Duane Kinsley once feared the internet was killing his business.
Now the 62-year-old owner of Sport Systems embraces it.
“I love the internet,” Kinsley said. “Actually, it helps me.”
Located in Albuquerque, Sport Systems is a 38,000 square foot sports store specializing in bikes, skis, snowboards and racing gear.
The company has nearly gone bankrupt twice in its history, Kinsley said. In both cases, the practice of matching competitors’ prices reduced the store’s profit margins until its very existence was threatened. As a physical shop that employed knowledgeable employees, Sport Systems struggled to compete with prices offered by companies that had lower overhead. First it was catalog companies, then specialized online sporting goods sites.
Kinsley said buyers want to buy from local businesses that are active in the community — Sport Systems has donated services, products or money to more than 60 different organizations — but they also need to consider their budgets. Many people would only support Sport Systems if the prices matched.
“Retail was demoralizing,” Kinsley said.
Then, five years ago, as he considered winding up Sport Systems, Kinsley shifted his paradigm. Instead of competing on price, the store had to compete on value.
While retail sales make up about 80% of its business, Kinsley said the rest comes from rentals and aftermarket services, such as tune-ups and repairs. And services are something that low-overhead retailers don’t have. So Sport Systems moved away from price matching. Today, most items are sold at the manufacturer’s suggested retail price, Kinsley said. Instead of lowering prices, the store now appeals to shoppers tempted to make an online purchase by bundling free or discounted services with the sale of the product. Customers spend more than they would if they bought the item online, but they also get more.
To help potential customers see how paying more for a product could benefit them in the long run, Kinsley developed an app to illustrate the value of the store’s services. In the sales room, employees use the application on touch tablets to facilitate discussions with customers on price and value.
Kinsley said he had seen a 250% increase in sales and profitability and nearly doubled the number of people he employed since implementing the app.
“I make my markup and never have to cut back,” Kinsley said. “I show the value of my business, through my app, in dollars.”
Sport Systems also uses the Internet as an in-store sales tool. When assisting a customer, an employee might open a popular manufacturer’s or online retailer’s website to check a specification, play a product video, or show a side-by-side comparison of similar items.
“We use that on our floor – their information on their website to sell our products. We call it reverse showrooming,” Kinsley said. “I’m the one now using the internet to help sell my stuff.”
Using technology allows Sport Systems to stay profitable while making deals that appeal to customers, Kinsley said. Buyers benefit from the expertise of other Albuquerque residents. Dollars and jobs stay in the region.
“It brings the best things from the internet together with the best things from local retail.”
Why ski? What brought you in there?
“Well, I was a water sports guy. I went to Baylor, a school in Texas, and I was a windsurfer. State windsurfing champion. … Water sports, that’s what I knew. So I started this, these companies. Then a friend of mine opened a small ski rental shop. He was actually kicked around by a few other guys and then he said, “Hey, that little ski rental thing doesn’t work. Do you want to buy my half? And I said, ‘Great. I don’t do anything during the winter in a windsurf shop. So I moved my windsurf shop to their rental because they didn’t do anything in the summer, I didn’t do anything in the winter. It was a good game. The two reunited. And then I bought out the other partner a year later, and then it was mine from then on.
How many people did you employ when you started?
“Nobody. It was just me and the partner I had. … We were very restricted and just trying to figure out how to survive. We did more business on Saturday than we did all year those early years – just this past Saturday. I talked to my staff. I’m like, ‘What we did today took me a year and a half to do my first year in business.’ »
What do you attribute this growth to?
“Perseverance, stubbornness and hard work. You know, I worked many days, many hours. I’ve done all – I’ve worn all the hats. In those early years, I worked all day and then came home at seven o’clock in the evening. And then I would sit at the kitchen table with my wife, and we would do the books until 10 or 11 o’clock. Wake up and start again the next day. Now that we have people in these different areas, marketing and accounting, it’s much easier to do. Now I don’t have to do all that anymore. But, yeah, it didn’t end like that.
Has the growth you’ve seen over the past two years created any problems?
“Yeah, I mean, sometimes we’re so busy it’s hard to reach everyone. And staffing. I don’t think there are too many downsides, frankly. I think almost all of them are advantages. We see—just to give you an idea of how many people come through the door in the winter, our busy season—throughout the winter, we see between 600 and 1,100 people a day come through the door. …I did the math last winter. We made a transaction every 93 seconds, that was our average, throughout those months.
New to Sport Systems?
“Not really big things – other than we’re totally retrofitting the building to be green. We’ve spent almost half a million dollars on solar panels, efficiency, electricity and all these other things to try to be carbon neutral. We’re almost there now. I did the solar panels years ago. … We did all the lighting to have, you know, more efficient lighting. We’re just going to sort of sort of step by step on all these different things. Replacing stuff. I spent a lot of money on that because it’s just kind of fun trying to take it to that level.
Are you gonna do this forever? Do you have a succession plan?
“People ask me when I’m going to sell to one of these chains because that’s the trend. You know, I’m having too much fun right now doing what we’re doing now. … I don’t have kids, so it’s not like anyone is going to take over. …So it could be an employee or an ESOP (employee stock ownership plan) type of situation, maybe, later.
“But at the moment I think maybe my only change is to work a little less. I love being in the business and doing that. It’s an incredible industry. I mean, you come to work and you sell people fun. You sell experiences, you sell a lifestyle, you sell health. It’s a pretty good gig for the last three decades.
About the company
Company Name : Sports systems
Chief: Duane Kinsley, owner
Industry: Sport stuff
Physical address of the head office: 6915 Montgomery NE
Year of creation: 1985
Number of employees in the year of creation: 1
Number of employees today: 65