The Company Store Muscles Into Retail

Ralph Lauren, Giorgio Armani, Speedo . . . Speedo?

The makers of fitness wear are joining the ranks of designers with exclusive boutiques. Companies such as Speedo, Reebok, Carushka and Dance France have all hung out their shingles in Southern California. Come spring, Nike will join them with a Nike Town super-store in Costa Mesa.

Why are manufacturers turning retailers? The better to beat the competition.

In department and sporting goods stores, dozens of brands jostle for shoppers’ attention. At the Speedo Authentic Fitness store, which opened at the Beverly Center in early December, there is nothing but Speedo. Speedo swimwear, Speedo volleyball togs, Speedo running shorts and shirts, Speedo aerobics outfits.

The ceiling looks like a swimming pool and serves as a backdrop for mannequins wearing, well, Speedo.

“Stores like this give us an identity, a place for a customer to see a product presented to them by people who are trained to talk about it,” says Linda Wachner, chairman of the board and chief executive officer of Authentic Fitness Corp., Speedo’s parent company.

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Speedo and Dance France, which opened a retail boutique on the lower level of its Santa Monica wholesale headquarters 1 1/2 years ago, are using Los Angeles as a test market.

“L.A. is a natural for trying out this kind of concept because people are really into fitness here,” Wachner says. Speedo plans to add five stores in the next five years nationwide.

Likewise, the success of Santa Monica’s Dance France store, with its antique brick floors, white walls and black-and-white fashion photos, has prompted the company to consider expansion.

Sales at the Dance France store exceeded the company’s projections by 40%, according to Sue Richter, president of the Dance France division of New York-based Esmark.

Walter Loeb, a New York retail consultant, says, “Manufacturer-owned fashion stores look like a real trend for the future.”

But some industry executives and analysts say such stores face stiff competition.

Discount and off-price stores offering previous season, name-brand merchandise attract the lion’s share of shoppers who are more likely to look for labels than current styles.

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Gilda Marx, founder and co-CEO of her signature L.A.-based corporation, which makes and sells fitness-related products and apparel, experienced the pitfalls firsthand at her now defunct New York City boutique.

“I believe you need a variety of items to attract customers these days,” she says.

“Competing with (larger) retailers is treacherous, and then there are unforeseen problems like robberies. Even though your profit margins are higher, you have to absorb all your losses alone.”

Since small shops stocking smaller volume cannot compete with discount store prices, many company stores sell special attractions and products unavailable elsewhere.

Speedo’s Beverly Center shop offers prescription goggles, an item so specialized it is rarely carried in gym shops or sporting good stores.

Nike Town’s giant, 68,000-square-foot Chicago store, the prototype for the soon-to-open Costa Mesa shop, features a half-court basketball area for product testing, as well as a video theater, aquarium and a Nike museum.