Hockey's Back! So, What Does that Mean for Business?
In 2005, the National Hockey League canceled its entire season after NHL owners and players failed to reach a labor agreement. The league just barely avoided that same fate this year. After a 113-day lockout, owners and players begrudingly came to an agreement early Sunday morning that will restore the remainder of the 2013 NHL season. It's good news for the sport, but businesses that cater to hockey fans will have to wait and see if the lockout has left NHL fans jaded. Michael Benoit is the co-founder of Total Hockey, one of the top independent hockey retailers in the country, with 18 stores in hockey towns such as Pittsburgh, Chicago, and Minneapolis, as well as multiple online stores. With $25.9 million in sales in 2011, Total Hockey scored the No. 1,793 spot on the 2012 Inc. 5000. Below, Benoit explains how the lockout has affected his business and whether he thinks fans will give the NHL another chance. --As told to Judith Ohikuare
There will be skeptics and naysayers who are bitter about the lockout, but I say better late than never. No doubt about it. The sport has suffered a lack of enthusiasm from a business standpoint, and I think this news will be uplifting for the U.S. hockey community. Canadians will never give up on the sport because it’s such an integral part of their culture. In the States, we had football and basketball to watch and it will take time to get the bad taste out of people’s mouths.
During an NHL lockout, there’s almost no interest in licensed goods like banners and jerseys because there are no games to wear them to. Licensed sales for Total Hockey were down about 75 percent through the end of December from the previous year. Still, companies that make NHL-licensed gear need to get their goods out there somehow; they can’t just shut down and wait for the league to figure everything out. So we stocked those items, but we asked for protection from a lot of those vendors.
For example, we negotiated some contingency plans with vendors that supply us with NHL-licensed goods. In some cases, we were given a more liberal payment schedule in which we don’t start making payments until the NHL season starts. In other cases, we took less stock or scheduled delivery for later in the season, depending on how long the lockout lasted. We do have licensed inventory on hand because we weren’t very conservative going into the league’s collective bargaining agreement, and that’s my responsibility. It seemed unimaginable that the league would this happen again after the 2004-2005 season was canceled. I think we’ll be a little more conservative in that area during the next bargaining renewal.
The effect of a lockout is minor in the short term but does have some significance for us in the long run. A lockout that lasts two or three months may not affect a person already involved in hockey, but a lockout that lasts a year could produce an ongoing dip in business.
Our primary customer is the 6- to 15-year-old kid who needs skates, a stick, shin guards, a helmet, and gloves. When the pros aren’t playing, there are kids who might have picked up the sport but don’t, because they didn’t see it on TV and say, “Mom, I want to play.” That results in a slight weakness in that age group. We saw that after the 2004-2005 lockout with children who are around 12 and 13 years old today.
After the league canceled the 2005 season, it took several months before people started getting back into the sport. My suspicion is that people are irritated but will ultimately return. Fans forget losing part of a season a lot faster than they forget losing an entire one since they can still watch high-profile events like the playoffs and the Stanley Cup. Still, you never know what could happen the next time someone’s been jilted. The league certainly isn’t helping itself. More than anything else, it has to be respectful of customers and work with them to improve the fan experience. That could come in the form of special deals like discounted tickets, family pricing, or getting players closer to fans. It’s going to take some effort but the sport will get there.
Regardless of the four-month lockout, the end of the year was a pretty crazy time for us. There’s a lot of hockey going on, not to mention the increase we see during the holidays. December is our biggest month. Our product volume increases by 250 percent compared with our slowest month. That isn’t the worst kind of seasonality in the grand scheme of things. We’re fortunate, because our customers tend to be involved in spring leagues and summer camps, so they’re really engaged throughout the year.
Probably about 75 percent of our staff members play or used to play hockey, so they know everything about shin guards and skates. But we've made a significant commitment to growing the apparel side of the business, so I've made an effort to hire people from other industries--like department-store retail and fashion--who don't have a background in the sport. Our hockey guys are great, but they're not exactly experts at dressing mannequins and things like that.
Now that the lockout is over I hope everyone who decided to forego purchases rushes out and buys licensed goods. Total Hockey is not in a terrible position from an inventory standpoint because we’ve been able to adjust to the situation over the last four months. I actually just bought my 7-year-old daughter who plays hockey a Blues jersey for her birthday. I’m already back in the game.
This article was updated on January 8, 2013.