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Hibbett Sporting Goods sticks to rural markets free of competitors

By Donna Mitchell

Amid the hurly-burly of the sporting goods business, one chain says it prefers the relative quiet of less-populated, rural markets.

So far the chain, Hibbett Sporting Goods, has done respectably well in such markets — those with 30,000 to 100,000 people — as measured by territory and number of stores. Hibbett operates 450 stores under the Hibbett Sports banner in 22 states.

“Our absolute primary focus is small markets,” said Mickey Newsome, the Birmingham, Ala.-based chain’s chairman and CEO. Sounds simple enough, humble even, but the company’s growth plans are decidedly grand — some 400 potential new markets exist for Hibbett stores in the 22 states where the chain already operates, and that means the company could double its store count over the next seven years, he says.

However humble or grand, the approach is certainly smart, observers say. Rural markets mean less competition, says David Magee, a retail analyst at Atlanta-based SunTrust Robinson Humphrey, and more opportunity, in the form of convenience for shoppers who would otherwise have to drive an hour to the nearest Sports Authority or Dick’s Sporting Goods.

Newsome acknowledges outright that self-preservation plays a part in the company’s real estate strategy. “We absolutely stay away ... from their stores,” Newsome said of competitors. “We have a lot of the same products.”

But Hibbett brings something important to the likes of Nike or football equipment maker Schutt Sports. Hibbett stores offer these vendors the chance to expand their businesses without cannibalizing sales at existing retailers in large markets. Ultimately, they can sell their products with fewer discounts, Newsome says. “They add value right away to customers by giving them a consistent assortment of high-quality brand merchandise that otherwise the customers don’t have access to,” said Magee.

Indeed, Hibbett combines merchandise mix with service options to gain a competitive edge against discounter and independent alike. Both Hibbett and Wal-Mart sell baseball gloves from Nike, for example, with the discounter offering the lower-end product at about $19.99. But Hibbett carries gloves for serious athletes, which sell for between $50 and $150, says Newsome. And Hibbett offers about 90 styles of gloves, plus a knowledgeable and attentive sales staff to help customers find the right one. At Wal-Mart or Sports Authority, customers help themselves, Newsome says.

In a typical Hibbett layout, the current season’s equipment is displayed on the left wall, footwear is on the right, and off-season products are at the back of the store. Nowhere, however, are there stacks of shoeboxes laid out for customers to open themselves. The sales staff do that, personally fitting all customers for the right shoe.

Hibbett also presses an advantage against independents with a well-organized presentation and a computerized inventory system that helps keep costs down and tailors offerings to the local market, says Newsome.

The company prefers to open inside the top shopping center of a chosen market, which puts its stores in Wal-Mart-anchored open-air centers about 70 percent of the time, Newsome says. The other 30 percent of its units operate in what are considered middle-market malls, and the company also operates a few freestanding stores. The stores occupy small and narrow spaces, averaging 5,000 square feet, and they clear about $162 per square foot in sales, says Newsome.

Love thy competitor
Hibbett’s being a stone’s throw from one of its main competitors does not bother Newsome in the least. Wal-Mart is good at driving shopper traffic, he says, and “that’s why we want to be in the same center.”

Hibbett Sporting Goods was established as the Dixie Supply Co. in 1945 in Florence, Ala., where it sold boats and marine equipment, guns and ammunition, and even small aircraft. Four years later the company began selling sports equipment to schools and league teams. That business became so lucrative that the company eventually dropped everything not related to athletic apparel and equipment. The name change to Hibbett Sporting Goods occurred in 1952.

By the time the company moved to Birmingham in 1980, it was already a year into a store-expansion effort and running 13 stores. Sixteen years later, it went public.

Newsome says future stores must be within 150 miles (two hours) of an existing Hibbett store.

“It is important to stay tight geographically to understand the wants and needs of that consumer,” he said. Consumer demand can be dramatically different from market to market, he adds.

One store in Pinehurst, N.C., does a brisk business in soccer equipment, while wrestling equipment is in especially high demand in several stores in Oklahoma. At the same time, stores in Texas sell a lot of spike-soled track shoes, and the K-Swiss line of white leather sneakers sells well in heavily Hispanic markets such as New Mexico, says Newsome.

“They’ve always known who they are ... as far as knowing they are small-town niche players,” said Magee. “They have never deviated from that, and it has really paid off.”