SBJ/Jun 8-14, 2015/Opinion

Knowing when to bring team merchandising back home

WANT MORE GREAT STORIES LIKE THIS?

CLICK ON ONE OF THESE BUTTONS

ALREADY A
SUBSCRIBER?
SEE IF
YOU LIKE IT
GET IT ALL
(PREMIUM ACCESS)
I am frequently asked about outsourcing on a number of fronts, with ticket sales and merchandising being the two of the most common areas. Whether an organization should consider owning and running its own in-venue team merchandise store is not an easy question because it is a situational decision and certain factors influence that decision.

“Time, informed effort [expertise] and resources [space and money] are all important considerations that can influence and ultimately dictate the decision,” said Mike Tomon, president of Legends, North America. “The ability to execute is tied not only to talent, but resources and relationships.”

Andy Montero, vice president of retail business and development for the Miami Heat, agreed with Tomon’s position and is an advocate of teams owning their retail business. Montero, whose operations have led the NBA in retail merchandise revenue for six consecutive years, is concise when describing what a team must do to be successful in owning its retail business:

Everything you do reflects your brand, so why would you trust anyone else?

Control your arena. The opportunity is there to control all retail sales (including online) in your venue, thus increasing revenue opportunity and performance.

Talent is crucial. A team must have the expertise, passion and ability to earn a good income.

Be passionate about retail and continue to learn and strive to improve every day.

On a visit to Charlotte, I had the opportunity to visit the Hornets Fan Shop. I was impressed with the layout, merchandise quality and variety, and traffic in the store on a non-Hornets event day.
The Hornets Fan Shop has a mix of new, “legacy” and team co-branded Jordan Brand merchandise.
Photo by: MIKE CRISTALDI / CHARLOTTE HORNETS
As a result, I scheduled a conversation with Fred Whitfield, president and COO, and Pete Guelli, executive vice president and chief sales and marketing officer, to discuss the store and why they made the decision to keep control rather than outsourcing.

Guelli echoed what I had heard from Montero, especially the concern about letting a third party control something so important to your brand and how it is perceived. Guelli and Whitfield both felt it was more than just talented people but an organizational commitment to the brand that the team represents. In this case, they explained that it was part of their plan to marry the Hornets’ history in Charlotte along with the tenure of the Bobcats and create a Charlotte NBA history. The store was uniquely positioned to be integrated into everything connected with the brand and at the same time become an integral part of the fan experience. Furthermore, the rebranding of the franchise and the unique use of the store was part of a strategy to win back a market that had lukewarm feelings about the Bobcats.

How the Hornets implemented this through a store is a combination of classic brand positioning and situational marketing, capitalizing on the opportunities at hand.

The highlights of the development/launch of the store and its success had a number of facets, some of which are unique to the Hornets and the iconic brand image of the owner, Michael Jordan. The Hornets (then Bobcats) took the store in-house in July 2010. When Jordan became the primary owner that year, there was a move to integrate the Jordan Brand and products culminating with a Jordan Boutique (2011).

The Hornets brand identity was introduced in 2013, and the grand reopening of the Hornets Fan Shop followed the next year. It should be noted that the Hornets learned that 80 percent of the fans wanted a return to the original franchise colors of purple and teal.

FIVE QUESTIONS ABOUT TAKING TEAM RETAIL IN-HOUSE

C
ompiled from my conversations with the individuals mentioned in this column, on how teams can determine whether to take ownership of team merchandise:

1. What is your company’s internal level of institutional knowledge in this area?
2. What are the vertical alignment benefits for your organization?
3. Will it enhance brand control and development?
4. Will this undertaking offer other revenue opportunities for ancillary events, sponsorship possibilities, meaningful interaction with the market, and benefits for season-ticket holders, corporate partners, etc.?
5. What is your motivation for this undertaking, and do you have the commitment to see it through?

If the answers to these questions are positive, then pursuing self-ownership would make sense. If not, it would be wise to consider outsourcing with a credible partner in this space, such as Legends, VF Imagewear (Majestic) or Fanatics, to name a few.

The logo was redesigned with research and help from Jordan Brand. Guelli and Whitfield sought to capitalize on that Jordan Brand, which they interpreted to mean being premium in every aspect of the retail experience. New branded merchandise as well as the original-logo merchandise, referred to as the “legacy brand,” are available at the store.

The team established an in-house committee to provide input on the merchandise and the store in general.
Owning the retail business meant owning a year-round business, so the emphasis included being event-driven and creating events such as shoe launches with exclusive windows for season-ticket holders. The Hornets Fan Shop is the only location for team co-branded Jordan apparel in all of professional sports.

The commitment that Guelli and Whitfield made to the retail business was significant in terms of resources and it has paid off handsomely. The Bobcats/Hornets, usually a perennial resident of the bottom quartile of the NBA in terms of merchandise sold, are now a fixture in the top 10. Gross revenue from 2009-10 through 2012-13 increased 130 percent and has increased an additional 130 percent since 2013-14.

Should every team take its merchandising and retail operations in house? No (see box).

The most important considerations that were echoed by all of my contributors are talent/expertise and resources.
The Heat has been successful in the space whether it has been a playoff team or not. The constant could be Montero’s 30-plus years of experience in the retail space, a tenure that began before he came to the Heat.

In almost any endeavor, talent at all levels is the key ingredient for success.

Bill Sutton (wsutton1@usf.edu) is the founding director of the sport and entertainment business management MBA at the University of South Florida and principal of Bill Sutton & Associates. Follow him on Twitter @Sutton_ImpactU.

Return to top

Related Topics:

Opinion

Video Powered By - Castfire CMS Powered By - Sitecore

Report a Bug