While most retailers are struggling to combat a weak spending environment with frugal customers and an uncertain economic outlook, The Athlete’s Foot has bucked the trend recording like-for-like sales growth of 8.3% and total sales growth of 11.6%.
Given most retailers have reported like-for-like sales growth under 5%, it’s an impressive results.
The company’s parent, RCG Corporation, pins the better-than-expected result on a refusal to give in to rampant discounting and a focus on providing an unusually high level of personal service. Overall, RCG recorded a net profit increase of 30% to $6.9 million.
“We are definitely satisfied with this result,” RCG chairman Ivan Hammerschlag says. “We believe that when times are tough, people can go to the brands they trust.”
Here are five lessons SMEs can learn from TAF’s surprising result.
In a season of rampant discounting, Hammerschlag says TAF is simply refusing to drop prices. Instead, he wants to offer customers a little more value for money.
TAF staff are trained to offer an extremely personal level of service, going so far as to fit and tie up shoes for customers and ensure they receive the perfect fit and don’t have to return with an uncomfortable shoe.
Hammerschlag says the focus on a personable level of service, even going so far as to “over-service” the customer, leads to brand loyalty.
“Anyone can compete on price. I have a view that if you are selling a pair of shoes that cost $150, you won’t bother saving $20 or $30 on that if you can go to The Athlete’s Foot and make sure you’re getting a high, personal level of service.”
“We have no doubt that the fact we’ve focussed on personally fitting the customer, having staff with a high level of understanding and high stock levels, have led to these results, and we don’t lose sight of that.”
Other chains have followed similar trains of thought. Facing a downturn in food sales, burger chain Grill’d changed its strategy to offer table-side service last year, rather than having customers walk to the counter to order.
When times are tough, offer customers a little more value for their dollar, and they’ll reward you with regular purchases.
Industry analysts are constantly telling businesses to get out and about in their communities to drive sales, and Hammerschlag says this strategy is key for increasing TAF purchases. In fact, he says at least 25% of the company’s business overall comes from community-based initiatives.
“We are working across the line in sporting clubs, schools, and we are generating a lot of business from the outside. We don’t wait for customer to just arrive to us, we go out and get their business.”
There are plenty of retailers pursuing aggressive growth strategies to drive sales, with examples including JB Hi-Fi and The Reject Shop. But Hammerschlag says TAF is simply expanding its existing stores to make room for new brands and products, largely banking on their existing customers to drive sales.
“We will only open a store if it’s in the right position. This next year we’re looking at opening five stores. Instead we are converting our stores to bigger footprints, because the easiest way to make mistakes in retail is just to blindly open new stores.”
“We think you have to drive the profitability of the stores you already have. There’s so much potential in those existing stores already.”
Expanding these stores means TAF is able to move into new areas without putting too much pressure on costs.
“We’ve added a number of different brands, expanded into new categories and so on. We’ve never been in football, soccer, rugby and so on, and now we can move into these areas.”
It’s no secret the franchising sector has performed extremely well during the downturn, and Hammerschlag says constant communication with franchisees keeps the support network strong and healthy.
“Our average franchisee is highly entrepreneurial. The franchise system is extremely profitable, and all of our franchisees are businessmen in their own right. They have worked in business in their own right before, and we put a large amount of trust in them.”
The brand name, “Athlete’s Foot”, conveys a certain type of professionalism, appealing to sports players and more dedicated exercise addicts. But Hammerschlag says the company also wants to simultaneously appeal to older demographics who are putting more attention on their health and fitness.
“Everyone is finding a way to live 10 years longer, people are trying to be healthier and people of my generation are out exercising when they never used to before. People aren’t going to hold back on their health, and that’s the market we try to target.”
“The other point I’d make is that even when people are cutting back on fashion, they don’t necessarily cut back on shoes. We’ve noticed that footwear sales have increased even though overall fashion may be down.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
