Merrell bucks economy and opens first U.S. company-owned store in San Francisco - SNEWS

Merrell bucks economy and opens first U.S. company-owned store in San Francisco

Merrell celebrated the opening of its first U.S.-based, company-owned retail store, located in the heart of Union Square in San Francisco, on Oct. 23. Granted, the 2,400-square-foot flagship store at 285 Geary St., had been open since Sept. 13, but even in this challenged economy, Merrell vice president and general manager Seth Cobb told SNEWS® the store's sales had significantly outperformed projections -- and those projections weren't exactly conservative, he noted.
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Merrell celebrated the opening of its first U.S.-based, company-owned retail store, located in the heart of Union Square in San Francisco, on Oct. 23. Granted, the 2,400-square-foot flagship store at 285 Geary St., had been open since Sept. 13, but even in this challenged economy, Merrell vice president and general manager Seth Cobb told SNEWS® the store's sales had significantly outperformed projections -- and those projections weren't exactly conservative, he noted. Hence, the party mood was extremely upbeat during the grand-opening celebration, which featured a celebrity appearance by adventure racer, triathlete, as well as captain of Team Merrell, Robyn Benincasa.

The San Francisco store is not Merrell's first company-owned venture in North America. In 2007, it opened a storefront in the heart of Whistler, British Columbia. "The store will serve as a base camp for our activities surrounding the 2010 Winter Olympics and will represent an ideal opportunity to tell the Merrell story to visitors from around the world during the games," said Cobb.

A desire to leverage the brand strength of Merrell to connect with visitors from around the world also explains the logic behind opening its second company-owned store -- but it underscores a risk as well. Cobb told SNEWS the San Francisco Bay Area has historically been one of Merrell's strongest U.S. markets. Plopping the store down in one of the priciest retail lease landscapes such as Union Square also was logical, as it provides Merrell the greatest opportunity to grab the attention of travelers from around the world who frequent San Francisco, and in particular, the trolley stop and other retail stores on Union Square. But, therein lies the risk, which Cobb acknowledged. If global travel drops off for any reason -- failing economies, stronger dollar, global unrest -- shoppers visiting Union Square will likely drop off too.

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Which is why Merrell is hedging its bet on this and all future stores it opens by putting a community events manager on each store's payroll and establishing strong relationships with the local outdoor community and related organizations. In San Francisco, Merrell is partnering with the San Francisco Recreation and Parks Department (www.sfgov.org/site/recpark), the San Francisco Triathlon Club (www.sftriclub.org), Bay Area Wilderness Training (www.bawt.org), and the San Francisco Bicycle Coalition (www.sfbike.org).

For the San Francisco store, Shane Dykhuis has been hired as the community events manager. "Shane's role is to help build and support these partnerships and others that we pursue in the future," Cobb told us. "We'll support our community partners with funds, but we believe it's just as important to support them by becoming personally involved and volunteering our time. Shane will coordinate those activities.

"In addition, Shane will organize consumer events such as Thursday night bike rides, guided hikes, and other functions that communicate Merrell's 'Let's Get Outside' philosophy. Our intent is to use the store as a vehicle to provide meaningful consumer experiences, and Shane will be responsible for making that happen. We plan to invest in this position at every Merrell store," Cobb added.

Opening company stores has been part of an overall strategy plan set in motion nearly two years ago to establish the Merrell brand outside of the company's traditional wholesale business. But that does not mean, Cobb said, that Merrell is downplaying the value of its wholesale business in any way.

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"Merrell has been, is and will continue to be primarily a wholesale operation. We value our retail partners and the ongoing commitment they make to the brand," Cobb told SNEWS. "We consider specialty retailers to be the backbone of our business, and we recognize that our recent success is principally due to our partnerships with them. In this context, Merrell stores are not about selling shoes and jackets -- they're about building the brand. The stores represent an opportunity to tell the Merrell story and to connect with current and potential consumers in ways that we can't in other retail formats. One key measure of success for a Merrell store, then, is what happens to our business with specialty retail partners in that market. We'll be watching this closely. If we're doing our jobs, a Merrell store will improve brand awareness in the market to the benefit of all."

Merrell will be opening a second company-owned store this week in Birmingham, Ala. Similar in size to the Union Square store, it will be located in the Summit, one of the premier retail centers in the country, Cobb said. Later in November, Merrell will open a third store, with a much smaller footprint, in the Bridgeport Village, another lifestyle center in Portland, Ore. Cobb told SNEWS that the company plans to open three more stores toward the end of 2009, but locations were not divulged.

—Michael Hodgson


SNEWS® View: During the grand opening, the new San Francisco store was packed, energy was high, and wine was flowing freely -- especially when SNEWS President Michael Hodgson juggled a full wine glass following a crushing hug from Robyn Benincasa. Fortunately, we can report that the garments on a nearby rack passed the impromptu DWR test with flying colors. During our three hours in the store, we can also say the cash registers were ringing and the sales staff members were not only working to move merchandise -- they were downright entertaining and fun to watch as they interacted with customers, press and invited guests with smiles and energy. One saleswoman even good-naturedly chided Cobb about being in the way as she helped a customer carry boxes of shoes to the register.

Frivolity and grand-opening good vibes aside, we would expect this store to do well. The location can't be beat, and the staff members, if their evening performance was any indication, were extremely well trained. Also, it was enlightening for us to be on hand to talk to representatives from Merrell's partner organizations. They expressed deep and sincere appreciation for Merrell's willingness and eagerness to connect with the community on such grassroots levels. Tourist fluctuations aside -- that alone should ensure some stability in the sales of shoes and garments at Merrell's Union Square store.

On a broader scale of observation, we expect to see more companies opening their own stores in key communities around the United States and the globe, especially as the economy causes independent retailers to tighten belts and limit the breadth and depth of inventory. If these independents are working well with their reps and the companies opening company-branded stores in their community, and if they also have their own deep community ties and a well-trained staff, then company-owned stores should pose little threat and actually be a benefit to their independent neighbors.

It's hard to argue with the logic that a company-owned store, such as Merrell's, located in a high-profile area, will do more for its brand and brand awareness among the broadest possible sector of customers than even a strong presence in a retail shoe wall and garment rack could possibly muster. As long as Merrell, or any other company store along this ilk, sells its range of products at full price and margin and also drives sales to its community retail partners as much as possible, company stores can be and should be good for everyone. Where companies could stumble with a company-store plan is if they begin to sell off-price, demonstrating to consumers that good deals can be had at a company-owned store rather than driving those customers to retail partners. The minute a company-owned store abandons premium pricing, high-end merchandising and front-line product presentations of the latest and greatest, then the experiment will likely backfire on everyone.

To Cobb's point in the article, if Merrell is doing its job properly, brand awareness in the market will improve and sales of Merrell footwear and apparel will grow for everyone. Like Cobb, we'll be watching that relationship, and others of a similar nature, closely.

--SNEWS Editors

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