Not many retailers have a base of 1,100 stores and plan to expand by 75 more locations per year, but for hat king LIDS Sports Group, it’s no sweat.
LIDS Sports Group was started by athletic retail store managers and partners Glenn Campbell and Scott Molander in the mid-1990s. At first, shopping mall executives were skeptical of their plan to sell only hats. But if other stores could sell only cookies, why not hats? Hat World Inc. was born.
When the new concept sold 6,000 hats during the holiday season of 1995 at its first store in a Lafayette, Ind., shopping mall, Campbell and Molander knew they were onto something big. Hat World subsequently obtained financing and opened five more stores in its first year and then grew by 157 stores four years later when it acquired its largest competitor, LIDS Corp. in 2001, bringing the total store number to more than 400. It then took the name LIDS from the former competitor.
Three years later, Genesco Inc. of Nashville, Tenn., acquired Hat World Inc. Genesco Inc. operates 2,387 retail stores and about 1,000 wholesale retail accounts specializing in footwear and licensed apparel. Its brands include Johnston & Murphy, Dockers Footwear and Journeys.
LIDS Sports Group includes the LIDS, New Era and Locker Room by LIDS brands. It has made many acquisitions in the past decade, including Hat Zone (in 2002), Cap Factory (2003), Canada’s Cap Connection and Head Quarters (2004), Hat Shack (2006), Sports Fan-Attic (2009), Impact Sports and Great Plains Sports (2009), Brand Athletics (2010) and Anaconda Sports (2010).
When asked what accounts for its success, LIDS Sports Group Vice President of Real Estate and Construction Dennis Carafiol explains the chain “resonates with both customers and vendors. It’s our size and our ability to operate stores with an understanding of the markets. It’s that magic great retailers have. It’s hard to put a finger on it, but you experience it throughout the entire organization. They just know what works.”
When evaluating locations, Carafiol says a maximum number of impulse customers are required as its product “is clearly an impulse buy” item. To that end, it seeks enclosed regional malls, airports or train stations with constant foot traffic, or ultra-high-density street locations.
In addition to abundant foot traffic, LIDS Sports Group has determined that its success also stems from proximity to certain junior retailer stores. For example, it has found locating near athletic shoe retailers, Zumiez, American Eagle, Aeropostale, The Buckle, Skechers, Apple, Oakley and Urban Outfitters can be beneficial. Because it has several formats, it also must consider strategies to avoid competing with itself. Some are strategically located near ballparks and sports arenas.
Negotiating with landlords on leases is a top challenge, but Carafiol has an advantage in that regard because he worked two-and-a-half decades for shopping mall owner Simon Property Group. With LIDS Sports Groups’ extensive historical sales information and data, it can evaluate most locales and determine whether new spots are likely to be sales successes.
LIDS Sports Group is the exclusive retailer operating Chicago Cubs, St. Louis Cardinals, Los Angeles Dodgers and New York Yankees Clubhouse stores, among others. These fan-centric store formats contain apparel as well as novelty items for the home teams. “Our relationship with these organizations is unique and offers a competitive advantage in certain markets,” Carafiol says.
Of the 1,100 total stores in the United States, Canada and Puerto Rico, about 900 of them are LIDS, with about 20 to 25 new LIDS planned annually. LIDS is the “mothership” for the LIDS Sports Group, Carafiol explains, however, it intends to begin rolling out more stores under the New Era brand format, as well, which is the official hat of Major League Baseball.
“This is really exciting for us,” Carafiol says. “There are just a handful of New Era stores so we are rolling out a concept in its infancy. New Era is a very established brand in and of itself, but it’s a pretty young retail concept so it will be exciting to see how we are able to grow and operate that concept and tweak it as necessary to make sure that’s a successful operation.”
“But our most aggressive growth vehicle is our Locker Room by Lids concept. It’s focus is primarily licensed apparel such as jerseys and T-shirts of professional and college teams, with an incidental display of headwear and novelty items. So it complements, rather than competes with, our other retail concepts. We will open approximately 40 to 50 annually for the foreseeable future. Typically we look for about 2,500 square feet.”
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