New York, NY
Our quick scan of Modell’s digital presence: On the website, a buy online and a buy online, pick up in store option is offered. On a President’s Day visit, the website promoted a 20% off sale with free shipping for orders over $50. Modell’s has a strong social media presence. Working with pro athletes on viral videos is a strength. The retailer also uses social channels to alert consumers of sales/discounts, post sports highlight clips and unveil new product offerings.
We visited Modell’s on 6th Avenue and 18th Street in NYC. Top takeaways: This is a multi-level store in prime NYC real estate. Staff in store are pleasant but not pushy. Champion brand stands out in the apparel section. Upstairs is sportswear (lots of sweatshirts). Downstairs departments include licensed, team sports gear (Rawlings, McDavid) and footwear (work boots are very prominent). Store is packed with product. Price is a big factor in here, with discount, sale and prominent “deals” around the store, including private label sweatshirts for $10, work boots (Smith’s starting at $49.99) and sweatshirts from Champion at $29.99. Adidas, Nike and Under Armour all have “store-in-store” showcases.
The Rundown: In business since 1889 and with more than 150 stores throughout New York, New Jersey, Pennsylvania, Connecticut, Massachusetts, New Hampshire, Delaware, Maryland, Virginia and DC, Modell’s Sporting Goods is a perennial on our Power Retail list. But recent reports of financial trouble at the family-owned, NYC-based sporting goods chain have the industry abuzz with talk that Modell’s future is looking uncertain.
Background: Modell’s touts itself as America’s oldest family-owned and operated retailer of sporting goods, athletic footwear, active apparel and fan gear. CEO Mitchell Modell is one of sporting goods retail’s most recognizable leaders. (He memorably appeared on the TV Show Undercover Boss back in 2012.) The chain’s motto “Gotta Go To Mo’s” is a recognizable refrain on the New York sports scene.
Strategy & Challenges: Modell’s has traditionally done brisk business in licensed fan gear. But the licensed business has become tougher in recent years as Fanatics has spread its tentacles through the vendor and retail base, taking away market share. And it doesn’t help that Modell’s core store base has been starved of a championship NY team in recent years.
Modell’s has pushed more chips into markets outside of NYC in recent years. In 2016, Modell’s added eight stores, including three former City Sports locations – one each in Philly, Boston and DC – where premium product became a focus. In the first few months of 2019, Modell’s has reportedly closed stores in Parsippany, NJ, Douglaston, NY and Riverhead, NY. When the Riverhead store closed, a spokesperson for the real estate transaction said the store was too large for Modell’s “stores of the future.”
Omnichannel Investment: Modell’s has made significant investments in its omnichannel strategy over the past few years, bringing all of its e-commerce operations in house six years ago and then taking major steps into omnichannel. Endless aisle and buy online, pick up in store options have been rolled out along with ship-from-store capabilities – available in more than half the chain’s stores.
Outlook: Modell’s execs are staying quiet for now. But as first reported by the Wall Street Journal, Modell’s is said to have hired restructuring adviser Berkeley Research Group to explore “next steps for the company, including a possible bankruptcy.” (Berkeley Research Group has recently worked with a number of troubled retailers that have filed for bankruptcy protection.) A restructuring is not definite. But Modell’s has plenty of competition, and some point to Modell’s expansion beyond its key New York market as being partially to blame for the current financial situation.
Could Modell’s be Next? Sporting goods retail has seen giants fall more than once in recent years. In 2016, it was Sports Authority, then EMS and Sports Chalet. MC Sports went down in 2017. More than one third of Modell’s stores are in NY, and Modell’s has significant real estate assets in the New York area. Last year Modell’s sold a Bronx warehouse property for a reported $100 million. In the past, Mitchell Modell has told us, Modell’s mission is “to own NYC.” Perhaps the future for Modell’s will see a return to a NY-centric focus for the chains’ store base.