MERCH ON TAP: The Brewers Team Store, pictured in 2018 after renovations at Miller Park, has reopened in part to capitalize on Milwaukee’s new uniform design. (Don Muret / Staff)
Team stores reopen their doors after shutdown facing stepped-up challenge from online
Most sports venues are closed to the public during the pandemic, but that’s not the case for team stores at arenas and stadiums. The retail doors are open for business as teams and vendors take a stab at recouping a sliver of revenue to offset massive financial losses from canceled games and events held without crowds.
Delaware North Sportservice, one retail provider, has reopened its 11 team stores at sports facilities across the country.
Aramark has reopened about half of its 10 team stores in MLB and the NFL. Those include Arrowhead Stadium, where Aramark has extended its merchandise contract with the defending Super Bowl champion Kansas City Chiefs, company spokesman David Freireich said.
For Sportservice, the process started in May and continued through mid-July, said Jeff Hess, vice president of retail. Seven team stores are tied to MLB parks in Chicago (White Sox), Cincinnati, Detroit, Minnesota, San Diego, St. Louis and Texas. In addition, Sportservice runs merchandise for NFL teams in Buffalo and Chicago and NHL clubs in Nashville and Columbus (at a local mall).
Revenue has fallen from pre-COVID-19 levels, but as of late August, officials were happy with the results. There’s intense competition with online retailers, but the takeaway is that fans still want to maintain a connection with their team, Hess said.
In this strange and unpredictable year, though, they’re restricted to shopping at an otherwise empty facility.
“Our focus has been on taking care of our clients and guests as best we can in 2020,” Hess said. “For our teams lucky enough to get into the MLB playoffs, we intend to continue to run operations there and have a playoff product selection. We’re trying to make it business as usual but understanding there’s a different base in revenue capture opportunity.”
It’s a base that teams and their retail providers would like to see grow after venues fully reopen, given the changing times in the merchandise world and COVID’s effect on the future of in-venue operations. Like everything else in sports, the national shutdown has teams and business partners rethinking the model, especially as more consumers have bought online while stuck in their homes over the past six months.
Sales of online merchandise grew significantly during that period. Dick’s Sporting Goods, for example, reported a record $2.71 billion in net sales for the second quarter of 2020, with online purchases spiking by 194% over last year. Fanatics, which runs online retail for MLB, the NFL, NBA and NHL and operates team stores at multiple venues, has seen online sales increase by about 30% over last year, according to The Wall Street Journal.
Conversely, Fanatics could see a $20 million loss due to the closure of its team stores. Those accounts include Levi’s Stadium, where sales at the 49ers Team Store in 2019 for a club that made the Super Bowl jumped 146% over the previous season, said 49ers spokesman Roger Hacker. The 49ers Team Store remains closed, he said.
Despite those projected losses, Fanatics recently closed on a new investment of $350 million, a sign of confidence in the sports merchandise industry, and the company is expected to go public, the Journal reported. In early September, the company acquired the assets of Vetta Brands, extending to headwear licensee Top of the World and its deals with 600 colleges.
The bottom line, with the U.S. officially in a recession, is that fans are still spending money on sports retail. It comes at a time when consumers have become smarter in their buying habits, finding the best deals on Amazon and other retail shopping sites.
But that hasn’t deterred big league teams from coming back from the shutdown and restarting brick-and-mortar retail.
In 2019, the Milwaukee Brewers took over retail at Miller Park from Sportservice after renovating the team store two years ago. This year, the store reopened in early July at the start of the 2020 season in part to capitalize on the team’s new uniform design.
Under city law, it’s restricted to 50% capacity. Foot traffic has been “fairly robust” with fans “hungry” for the new logo, said Rick Schlesinger, the Brewers’ president of business operations. It’s nothing close to normal, but they’re getting business and they think it’s worthwhile to have the team store open seven days a week.
“I’m still bullish on the in-park experience and fans coming back and buying retail at the ballpark,” Schlesinger said. “Once we have that back, it will be consistent with what we’ve seen the last few years. There’s still the mentality of purchasing something you can only get at the ballpark.”
Whether the traditional business model changes for in-venue retail remains in question.
In a third-party agreement, the markup for arena and stadium merchandise typically runs three times the wholesale price, which reflects the revenue splits between the vendor and the team. As a result, a fitted cap that sells for $45 at the team store presents a stiff challenge for teams and vendors when fans can find the same item online for about $20, said Scott Marshall, president of Messenger Sports, a firm specializing in the design of sports food and retail spaces.
The traditional model has been that way for years, but as retail sales shift online, consumers have become even more savvy in their purchases, which puts more pressure on team stores to perform better after fans return to facilities.
Marshall, who was a Centerplate retail executive before spending seven years as chief hospitality officer for the San Diego Padres, said there needs to be more give and take between the vendor and the team on the splits to drive profits. The ultimate goal is to produce higher volume with reduced prices. Now more than ever, it’s critical, considering fewer than 20% of fans attending games buy merchandise at the venue, Marshall said.
“Retail has always been kind of the redheaded stepchild in a venue, an afterthought with the food contracts taking center stage,” he said. “Now, the experience is getting closer and closer to the experience at a Tesla showroom. Fans come in and interact with the product, but with online technology and the ability to have an item delivered the next day, it’s becoming even more of a challenge.”
Teams running retail in-house such as the Atlanta Braves and Green Bay Packers have the flexibility to adjust pricing on the fly without having to worry about protecting a third party, and officials feel they’re better positioned to compete against online retailers. The Brewers saw in-venue merchandise revenue increase by 15% last year after eliminating the middleman, Schlesinger said.
For all of sports retail, the issue this year more than in the past is managing inventory, considering merchandise is typically ordered one year in advance. At Truist Park, orders for the 2020 season at the Braves Clubhouse Store were completed months before the pandemic hit in March. By then, it was too late to cancel deliveries for a season that ended up being postponed for three months, said Derek Schiller, the Braves’ president and CEO.
“We’re sitting on all of this inventory,” Schiller said. “Some of it we were able to delay or reduce orders. But there’s a lot of merchandise to be sold. That’s a cost to our business, and it’s really important that we have an outlet for that. We’re still playing games and people still want to display their pride for the team, and they want to wear Braves gear. It creates a bit of normalcy for them.”
Overall, teams and retail providers keep shoppers safe by implementing Centers for Disease Control and Prevention protocols. They all require face coverings for staff and customers and have signs advocating 6 feet of separation. Sportservice hasn’t had issues with customers refusing to wear masks, Hess said. At some locations, displays were removed to improve traffic flow, with plexiglass shields installed at checkout counters for protection, he said.
In some cases, team store operators place apparel in quarantine after customers have tried on garments while dressing rooms are closed during the pandemic. The Green Bay Packers allow fans to return merchandise they’re not satisfied with and those items are put in storage for three days before they’re put back on display, said Peggy Prebelski, director of retail operations for the Packers Pro Shop at Lambeau Field.
Does it really make sense to quarantine clothing? Nobody really knows, Prebelski said.
“We’ve read articles on fabrics that (the coronavirus) doesn’t last more than 48 hours, depending on the item,” she said.
Long term, the physical layouts of team stores could change post-COVID with further safeguards, said Terry McIntyre, director of sports retail for Shawmut Design and Construction. Over the past decade, Shawmut has designed and built seven team stores at sports venues, including the Boston Pro Shop at TD Garden and the Warriors Shop next to Chase Center, which opened in 2019.
Pre-COVID, the trend was to create more experiential elements in team stores to compete against online retail, such as the shooting galleries at the NHL Powered by Reebok Store in New York, where shoppers can grab a hockey stick and test their slap shot. After COVID, those interactive features could come to an abrupt end, he said.
Shawmut has deals to develop renovations for team stores at two MLB parks, which it is hoped will take place in early 2021, McIntyre said. He sees increased square footage and a reduction in the number of displays as two options to protect customers and staff.
“Like everything else that’s being discussed right now for how to limit the number of people on the concourse and space them out in the seating bowl and get them in and out of the venue in an orderly manner — the team store is going to be basically the same thing,” McIntyre said.
In Green Bay, the NFL’s smallest market, the Packers Pro Shop stands among the league’s biggest team stores, measuring more than 21,000 square feet. Spacing customers isn’t really an issue, giving them plenty of room to buy Packers-branded masks, Prebelski said.
“They’re our No. 1 seller,” she said. “It’s been a great piece to sell for us. We’re being careful about what we’re doing to keep everybody safe. We want to be open and it’s a good thing.”