Former Hobbycraft chief executive Catriona Marshall, who now owns specialist retailer Running Bear, on how the coronavirus pandemic meant creating an online business overnight and the adoption of a new business model
In 2018, when I bought Running Bear, a specialist running shop, I soon discovered that managing an independent business is far from being a hobby.
I was heavily conscious of carrying the responsibility of people’s livelihoods, trading ethically and legally, and living up to the reputation of a 30-year-old brand.
When Covid-19 struck, those responsibilities, as for every retailer, were magnified.
Online overnight
When lockdown started, we kept four members of the team working as normal and furloughed the others. Our immediate priority was to recreate the Running Bear experience of a specialist and personal service through our website instead of our shop. Until March 23, we had been all about the shop and our website was new and rudimentary, to say the least.
There were two things we needed to do to create a business online overnight: engage with our shop customers through social media and compete on price with online discounting.
“We started a virtual running club, which we would not have had the time or capacity to research and launch while managing a busy store”
Social media led to a very high volume of direct conversations on the phone, Twitter, Facebook, Instagram and WhatsApp. During lockdown, we found customers had very high expectations of an immediate response and were keen to spend time chatting. That was good for relationship building but tough for the team who were on call 24/7.
In our favour was a groundswell of goodwill towards local and independent retailers and a big upturn in the running market. Compared to many small businesses, we were in a very fortunate position.
Sales converted to online very quickly and we averaged 40% of last year’s shop sales over the lockdown period. Profit was tougher, as we were discounting by 25%. We agreed with our landlord to pay 50% of our rent, we received a £10,000 grant from the council and benefited from the break on business rates. Financially, we were able to keep our heads above water.
Insensitive suppliers
It rapidly became a positive experience as we focused on personal service for shoes and our recently launched own-brand clothing range. Our customer base was growing quickly with so many new runners and people having more time to browse social media. We kept a tight-knit team, including furloughed members, using WhatsApp daily to share humour and relevant news, maintaining a sense of security and belonging.
We also spent time on our future, investing in the website, investing in stock and planning a new direction, which will take the business national without shops. In order to do that we started a virtual running club, which we would not have had the time or capacity to research and launch while managing a busy store.
Opening up again on June 15 was done with excitement and caution. The businesses on Alderley Edge high street and the council worked well together to make the village an attractive place to return to.
“All impressions, good and bad, would have a greater impact on people and be remembered – so we went the extra mile to support our customers”
We put an appointment system in place and increased from one treadmill to three, offsetting the impact of social distancing rules. In our first week after reopening, we took 300% of a typical week’s sales and we were back to normal margins.
Five weeks after reopening, we were back to our pre-lockdown run rate of 20% year on year. However, in the year to date, we’ve lost 12% of our sales and 16% of our cash margin as a result of lockdown.
We were conscious throughout that because of the unique period we were living in, all impressions, good and bad, would have a greater impact on people and be remembered – so we went the extra mile to support our customers.
Some of our biggest suppliers were not so sensitive towards us, their retail customers, and we were suddenly required to start paying for stock in advance by one of them. As we exited lockdown, priority for stock was allocated to their direct-to-consumer businesses online and they took drastic price reductions on their own websites. This made margin recovery for independents much more difficult.
New direction
Looking ahead, lockdown has made us more robust to handle future waves of the virus by moving online and has driven a new strategic direction, which works in reverse: a virtual running club with a shop, rather than a shop with a social media community.
We have deeper customer relationships and will transition towards our most supportive suppliers. As furlough winds down and unemployment increases, value will become even more important to people and the market will become more competitive, so lower prices and lower margins are built into our autumn plan.
Most importantly, by keeping the team intact throughout, we’ve bounced back with talent, knowledge and loyalty in place.
Business may not be a hobby but running is and it will be fun for everyone, whatever the challenges ahead.
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