Retail is a tough business as more sales move online. Running stores are not immune as it is becoming easier and easier to purchase running shoes and apparel online.
The secret of retail is location, which really means TRAFFIC. So much of a running store's costs are fixed --- namely, rent. Therefore, the more traffic you can drive to the space the better. A local running store to me recently divided its space into a running store and a new bike shop. The strategy is sound to help bring in new customers to the same space.
However, I have a few other ideas that could help the next generation of running stores be the most profitable on their block.
All right, five minute warm up. Welcome. Let's get started.
Hey runners hope all is well. Today I want to talk about a fun topic for me, which is a combination of two things that I do running and in business together. And particularly where I want to talk about is the economics of owning a running store. And the reason that it triggered my mind is one of the local running stores in the Atlanta area, one that I think is great, they do a great job for the community, they have recently decided to divide their store in half. So one side of the store is a traditional running store. And the other side of the store is now going to be a cycling shop. So they sell bicycles as well as doing maintenance. And the reason for it seems pretty clear to me, which is if you own a running store, your your big costs are rent that you have to pay no matter what, as well as your employees that work the store. And then of course, you have your inventory that you're stocking, and you make money by probably putting about a 20% margin on the inventory that you sell, and whether it'd be the clothing, the shoes, etc. Maybe higher in the case of clothing, and that's that's your economics, but you have to pay these fixed costs in a big way you do that it's all about traffic. And my sense is that if you own a running store, where you're making your most money isn't really always off the elite runners it's off of, you know, people like us, it's the middle of the pack runners is the starting runners, maybe it's the walkers, whatever it is, those are the people that the majority of people that are gonna be making your money from. And the more traffic you can drive to a retail store. And this works for any retail, whether it's a running store, or any other, a restaurant, etc. It's all about traffic. And to me, the idea behind diversifying and adding the cycling shop to the running store is for that too to bring in more clientele to bring in a different set of customers. Now we're going to bring in cyclists as well as runners, presumably you're going to bring the same amount of runners, but now the other half of the space can bring in cyclists. So that's going to double your foot traffic. And also create some recurring revenue because you have the maintenance for the bicycle, you have the maintenance for the different components on there. So that's the rethinking behind the business model. And I think that's a good strategy. I think retail stores can struggle in the online age, especially running store, where you can access a lot of the same knowledge online in terms of the goods that you buy, you obviously can't get the expertise that you would get in a running store from the fitting experts from the local knowledge, you don't get that you can't replace it online, you can try gets harder. But running stores are all about trying to get traffic. And so diversifying is a great strategy. What has been done before by running stores is to host neighborhood meetups and group meetings as a way to drive more traffic to their store. It's all about bringing people to their store. I think I was thinking about this problem. And I said, Well, if I owned a running store, and I needed to increase the amount of traffic to my store to make it more profitable. What's something that I would consider doing. And what I had thought about doing was very similar to what the local shop did in terms of dividing your retail space in half. There's a couple other things that you can go do. The first one is I think it would be interesting to have a running store plus a coffee shop. A coffee shop is a very high traffic neighborhood is central business that would generate a lot of traffic complements well with what runners like caffeine. And it can make a really interesting business model to have a coffee shop and a running store combined. The other idea could be a a bakery and a running store. So a running store that sold bread, carbs, gluten free stuff, whatever it might be, but it could be a combination kind of bakery that created a nice neighborhood scent as well as the running store could be another idea. Another idea could be this idea of having like co office or meeting spaces and so you could have one side of the store. Be a place where coaches can give feedback or give personal training or whatever it happens to have to be your physical therapy and you know that the running so but the whole strategy is how can you take a given space and bring in more traffic by diversifying the usage of that space and I think that is a decent model. When you're thinking about something like retail which is getting retail running store who's getting a lot of pressure from My life. At the end of the day, I wish the local running store the best of luck in diversifying with the bike shop. I think my strategy would be to look for other high traffic items to increase the probability running store, such as the coffee shop or the bakery. I think that could be a really exciting business model. But at the end of the day, as long as the store stay in business, I think that's great. And I wish them in all of you the best of luck and chasing your running goals.