility with its franchisees and provides an opportunity to test out different products and concepts.
The company’s flagship store in Carrboro, located in the same building as its headquarters, serves as a laboratory of sorts.
“We’re constantly testing ideas and concepts downstairs,” said Phillips. “If it works we can roll them out to the other company-owned stores. If it works on that larger scale, then we can roll them out to the franchise organization with a high level of confidence that they are going to be successful.”
But Phillips stressed that most of the chain’s best ideas – such as the No Boundaries classes and its Personal Rewards customer loyalty program – originate with franchisees.
“We have 115 stores out there that every day are trying things on their own, figuring out what works,” he said. “Our job, as a franchisor, is to take those ideas, refine them and figure out how we can roll them out to the whole system.”
In December, the chain started selling shoes, apparel and accessories on its website.
“We have to keep up with how our customers want to interact with our brand,” Phillips said. “We can’t ignore the reality of the digital world.”
But, mindful that its success is grounded in its franchisees and their relationships with customers, Fleet Feet crafted a way that it could move into the digital realm while at the same time helping franchisees.
When customers place an order on the website, the product isn’t shipped from a big central warehouse. Instead, it’s shipped from the closest store that has it in stock.
Fleet Feet Sports
CEO: Jeff Phillips
Business: Specialty retailer focused on running shoes, apparel and accessories.
Headquarters employees: 40
2014 revenue: $152 million
Stores: 144 in 37 states and the District of Columbia. Of those, 115 are franchises and 29 are company-owned.