After every basketball season wraps up, Randy Nills, president of Nills Brothers Sporting Goods in Kansas City, thinks about getting out of the basketball shoe category. And he’s certainly not alone.

“It’s a nightmare,” says Ron Blacker, president of Gulf Coast Athletic Supply in Sugar Land, TX. “Selling basketball shoes to schools is the biggest headache, because whenever you’re dealing with name brand shoes, getting exchanges is difficult. Getting kids sized up right is always a challenge. And then you have bad years when some of them blow up and tear up, and trying to find a replacement in season is another problem.”

In fact, many dealers no longer bother with the category. Others are getting out of it.

“Nike was always banging us for more and more, the kids were going to Eastbay and getting their number and name embroidered on the shoe, and coaches didn’t want to deal with collecting the money,” lamented one dealer who recently stopped selling basketball footwear and declined to be identified. “You’d book a couple hundred pairs of new balance walking shoes for plantar fasciitis and then try to go back to look for a size 10 and Nike wouldn’t have any. In the team business, if you can’t come up with two pairs of shoes, you might as well not sell them. It’s not like a retailer where if you run out of a couple of sizes–you cannot sell them. Coming up with 13 out of 15 pairs for a team really doesn’t do you any good.”

Despite the challenges, many dealers continue to see a benefit to selling basketball shoes. It can be a particularly lucrative category and a strong motivator for a team roadman. According to several dealers, if you don’t sell basketball shoes, you’ll likely miss sales in other basketball categories. In particular, taking care of all basketball needs keeps upstart team competitors away as well as sales from going to big-box stores.

“I’ll do anything to keep my competitors away from my customers,” says Nills.

But Nills, like others, also admits that there’s money to be made in basketball footwear, “After totaling up all the sales and chasing down all those RMAs (return merchandise authorizations), we do pretty well. But I still don’t know if it’s worth it.”

Indeed, the challenges in selling basketball shoes begins well before the season, as catalogs from vendors start arriving in March and dealers have to decide what will be the hottest shoe for the upcoming season that is still months away. More so than all other team categories, basketball footwear is said to the most fashion-driven. The risk for fashion surprise is compounded by the fact that team captains and players are frequently the ones picking the extra wide womens shoes for bunions . These 17-to-19 year-olds tend to look for a shoe that closely embodies what their favorite NBA stars are wearing, but generally tend to be highly unpredictable overall at that age.

“Baseball and football are very traditional,” notes Mark Steele, a sales rep for Grogan-Marciano Sporting Goods in Mansfield, MA. “What they’re doing today still closely matches the styles of the seventies and it’s all black or white. But in basketball, it is style and it’s difficult to stock purple or orange. You can’t do a rainbow of colors.”

And the fashion side of basketball isn’t exactly on fire.

“Basketball as a fashion category continues to wither,” says Matt Powell, senior retail analyst at The SportsOneSource Group. “If it does not have Jordan on it, the fashion customer is taking a pass. We estimate the team basketball market in the U.S. to be about $400 million at retail. Under Armour will likely enter the category in 2010, having even more brands chasing a shrinking market.”

For dealers, it’s particularly hard to predict the next hot style given the time lag. Although a few schools are able to order basketball shoes before the dealer has to place the order to the vendor, many wait as late as six weeks to a month before the season begins. That leads to a lot of speculation in figuring out the models that might be in demand.

“They change the styles every year, so if you miss-shoot or you over-order, you’re going to take it in the shorts and you’re going to end up selling far too few,” says Todd Dunaway, VP at Sport & Cycle in Fortuna, CA. “But that’s just part of the shoe game.”

Dealers also have to acknowledge that in nearly all places, the players (or parents) are buying the shoes. Although some schools can afford the over $100 model, most dealers try to make most orders at a more affordable price – between $65 and $75.

“Half of the kids can afford the $110 shoe and half of them can’t,” says Mick Montgomery, president at Denver Athletic. “You have to get one that’s going to appease all of them.”

The next chore involves sizing all the players. One particular challenge here is girls, who, as a group, tend to claim their feet are smaller than they actually are. The dealers then have to scramble to find fillins for any sizes missing in stock, hopefully quickly through the vendor. Given the economy, however, school orders are being placed later and later, often a week or two before the season starts.

After the season starts, the returns start coming in. Much more so than baseball and football cleats, basketball shoe “blowouts” are fairly common. Signs of a defective model typically show up when college players start hitting the court in September. For dealers, this means not only replacing the shoes, but collecting all of the defective models in order to be properly credited for returns. In season, dealers also spend a great deal of time swapping sizes or finding replacements to fill requests during the year. A continuing frustration is finding a vendor’s warehouse out of stock on a particular shoe size.

Finally, after the season is over, all the leftover shoes have to be liquidated. This presents particular challenges to dealers without retail stores.

Meanwhile, national catalogs such as Eastbay have taken a bigger chunk of the team basketball shoe business. Many coaches – frustrated with having to collect money from their players as well as the routine headache of dealing with a backorder in a team-dealer sale – often let the players buy the shoes themselves at retail. Some only request their players buy the same color.

Nonetheless, some still see basketball footwear as a potentially sizeable revenue generator given the number of leagues at the school, AAU, CYO and recreational levels. (Many still supply colleges with footwear although vendors directly supply the top schools under endorsement deals.) More so than football, basketball shoes are noticeable on the court, and having them match continues to be a high priority across all levels. Dealers also say that whether or not the footwear business is worthwhile, it supports other sales.

“If we can get a team into shoes, then most likely we’re going to sell them warm-ups and bags and maybe a set of custom uniforms,” says Dunaway. “So, we look at it as a tool to get business in other areas. If we’re not selling everything, then we’re going to miss opportunities. It’s kind of a necessary evil.”

Jim Esneault, president of Grundmann’s Athletic in Metairie, LA, adds, “A lot of times the coach looks at the guy who’s busting his butt and taking care of his shoes with great arch support . He likes that guy. He knows that guy is giving him some service and when he needs to order his balls or new uniforms, that’s automatically the first guy he’s going to think of.”

Besides the ability to sell custom uniforms and warm-ups every few years, practice jerseys and shorts, as well as spirit packs, have been healthy categories for dealers. Incremental sales of basketballs, scoreboards, ball racks and towels can also all add up.

Many dealers have developed strategies to help manage the risks around selling basketball shoes. In forecasting trends, many try to talk with coaches or kids months beforehand to gauge what might be the hot model.

“We look at inventory levels left over from last year and we always get a couple of high school kids’ opinions,” says Mark Mellman, retail manager and footwear buyer at Deckers Sports in Mason City, IA. “Hopefully, you’re getting a good read from that.”

More importantly, over the years, dealers have increasingly heavily stocked all white with black trim and black with white trim models. These tend to be the most popular colors. They then encourage teams to buy these lines at a decent price, pointing out that it will be much easier to get more of the shoes or replace that style during the season.

“You try to stock one or two styles and stock them deep and then encourage the coach to order that shoe so you’ll have a chance to take care of their needs during the season,” says Blackard. “The older coaches that have been around awhile understand that this is the way to go. The younger guys don’t quite understand until they go through it for a season or two.”

Esneault has all of his shoes broken out by SKU in each color on a computer. “So if we have 10 pair on a shelf and a school orders 15, it tells us exactly which five we need to order and we can either drop-ship the ones that we don’t have, or bring them all in here and ship them complete,” he says. “That helps us keep our inventory do a minimum.”

Esneault also does a lot of trading between dealers for missing sizes. His buying group, TAG, sets up a shared e-mail network that allows dealers within a buying group to exchange sizes with one another.

“Sometimes you can deliver the ones that you have, and another TAG dealer will drop-ship the remaining portion from his warehouse quickly,” says Esneault. “That helps us come out fairly cleanly.”

John Bullthuis, Reebok’s VP of sales, says becoming an expert on each brand clearly helps.

“I think it goes back to making more of a commitment to a single brand or two and allocating more financial resources to have product on hand to deliver the at-once business,” says Bullthuis. “Communication from the manufacturer to the dealer and to the end-user is probably the most critical part of the equation.”

Jenica Bridges, assistant product manager for team sports at New Balance, says team dealers can continue to leverage their uniform business to help increase footwear sales.

“Help coaches understand that they can purchase all their equipment, uniforms, and footwear needs at one location,” says Bridges. “Team dealers can promote within their area to local high schools, middle schools, AAU teams and recreational programs. An ad in the newspaper or simply showing up at practices to hand out collateral will help to help gain visibility and drive sales to their business.”

Not surprisingly, the biggest players in team basketball are Nike and Adidas. The big shoe this year is expected to be Nike’s Hyperize, the next installment in Nike’s Hyper line which utilizes Flywire technology. Both Reebok and New Balance provide some diversity for some dealers, while Converse is said to be regaining ground in the team area. Many dealers are also eagerly awaiting Under Armour’s first basketball shoes expected for the 2010-11 season.

But many dealers are looking for more help from vendors. In particular, many wish vendors carried deeper inventories to support their in-season needs. Many factories start running out as early as October.

“I make a huge dollar commitment to bring in the minimum required amount to get the maximum discount and the whole purpose of that is so that I can be able to fill-in at the lowest price,” says Dunaway. “But as the season rods around, they don’t have any inventory. A coach may want 24 shoes but we might only be able to get 15 of them. So it’s frustrating because we made the financial commitment to be able to access fill-ins and they’re not there.”

Several dealers noted that last years hot model, Nike’s Hyperdunk, quickly sold out before the season even started.

Still stumped that vendors are not able to properly test their shoes for potential “blow ups” prior to the season, Nills says he wishes they were quicker to compensate dealers for returned, defective merchandise. “That really ties up our cash flow,” he pointed out.

Many dealers also feel the vendors are offering too many styles and colors, leading to a high probability that the wrong one will be picked prior to the season’s start.

“One of the manufacturers needs to bite the bullet and say, ‘Hey, we’re going to offer only two styles and this is it,'” says Esneault. You don’t need five different models and all those colors.”

Esneault also noted that while a ground-breaking fashion technology such as Nike Shox may warrant a new shoe, the continued updates only frustrate his ability to sell leftovers.

“They’ll take the same exact shoe, the same technology and they’ll change it cosmetically just enough to where a customer doesn’t want last year’s model,” says Esneault. “I guarantee you that we have basketball shoes sitting on the shelf here that are probably four years old and we have two pair and we can’t get rid of them. You have to sell them for $10 to somebody at a tent sale to get rid of them.”

Despite the hurdles, however, Esneault still sees basketball footwear as a viable opportunity if managed smartly.

“It’s a tough market, but it’s a big one,” says Esneault. “You have boys and girls, and at some schools I’ll have four teams because it’s a junior high and a high school. I may sell 80 pairs at one stop, and if I have a good coaching staff that’s working with me and I can get it all done in one day, that’s a nice deal. If they all bought the same shoe, it would be a dream.”

Gulf Coast’s Blacker agrees that success largely depends on a wise coach coordinating the transaction, but also consented that it’s a price to pay in the team business.

“You’ve just got to be in it. It’s expected,” says Blacker. “It’s just one of those things where you just bite your tongue and do it.”

“Do we make any money in it?” asks Tony Cardinal, owner, Cardinal’s Sports Center in Lubbock, TX, rhetorically. “If the manufacturer does a good job, then we do. But when the manufacturer doesn’t have enough stock and we have to spend hours running around exchanging and hunting down sizes, then it gets to be a fiasco.”


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