Running with the Big Dogs (Part A): A Competitive Forces and Strategic Analysis of the Running Specialty Store Industry

THE "BIG DOG RUNNING COMPANY" STORY It was 2009 and in the middle of the great recession. John Teeples and Reggie Luther were discussing the possibility of opening a new retail store in Columbus, Georgia specializing in the running sport. Not only were they running enthusiasts who had participated in multiple "ultramarathons" (i.e., marathons that are more than 26.2 miles) and "ultraruns" (i.e., unusually difficult running events such as those involving many hills and/or mountains), they were also experienced entrepreneurs who had successful businesses in the Columbus, Georgia market. John Teeples was a local building contractor and Reggie Luther owned a website design business located in downtown Columbus. Consistent with national trends, they noted that running participation was increasing significantly in the Columbus area. Both John and Reggie noticed that other cities had new specialty stores dedicated to the sport of running, but not Columbus. This led them to the conclusion that there was a gap in the local market for a full service retailer catering specifically to the running sport. Also, John and Reggie felt that the recession may actually help to increase participation in the running sport since, compared to other sports like golf, it was a relatively inexpensive one. And they knew that the increase in health consciousness in the U.S. meant that the number of people choosing an active lifestyle was trending up--in a recession they would be more inclined to choose a sport that was less expensive like running. John and Reggie felt that there was a window of opportunity for a location in the city's newly revitalized downtown area. Like many cities across America, Columbus' downtown area was going through a renaissance. Many of the city's young professionals had started moving back downtown, and more and more retailers and restaurants were relocating to the downtown area to cater to them. More importantly, the Columbus Riverwalk brought tourists and sports enthusiasts downtown. Built in 1992, the Riverwalk is a paved trail that stretches 22 miles alongside the Chattahoochee River which runs straight through the heart of the downtown area. It provides a scenic public trail for the locals to use to walk, run, and bike. To add to the already growing downtown traffic, in 2009 the city announced plans for a $42 million white water rafting course through downtown to be completed by 2012. It was being touted as "the world's largest urban whitewater course. " It was expected to significantly increase tourism in the Columbus area and, more specifically, the retail customer traffic in the downtown area (in 2013, USA Today named this whitewater rafting course one of the "top 12 greatest man -made adventures on the planet"). Additionally, Columbus is located right next door to Fort Benning, Georgia, home of one of the army's largest training installations in the country with about 35,000 soldiers on active or reserve duty. This would provide the retail store with a constant influx of young soldiers in need of proper equipment for their PT training. On the weekends, many of the Fort Benning soldiers go to the downtown area for shopping, entertainment, and socializing, making it an attractive location to target military personnel. In anticipation of the new sports-minded traffic in the downtown area, other sporting goods stores had recently opened along the Columbus Riverwalk catering to fishing, biking, and water sports, but none catered specifically to runners. After an initial assessment of the potential market for a running specialty store in Columbus, John and Reggie needed to decide on the appropriate strategy. With the revitalization of the downtown ("Uptown") area, and the proximity of downtown to the Riverwalk and Fort Benning, John and Reggie believed the downtown area would be the most desirable location for their target market. They found a suitable downtown location and then debated a name for the store. …