An advertisement in the Denver newspaper Thursday touted Rossignol skis for $60, Nordica boots for $75 and fleece vests, your choice, for $10. How will Steamboat Springs' sporting goods stores compete with those prices when Gart Sports comes to town?
The answer may be that they can't and won't -- at least not head-on.
"People will go into Gart for cheap socks and cheap goggles," Mike Parra of Ski & Bike Kare said. "But the locals are going to hang with what we do because they need what we do."
Gart became part of the nation's largest chain of retail sporting goods stores last August when it merged with The Sports Authority. Combined, they have more than 450 stores.
Whitney Ward, developer of the new Wildhorse Marketplace, announced last week he was ironing out lease details and expects to break ground this summer on a new home for Gart.
At first glance, it would appear that if any business owners need to fear Gart, it is Parra and his business partner, Harry Martin. Their new home, carefully designed to mirror Steamboat's historic red brick and sandstone buildings, is under construction at the corner of Lincoln Avenue and Fifth Street. They've ordered a new $35,000 stone grinder that will allow more efficient custom ski tunes in the new store. And their grand opening could be followed, in a matter of months, by the arrival of Gart near the base of the ski area.
Yet, Martin and Parra are unruffled.
Banking on expertise
Gart is a generalist in the sporting goods industry, selling everything from tennis rackets to spinning rods, Martin said, while his staff is devoted to a couple of narrow specialties.
"They can't be an expert at anything," he said.
Parra said it's the expert service that will allow his store to continue down the path mapped out in its business plan, with or without Gart.
"We have a guy who has tuned skis on the World Cup," Parra said. "Locals come in here and ask for 1-degree or 2-degree bevels on the edges of their skis because they have a race coming up. We're getting ski instructors coming in here because they know we'll put their feet in perfect alignment with their skis."
Parra and Martin acknowledge Gart Sports likely will succeed in selling and renting skis here -- they simply believe theirs is a different customer base than the sporting goods giant.
Attempting to compete head-to-head with Gart will be a challenge, Scott Ford agreed. He leads Steamboat's Economic Development Council and heads the Small Business Development Center at Colorado Mountain College.
"(If) Gart Sports comes to town, it will no longer be business as usual for existing establishments in this industry," Ford said.
Ford thinks Parra and Martin are on the right course, however.
"This is an area where specialization, knowledge and superior customer service will be the key," he said.
Not all sporting goods are alike, Ford pointed out. Consider for example, golf tees and mountain bikes.
Golf tees are strictly a commodity; consumers' buying decisions are based on price alone, Ford said. When it comes to mountain bikes, however, consumers often are willing to pay a premium for the guidance and support provided by a knowledgeable and responsive staff, Ford said.
"If a business already has some flaws in these areas, the arrival of Gart Sports may just highlight them," Ford said.
Martin said he expects Gart to provide stiff competition for sales of bicycles in the $300 to $400 range. And he acknowledges that he will miss out on some of those sales. On the other hand, he is competing with Wal-Mart at that price range and has learned from experience that consumers will come to him after learning the hard way about a bike that hasn't been "set up" properly.
"When they fall apart, they come see us," he said.
And in Rich Takesuye, Ski and Bike Kare has a bike technician who has almost a cult following, Parra said.
"Ninety-five of our bike customers are locals," Parra said. "Bikes are so service-intensive -- if your treat your customers fantastic, you can own them."
The typical Steamboat customer may spend more than $1,000 on a bicycle, and he or she takes the purchase very seriously. The manufacturers of the kinds of bikes their customers seek out won't even sell to big-box retailers because they want to protect their brand image, he added.
Bracing for Gart
Ford has used statistics compiled in the 2003 Consumer Preference survey to reach some assumptions about how Gart's arrival might impact the economy. He looked specifically at "leakage" of money spent on goods and services outside of Northwest Colorado.
Routt County households spend almost $5 million annually on sports equipment and apparel, Ford said, with equipment accounting for $3.6 million and apparel, $1.35 million Of those totals, he estimates $2.08 million leaks out of the community. If Gart could capture 40 percent of the leakage, the "plug" would be worth $835,000 and restore a little more than $33,000 in city sales taxes.
Keith Liefer already is accustomed to competing with Gart Sports in mountain towns including Frisco and Avon. Based in Steamboat, he is the chief operating officer of the Christy Sports chain of more than 40 stores throughout the intermountain West.
Liefer said his store at Beaver Creek lost 5 percent in sales in the first year of direct competition with Gart's new big-box store in Avon. Similarly, his store was down 6.5 percent in Summit County after its first year going head to head with Gart.
"Is that a huge deal?" Liefer asked. "Did they hurt us big? No."
Christy Sports has a store in Central Park Plaza that is across the parking lot from Wal-Mart, the nation's single biggest seller of sporting goods. When Gart opens across Mount Werner Road, his store will be sandwiched between two behemoths.
Christy Sports has positioned its Central Park Plaza store to have year-round business with lines of high-quality patio furniture and golf equipment that isn't widely available outside of pro shops and Wal-Mart here. Liefer expects Gart to take him on with its golf lines.
However, Liefer thinks Christy's roughly 40 stores put it in a better position than single-store retailers to absorb losses and adapt to the arrival of Gart.
His store deliberately has avoided a direct assault on the careful niches created by independent sporting goods shops in Steamboat, Liefer said. But he predicted that will not be the case with Gart. They will look for every opportunity to gain market share, he said.
Store owners will experience pressure in the marketplace when springtime arrives early at Gart.
"They have a tendency to transition out of winter sports (merchandise) earlier than people who live and die by winter sports," Liefer said. "From a consumer standpoint, it's great to see stuff on sale in January. The challenge will be for smaller retailers who have worked their tails off as entrepreneurs to carve a niche for themselves."
Smaller retailers could be hurt if they have to put their skis and boots on sale earlier to compete with Gart, he said. And the nation's biggest sporting goods chain will be able to negotiate more favorable terms with it suppliers.
"It's a whole different set of rules," Liefer said. "Sports Authority dictates to vendors."
Single stores don't have the leverage to call corporate headquarters and demand favorable terms -- how quickly they must pay for merchandise and whether the manufacturer will buy back merchandise that doesn't sell through at retail, he explained.
Price vs. service
Ford said sporting-goods and outdoor-clothing retailers will have to continue to build relationships with their customers in order to compete with Gart.
"You and I could buy flies from Gart Sports or from the Steamboat Fishing Company. Where will we buy them? Most likely from the Steamboat Fishing Company because Jeff (Ruff) and his crew give away knowledge with every sale," Ford said. "They provide guidance -- often a lot more than the $2 fly pays them back for. However, where do we go when we get ready to replace a reel -- or buy a rod? To the folks that have consistently demonstrated they know what they are talking about and had my interest in mind and were not just interested in making a sale.
"Existing establishments must work at consistently exceeding expectations."
Martin and Liefer say they are firm believers in free enterprise and would not go as far as saying a big-box retailer should not be allowed to come to Steamboat.
"Ultimately, the consumer will decide if their loyalty is to their checkbook or to small local business people," Liefer said.
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