Yesterday’s Shoes

Had occasion today to visit one of my favorite retail stores; it turns out that a couple of the members of my household did not have the correct shoes for tomorrow’s family outing. So we went by the Sports Authority and took a look through their shoe department. We split into teams, with my wife and daughter taking to the women’s shoes section, while my son-in-law to be and I looked over the men’s shoes. I like Sports Authority specifically because, in addition to all of the cutting edge new stuff, they will often have last year’s hottest athletic shoes available at as much as 50% off because they are LAST YEAR’S shoes, and all of the people who are into cutting-edge fashion will no longer buy them.

Sure enough, we were able to locate a pair of athletic shoes in his favorite style at 40% off the original list price. The women’s shoes were a little more problematic, however; since women’s shoes are designed more for looks than for function, our daughter was unable to find a pair that was both comfortable enough to be worth wearing and attractive enough not to make a goat retch. Finally, she gave up and looked in the men’s section, where she was quickly able to locate a pair of walking shoes that both fit and looked acceptably. These, too, were marked down from last year’s price.

It was only as we were leaving that it struck me that what I had just seen was a very clever business model indeed. Sports Authority has competitive prices on a whole lot of clothing, shoes and athletic equipment, and occasionally features some very good bargains on the latest styles and fashions. This suffices to bring in people for whom “the latest fashion” is important. But they also seem to buy up last year’s items – or perhaps, simply don’t stop selling those items at the end of their “model year.” The result is that the store also appeals to people like me, who don’t care in the least about fashion trends, but are looking for the most value for their money. It means that they are, in effect, spreading their reach over a much larger range of demographic categories than one normally associates with retail stores of any kind, let alone specialty stores.

Of course, the drawback is that they require a great deal of space, both on the sales floor and in the back room, in order to cover the wider range of products. They also incur a certain risk of not being able to obtain a specific size or color of a discontinued item (and thus breaking the Second Rule). But these are relatively minor drawbacks, in that they would need a large amount of space to display their range of products and styles anyway, and that most retail stores already can’t seem to get anything on order. They managed to address my needs as a customer (good bargains, reasonable selection of choices) while at the same time satisfying many more upscale patrons’ needs (latest styles and colors). They got my business, and they will again.

Which leads me to this question: How many more businesses could increase their customer base simply by retaining some of last year’s merchandise for another few quarters? Or by some other strategy that uses the same sales floor, same personnel, same supply chain and inventory control, and same marketing systems to address multiple additional demographic groups? I could make an argument that some businesses already do, and in future posts I probably will, but what the reader really needs to ask is, are there other groups of customers we could service with our existing infrastructure? And if so, why aren’t we doing so? It’s worth thinking about…