Modell's marks milestone opening with ribbon cutting in Times Square - Modell's Sporting Goods

DSN Retailing Today, July 7, 2003 by Mike Troy

ORLANDO, FLA. -- When Modell's Sporting Goods opened its 100th store recently in New York's Times Square, the event had a special significance for the company beyond simply being a high profile location in the heart of Manhattan.

Instead, it marked an important milestone in Modell's transformation to a retailer that lives up to its "Gotta Go to Mo's" advertising tag line from a company that a decade ago offered inferior merchandise and operated stores customers were embarrassed to shop at. Its newest store is hardly that. With an attractive exterior befitting the high-profile location, the two-level unit contains a broad assortment of merchandise with an emphasis on licensed apparel, footwear, a modest representation of hardgoods and the industry's leading brands.

How Modell's transformed itself into a $500 million retailer with aggressive growth plans was the subject of a presentation ceo Mitch Modell gave last month at the University of Florida's annual Retailing Smarter Symposium held in Orlando. According to Modell, it was the chance encounter with two unlikely individuals 16 years ago that Modell's is where it is at today, as opposed to being on the retail scrap heap with other failed companies.

As Modell relayed to attendees at the conference, he and several buyers went to visit Spalding in 1986. At the time, Modell's was a small but profitable company that operated 18 stores with annual sales of $35 million. However, at Spalding's headquarters, Modell was greeted by a receptionist named Gert who was so bubbly he thought she had won the lottery, and knew so much about Spalding's financial performance she sounded like the ceo. She wasn't like Modell's employees and Modell wanted to know why.

After further discussions with Gert and meeting with Spalding executives, Modell realized one of the company's biggest problems was that "we had an organizational chart that looked like a bowl of spaghetti. We had unclear lines of communication and every time there was a problem there was a lot of finger pointing."

The company underwent a restructuring to clarify who reported to whom, and Modell also realized his approach to the business had to change. Citing the example of the Christmas tree in Rockefeller Center, Modell said the company's former culture was to focus on the one bulb that was burnt out rather than the 99,000 that were lit.

"That was the culture that permeated our business because of me," Modell said. "I had to apologize to our entire company."

He also had to open lines of communication so when problems arose they could be resolved quickly. Today, Modell's frequently brings in groups of associates from the field to participate in a variety of meetings and is highly focused on employee satisfaction and retention.

"We want to understand people, where they came from and why they left so we don't make the same mistakes," Modell said.

The company also conducts customer roundtables where its best customers are assembled to find out what they like as well as what should be changed. Breakfast roundtables with employees are another common occurrence at Modell's. One person from each department is invited so people who might not normally interact with one another in the daily course of business can get to know each other. One of the main goals of these roundtables is to help the company react to and solve problems faster. Modell's also involves store employees in buying decisions. Ten of the company's best employees in a particular department are invited to headquarters to meet with buyers and they help pick out merchandise.

If Modell was inspired to change its culture because of a Spalding receptionist named Gert, it was a young man named James with whom Modell struck up a conversation on the streets of New York that inspired the company to improve its store operations and merchandising. Modell wanted to know where James bought his Adidas sneakers. They didn't come from Modell's because the stores didn't carry the brand, and James said his friends would laugh at him if he bought anything from Modell's.

At the time, Modell's bought a lot of closeouts and irregular merchandise and also promoted irregular items in its advertising. Shoes were taken out of boxes and displayed loose on tables.

"In James' mind the whole store was irregular," Modell said. "The major brands wouldn't sell to us for the same reason James didn't shop with us. Back then we looked like an Army and Navy surplus store."

Modell said James was hired as a consultant for six months and over time, the company cleaned up the appearance of its stores, improved its merchandising and gradually convinced major suppliers it could be trusted with their brands. Today, 13 of Modell's top 20 suppliers are those that did not sell to the company in the late '80s.

While it obviously took a lot of effort on the part of numerous individuals throughout Modell's to position the company where it is at today, Modell is convinced that, "if it were not for Gert and James, we probably would not be here today."