The success story of The Athlete’s Foot (TAF), which is owned and operated by investment holding company RCG Corporation Limited, is filled with pages of rising year on year sales and profit.One size fits all is far from this company’s motto, but could its retail mantra be mirrored by others in a bid to reflect such ‘outstanding’ results?
RCG Chairman Ivan Hammerschlag announced a record full year profit and final dividend for the year ended 26 June 2011, despite the difficult retail market conditions. Speaking to Ragtrader he said he attributes the success to the ‘extraordinary’ level of staff care and the trust that is built between TAF customers and the brand.
“We are nothing to do with fashion. Our business has a very different focus,” Hammerschlag said.“We are about function and fit and customers trust us to get the right shoe for the right foot. You walk past any of our stores and you will see our highly trained staff on their knees doing shoe laces up – our service levels are extraordinary and our staff members are as good as it gets.” The group lifted consolidated net profit after tax by 30 per cent from $6.9 million to $8.9 million for the 2011 financial year. TAF chain also recorded a total sales growth of 7.3 per cent from $186.1 million to $199.4 million for the year, with 4.3 per cent like-for-like sales growth.
“TAF business continues to deliver consistently outstanding results,” Hammerschlag said. “We have had a wonderful run over the past five years and we are in a good position.”
TAF has 148 stores across Australia and New Zealand and six new shops opened during the 2011 financial year, all of which are on a new, larger footprint format. In addition, 12 stores were converted to the bigger layout, taking the total number of large format stores to 34 at the end of the financial year. Hammerschlag said as well as TAF’s loyal customer base and drop-in shoppers, people within medical professions such as podiatrists also recommend the brand to patients. The group is now developing a new comprehensive digital strategy in a bid to launch TAF online site.
“We will always encourage our online customers to still come into the shop as we want to fit them and make sure they have the best product for them,” Hammerschlag said. “They can have the product delivered to their home or the store as that way we can ensure they are happy with the product.”
It is clear TAF focus on staff training, function and fit, but Hammerschlag said he does not feel qualified to give advice to other retailers who may be weathering the storm in the midst of the economic downturn.
“We are not immune from what is going and we have noticed that consumers are not spending as freely as they have previously. But we are very well structured and we can’t see things getting much worse.”
With no debt and $15 million on its balance sheet, Hammerschlag said they are well prepared if trade ever did take a turn for the worse. RCG also operates the Shoe Superstore Group and is the Australian distributor for the Merrell, Cushe, Chaco and CAT brands of footwear and apparel. The Shoe Superstore had a similarly excellent 2011 financial year to TAF, as sales for the year were $5.8 million, up 58 per cent on the prior financial year, while like-for-like sales increased by 15.9 per cent.
Brian Walker, the managing director of the Retail Doctor Group, a consulting company which specialises in the development and transformation of retail strategy, says TAF brand has done well to position itself as ‘the expert’.
“They offer a high level value added service and have invested prudently in training of their staff,” Walker said. “I worked for them many years ago so I am aware of the good rapport they have with franchisees and suppliers. It’s run very well at the board level as the people in senior roles have a very long and lengthy history in the business.”
Walker also said the company strongly focuses on career development and likened the group to a family. TAF, which has expanded into more than 40 countries since it was created in America in the 1970s, opened its first international franchise store in Australia in 1978. Associate professor at Monash University's Australian Centre for Retail Studies, Colin McLeod, said the company’s decision to completely change its store model and concept a few years ago has helped it attract more customers.
He said the group made the stores’ doorways bigger to make it easier to see in, changed the layout so products were more visible and began to appeal to the more technically minded customers who wanted the best for their feet.
“Stores like TAF, in this sector, are more likely to benefit from returning customers and repeat purchases as footwear does run out, and people don’t want to wear old runners,” McLeod said.
He also stressed that the company did well to negotiate flexibility within its Australian lease so that it can adapt its stores in varying regions. McLeod said that Australian activewear brand, self-titled Loran Jane, is also excelling within the fitness apparel industry and this is because she too has worked hard to create an ‘engaging store environment’ for customers. Senior analyst from research company IBISWorld, Ian MacGowan, said the fitness industry in Australia as a whole in on the up.
He said the addition of more activities and various keep fit methods and classes has opened up the market and helped boost the fitness industry over the years.
“The fitness industry is very effective at promoting itself compared to years ago,” MacGowan said. “Much of the focus is on fitness rather than fashion and this sector seems to be insulated from any changes in the economic climate.”
He said despite a ‘bump’ in 2008/09 due to the poor financial climate, the industry, which includes fitness apparel, gym memberships and other sports related goods, is set to increase by seven per cent in 2011/12.
