CSG Recession Busters 3

Our panel of Industry Experts and authors of CSG Through The Ages, brings you this year’s series: Recession Busters

Businesses need vision, strategy, and the right leadership to find success even in a tough economy.

Using the vast CSG database of historical data and inside knowledge of each industry, our expert panelists have followed the trends for the last decade and selected the Top 10 companies in each segment that survived the recession.

Each month we reveal a top company that weathered the storm. We will examine what they did, how they did it, and where they are going in the future.

Golfsmith International, Inc. is a golf specialty retailer based in Austin, Texas. The privately-owned company operates Golfsmith stores in the U.S. and Golf Town stores in Canada. Golfsmith and Golf Town stores serve as a sanctuary for players’ equipment purchases, as well as education for the sport. The golf superstores offer the best brands of new and pre-owned golf clubs, golf equipment, golf accessories, golf gear and golf apparel.

In the summer of 2012, Golfsmith (the largest golf retailer in the U.S.) joined Golf Town (the largest golf retailer in Canada) to form Golfsmith International, the largest golf retailer in the world, operating nearly 150 stores. Under a new CEO, Sue Gove, Golfsmith International was born. The company continues to operate stores under both banner names with corresponding e-commerce businesses. Golfsmith International is said to be a pioneer in the social media world of golfers. Golfsmith’s websites offer online shopping, product reviews by customers, streaming videos about products, and services such as golf handicap tracking, tee time scheduling and live online customer service.

Store locations offer skill improvement and educational services for golfers and custom golf club makers. Most stores have putting greens, driving ranges and digital swing analysis equipment. In 2009, the company introduced the Golfsmith Xtreme brand of superstores, which is larger, with more interactive features like indoor tennis courts and sand bunkers. Stores serve as a destination for golf enthusiasts.

Golfsmith International specializes in a hobby played by the middle to upper-class. This along with the company’s ability to connect with its consumers has helped it through the recession. From free custom club fitting, to helping you understand your swing, the company prides itself on the programs and services it offers. Golf Town and Golfsmith stores offer a full range of in-store services designed to help find the best equipment for each player and maintain that equipment for years to come. Pro-shop technicians and certified fitters are on staff to help customize and repair golf clubs.

With 158 units and $800 million in sales, Golfsmith International, Inc. is currently the world’s largest golf retailer. Although there is competition from other sporting goods companies such as Dick’s Sporting Goods and Sports Authority, Golfsmith is still the number one destination for golf enthusiasts. The company has continued to thrive because it offers the best products, a unique store experience, and programs to keep loyal customers coming back. At Golfsmith International, you could say they make every swing count.

Chain Store Guide’s database of Discount Stores & Specialty Retailers indicates that PetSmart has grown both in terms of store count and annual sales consistently throughout the recession. Coming into the recession the company experienced nothing but stable growth but unlike most nationally focused retail businesses, the recession proved to be at most a minor impediment in the company’s destiny toward expansion and growth.

In terms of store count, the company had netted nearly 150 additional stores during 2006 and 100 for 2007. During the hit of the recession in 2008, the company actually added 104 locations. This was followed however by an addition of just 37 locations in 2009 and 38 for 2010, with the progress increasing gradually through last year’s growth of 55.

Annual sales growth has been even more substantial and remarkably consistent. In fact one must go back to the turn of the century, when the annual sales figure increased just less than $1 million based on a total of $2.109 million. That was by far the company’s low mark for the 21st century.

PetSmart’s recessionary success, begins with its inclusion in a popular, now seemingly recession-proof market. During the depths of the recession, it was commonly reported that households which were struggling economically, often sacrificed food and essentials for its human members before cutting back on provisions for their pets.

Thus this retail category became so popular that is it proved to be a vital growth area across the retail spectrum, especially in terms of dollar and discount stores and groceries, in addition to the category’s specialty retailers. Recently a number of interviews have surfaced from the executives of prominent hardware co-ops such as Ace and True Value, indicating that independent, corner hardware stores are enjoying impressive sales from their growing pet categories.

PetSmart’s savvy approach to growing its market is without parallel. More than this, the company drives growth from its many clever additions of related businesses and services to its merchandising arsenal.

The company operates nearly 200 in-store PetSmart PetsHotels, which are dog and cat boarding facilities. PetSmart offers veterinarian care in more than 60 percent of its locations. These are essentially full-service pet hospitals which are operated independently of PetSmart but serve to strongly amplify the power of their brand. In-store PetSmart Grooming Salons offer a wealth of services including nail trimming and teeth brushing.

PetSmart also offers pet training through its own accredited instructors. Not surprisingly, the company has managed to create a system of private labels which are sought after and often preferred.

As if all this is not enough to expand reinforce its brand, the company offers an in-store pet adoption service in conjunction with its proprietary charities. PetSmart estimates this service has saved the lives of more than 5 million pets during the past two decades. Yet another reinforcement of powerful branding through good cause.

While enjoying the fortune of residing in an industry which has more than survived the recession, PetSmart has been aggressively innovative throughout, adding products and services which set the company far apart from discount and general merchandisers and clearly distinguish it from competing specialty pet products retailers.

CVS Caremark is a leader in the retail healthcare industry, and its performance over the past six years solidifies that position. The company’s pharmacies filled 734 million retail prescriptions in fiscal 2013, good for approximately 21% of the U.S. retail pharmacy market while generating $45.6 billion in prescription drug revenue. While new store openings have slowed slightly as of late, CVS has experienced 18% unit growth and 34% retail revenue growth over the past six years. The overall aging of the U.S. population and an increasingly health-conscious American consumer can be accredited to CVS’ success during the recession; however, the company can attribute a number of specific events to its impressive performance. Most importantly, the 2007 merger of CVS Corporation and Caremark RX, Inc. that created CVS Caremark Corp. as known today was not only transformational for the company, but the entire industry. The merger created the nation’s largest integrated pharmacy services provider and positioned CVS as a total pharmacy ‘healthcare’ company. The company’s 2008 acquisition of Longs Drug Stores helped grow its presence in the Western U.S. and Hawaii while giving immediate market leadership in Northern and Central CA. In February 2014, CVS Caremark announced plans to end tobacco sales at all CVS/pharmacy locations in an effort to support the health and well-being of its patients and customers while keeping the ‘healthcare’ company mantra.

CVS’ MinuteClinic division is the largest provider of in-store retail health clinics in the U.S. with over 800 locations inside CVS pharmacies. The country’s demand for affordable medical treatment during the recession and into today has helped MinuteClinic’s growth. Recently, the company announced 20 million patient visits since opening the nation’s first store-based clinic in 2000.

The Fresh Market has experienced impressive organic store growth throughout the past six years. In addition, shares of the company’s stock are up approximately 10% since its initial public offering (IPO) in late 2010. Over the past six years, total revenue has increased 54.2%, while total unit count has increased 75.6%. The Fresh Market has capitalized on the natural and organic food trend that has swept the nation. Even during recessionary times, American consumers have become more health-conscious and seek alternatives to processed foods. This combined with the successful IPO and aggressive store openings, have specifically contributed to the company’s success throughout the recession and into present day. Even though the company’s stock performance has lagged behind its largest competitor – Whole Foods Market, it appears to have more room to grow. According to the company, 20 of its 152 current stores opened during fiscal 2013. In fiscal 2014, The Fresh Market plans to open between 23 and 25 new stores, with seven new stores opening in the first quarter alone. The new stores will mostly be concentrated within the company’s core geography throughout 26 states; although seven to eight will open in newer markets with four to five planned for California and Texas.

Founded in 1979 by Stanley Ma, what is now the MTY Group started with a single location in Montreal QC and has now grown to nearly 2,600 locations. The company is a multi-concept operator with 26 banner names, and it focuses on quick-serve restaurants found in mall food courts, street fronts, and non-traditional locations such as convenience stores, theme parks, and other shared sites. Menu types cover the spectrum, including Chinese, Japanese, Italian, sandwiches, frozen yogurt, Korean, Greek, Mexican, and many others.

For more than 25 years, MTY Group has positioned itself as a leading franchisor by developing innovative quick-service concepts, pursuing acquisitions, and forming strategic alliances. MTY acquired the Canadian franchise rights for TCBY and Yogen Früz in 2005 and 2006 respectively and to Taco Time in 2008. Although MTY has developed about a dozen concepts of its own over the years, the vast majority of its growth has come through acquisition. Seemingly unaffected by the worldwide recession that began in late 2008, MTY has more than doubled in unit count over the past six years. Beginning in September 2008, the company has purchased companies operating more than 1,400 locations under 12 banner names.

MTY Group credits its success to its strategy of ongoing market analysis to track emerging trends and forecast the needs of its current and potential consumers. As such, the concepts developed and acquired by MTY respond to a broad range of socio-demographic consumer profiles. Stanley Ma continues to lead the organization he founded, providing continuity of vision over the years.