Athletic Shoe Store Franchise Business Plan

There are approximately 110,000 residents living within three miles of Pine Ridge Square. Twenty-six percent, (29,000) are between the ages of five and nineteen. Fifty-two percent, (57,000) are between the ages of twenty and fifty-four. Coral Springs has one of the strongest youth athletic programs in the country. There were 11,359 children participating in the 16 various sports programs throughout the year. In addition, through the YMCA and other non-municipal sponsored leagues and programs there is an additional 3,500 children participants. This does not include the residents of neighboring cities like Parkland and Coconut Creek, which are within the market area and have an additional 3,000 participants. The city has 47 public parks, of which the six largest are devoted solely to athletics. The three-mile radius has four high schools, four middle schools, and 14 elementary schools in the public school system. There are an additional five private schools and three new schools planned for the next 18 months. Coral Springs is a young, active community, with outdoor sports played year round. The need for cold weather boots and shoes does not exist, therefore, athletic shoes are worn year round.

The residents of Coral Springs are in the upper income brackets, with an average income of approximately $68,000 per year. Eighteen percent of the area’s population earn in excess of $100,000 per year. In the next three years, that percentage is expected to increase to 25%. This affluent, active resident is willing to buy the latest in athletic footwear, if the service and assortment are strong.

The top two ACORN Consumer Groups determined by CACI, an international information technology corporation, within three miles are: Prosperous Baby Boomers, (30.7%) and Baby Boomers with Children, (17.4%). These are our primary target markets.

While we have focused on the immediate three-mile radius of residents, the co-tenancy of Fresh Market and Bed Bath and Beyond will generate customers from a 5 – 7 mile radius. Additionally, there are two specialty retailers in the center, Widensky’s Children’s Clothing and Jonathan Reed Young Men’s Clothing, which have a customer base throughout Broward and Palm Beach Counties.

We are confident that we will capture the true athletic adult with our assortment and service. By capturing the children’s business, through the same assortment and service, we can also become the “family athletic footwear store.” While the typical “family adult” may not be as “active” as our target runner, the convenience and professional service we will provide will allow us to become “their” athletic footwear store.

To recap, our target markets are:

1. The True Athletic Adult
2. The True Athletic Participant Children.

By serving these customers well, the balance of the less active community will identify The Athlete’s Foot as the athletic footwear headquarters.

4.1 Market Segmentation

The Athlete’s Foot feels there are two types of customers the store needs to attract: the Runners and the Non-runners. These groups are subdivided in the following sections.

4.1.1 Runners

1. “True Runner” – Runs between 20 – 40 miles per week. This person is generally between 30 – 45 years old, both male and female. This segment may also include high school track and cross country runners. This person wants the latest in technology, regardless of price. The True Runner would be the running circuit’s answer to the “computer freak.” You may find him/her running at 5:00 a.m. or 10:00 p.m., whenever it can be fit into his/her schedule. The True Runner frequently runs in races throughout Florida and may even travel further to combine races with social visits or vacations. Generally, the True Runner is in the upper income brackets. There are 6,000 families earning over $100,000 per year within three miles of the proposed location.
2. “Weekend Warrior” – May run up to 20 – 25 miles per week, but most of that is on Saturday and Sunday. A job or family restriction may not allow running to be scheduled during the week. This segment includes males and females between the ages of 25 – 35. This person is most frequently the parent of a young family and is looking for quality and an affordable price. The Weekend Warrior will run in local races. Typically, the Weekend Warrior is in the upper-middle income bracket: often two spouses working, with substantial disposable income. There are close to 12,000 families in this income bracket within three miles of the proposed location.
3. “Running for Attention” – People in this segment run 6 – 10 miles per week. He/she wants to look like a runner regardless of ability and will frequently go to parks, the beach, and other highly visible places to run. Most often is a single person looking to meet other singles. Interested in the latest styles, but, he/she must look good. A person who is Running for Attention purchases coordinated outfits and accessories, running bottles, and timing watches. This segment also spans both males and females between the ages of 30 – 55. A member of this segment can be seen frequently at races, but not always running. He/she also belongs to local health or tennis club. There are approximately 7,000 single households within three miles of the proposed location.
4. “Running for Need” – Two different groups within this classification.
   • The first is the ex-high school or college runner. He feels the need to remain active/competitive, but does not have the discipline to train alone. Will become an active runner in spurts, but not consistently because he needs motivation. Typically, the Running for Need segment is comprised of males between the ages of 18 – 30.
   • The second are the individuals who have been told by a doctor, spouse, or employer that they need to get into better shape … or else! This is a very enthusiastic runner initially, but, quickly realizes that this is not always fun and can become very boring. Again, not a consistent runner, but, can become one if they remain motivated. Motivation relies heavily on the support of  family and friends. While it is impossible to determine the number of people in this segment, these folks may be one of the easier to contact. Through medical journals, health food stores, and medical offices, this is a prime target for referral marketing.

5. “Running Fashion” – This is someone who purchases running shoes, but, is not a runner. He/she simply likes the style or the feel of a quality running shoe. Many working people on their feet for extended periods, factory workers, delivery people, airport employees, any type of outdoor work not requiring safety shoes, and students are a few examples.

4.1.2 Non-runners

1. Infants – While not a high volume, the first pair of shoes for most infants is an athletic style. The first pair of Nikes or Pumas can be a very proud moment in a young family’s development. Being able to properly measure and fit an infant’s foot is critical to developing a following in this market segment. Credibility in the sales to the parents or older sibling will determine if you receive to opportunity to serve the newest member of the family. There are approximately 6,000 children below the age of five within three miles of the proposed location.
2. Children – Possibly the most important segment other than adult running. With approximately 20,000 potential customers, this group must be a primary focus for any family business. Regardless of athletic level of participation or interest, virtually every child has at least one pair of athletic shoes. More often, children have several, depending on their preference of sports or style. The importance of capturing this business is intensified based upon the built-in obsolescence due to the growth of their feet. There are approximately 17,500 children between 5 – 12 within three miles of the proposed location.
3. Teens – This used to be the most important segment in athletic footwear. The local teen boy and girl had to have the new Michael Jordan high-tops, at $100, every eight months. Today, that need has diminished, but teens still remain a critical element to a successful athletic shoe retailer. While it may not be the “required” footwear in middle or high school, it remains a primary asset of every teen’s wardrobe. Due to their ever-present concern for being in style, most Coral Springs teens still require name brand, in-style athletic shoes in their stable of footwear. As well, every teen needs a pair for practical use. That may include participant sports, physical education class, or simply something to wear with jeans. Teens also wear a lot of sandals and athletic aqua/sandals, which are newer categories in athletic footwear stores. Coupled with their still-growing shoe size and concern for the latest style, teens remain an important focus. There are approximately 10,500 teenagers within three miles of the proposed location.
4. Adults/Non Participant – While some adults never participate in a sport, almost all own a pair of athletic shoes. The non-participant adult may be the most difficult segment to capture. The upper income adult will still want name brand newer styles. The middle and lower income adults will look to the discount department stores and “discount shoe warehouse” concepts for practical athletic footwear. This customer is also less concerned about customer service and the proper fit, since they are not as hard on their athletic shoes and buy less frequently.
5. Active Young Adult – Twenty to twenty-four years old. This is a small segment, approximately 5,500 people, but these individuals tend to be very active. Participating in sports is still a social activity for this primarily single group. Baseball, Basketball, Softball, Soccer, and Flag Football leagues are popular with this age.
6. Adults/Participant – Twenty-five years old and above. This segment can be divided best by income level.
   • An active, upper income participant will look for quality, name-brand footwear based upon the sport that requires the purchase. These adults are willing to pay a higher price for a new style or features they deem are important.
   • The active middle income participant will again look for a quality shoe at a competitive price. This group may not require the newest style, but still wants good quality with basic features for the sport they participate in.

4.2 Target Market Segment Strategy

We will focus on two primary market segments:

1. The “Active Family” – The Active Family will be the focus of our non-running marketing effort. They give us the largest target, most opportunity for multiple sales, and allow us to gain further access into the community’s numerous leagues. A typical active family would be described as parents in their late 30’s and early 40’s with two children. If the children each play two sports, that would require a minimum of two pair of shoes per year, for each. If the parents are also active, that could amount to an additional two pair per year. With the need to purchase six pair of shoes per year, we expect this family to make shoe purchases anywhere from three to six times during the year. They may visit the store an additional three to four times for accessories or simply to browse while in the center. For example, there are 13,000 participants in the Coral Springs Youth Soccer Program. Every one of them needs a new pair of soccer cleats every year. Currently, they need to leave Coral Springs to get a good selection of styles. This is a volume customer, but our goal is that the entire family comes along for the ride, and through service and knowledgeable sales help, an additional sale is consummated. This average sale will be approximately $40.
2. The “True Runner/Weekend Warrior” – The next most important segments will be the participant runner. The average sale for this customer will be between $70 – $90. This customer should always make an additional purchase when visiting. Running socks, running apparel, running accessories, or supplements should be added to this ticket. By capturing the True Runner, the less serious runner will be attracted to the store to be able to associate with their more serious counterpart.

We anticipate that 70% of our annual volume will come from these two classifications. The balance will be sport-specific buyers and non-family participants.

4.3 Industry Analysis

The retail athletic footwear business has been tarnished in the past two years due in part to the failure of several highly visible large store formats. Most recently, Just For Feet filed Chapter 11 and is currently liquidating the entire company stock. In addition, several large general sporting goods retailers have either closed entirely or reduced the number of stores in the chain. There are a number of reasons for this demise, the lack of demand for high-priced basketball shoes being a primary reason.

For the general sporting goods chains, the drop in basketball shoe sales as well as the drop in popularity of NBA/Logo clothing has taken it’s toll. The “superstore” concept in the sale of athletic shoes has proven to be unsuccessful. You can sell as many shoes in 2,000 sq. ft. as they were selling in 15,000 sq. ft. Neither of those concepts provided competent customer service in the purchase of a pair of participant shoes. Too many styles causing broken size ranges and constant clearance sales educated the consumer to not rush out to buy a new offering. Anyone looking for technical information when purchasing a pair of running shoes was simply unable to find it.

Successful athletic shoe stores are offering quality customer service and a strong assortment of the new style of shoes. They must also offer shoes in all price ranges, to assure that the entire family can be satisfied.

Our aggressive sales and marketing approach, while slightly reducing the gross margin, will allow for anticipate significant increases in volume (33% year two), to offset any reduction in net profits.

4.3.1 Competition and Buying Patterns

When purchasing athletic footwear, customers need a knowledgeable sales person to guide them to the proper shoe. By offering our exclusive Athlete’s Foot Computerized Scanner, as well as extensively trained associates, called Fit Technicians, we will provide the most sophisticated service in the market.

The competition within Coral Springs consists primarily of the regional mall athletic footwear stores. There are three stores in Coral Square Mall, all company owned. These stores cater to the “fashion athletic” customer. Coral Square Mall is a “B” mall, and has a reputation within the community of being a “hangout” for teenagers and gangs. The true participants generally have to leave Coral Springs for Boca Raton or East Ft. Lauderdale to shop in specialty running or sporting goods stores. Our advantage over these mall stores will be superior customer service and technical knowledge, and a more convenient atmosphere, which the mall stores cannot reproduce.

There are three children’s specialty stores that carry infant and children’s athletic footwear in Coral Springs. One is well entrenched in the community and will be a difficult competitor. Our advantage over these stores will be our larger assortment, specialty sport shoes (which these stores do not carry, ex; soccer and baseball cleats), and the ability to serve the entire family’s athletic footwear needs. Our challenge will be their ability to provide non-athletic shoes for the youth customer.

The other competition will come from discount department stores (Wal-Mart, Kmart, Target), and discount “rack” shoe stores (Payless, Rack Room, Famous Footwear). These stores will serve the non-participant athletic shoe customer, which is not a primary customer of ours. We will carry an assortment of discontinued and clearance shoes, which should help us to be competitive with these stores.