On the Right Trail

Many company executives profess that employee empowerment is essential to long-term success. Blue Ridge Mountain Sports, the outdoor specialty retailer based in Charlottesville, VA, affords its store managers such autonomy that the company's 13 stores, dispersed within four states, are typically referred to by a manager's name rather than by city or location.

"The managers are the eyes and ears for us and we rely on them," says Stephen Nauss, co-owner and majority shareholder of Blue Ridge, who began with the retailer in 1973, a year after the company's inception with its first store in Charlottesville. "They become involved in the communities in their individual markets."

Adds Jeff Smith, co-owner, and the only other shareholder along with Nauss, "We have core [central] buyers, but a manager can influence the individual shipments to a [given] store. And each store is charged with growing the sport and getting people into the [merchandise] we are selling and getting them into the outdoors."

Indeed, individuality inspires Blue Ridge's store managers and co-owners, who are determined to neither run their business in the manner of, nor be perceived as, a company of chain stores. The strategy is critical as Blue Ridge, which has stores in Tennessee, North Carolina and New Jersey, as well as in its home state of Virginia, operates without a central warehouse and with little interference from Nauss and Smith. (In fact, the co-owners have both experienced the fiscal and managerial nuances of running a retail business and have left the company at different stages of tenure?only to return.)

"The notion here is to put inventory at the store level so customers have the opportunity to weigh in," explains Smith, 39. Smith joined Blue Ridge in 1986 at the Knoxville, TN, store before venturing onto two separate career paths?in medicine and in sales?only to return to Blue Ridge full-time after each hiatus, most recently in 1992. "When managers choose, they can course-correct and balance their inventory by having one store ship to another," he says.

While the owners acknowledge the system "drives buyers and accounting people crazy," store managers and sales personnel are so invested in their retail locations that customers often consider each store a single-shop entity and believe the manager to be the owner. Consequently, Blue Ridge has doubled its retail square footage in the past six years, often electing to remodel or relocate stores rather than open new venues.

Although Nauss and Smith claim they have not fully realized their sales goals in the past five years, Blue Ridge increased sales by just over 3 percent in 2003, and reports revenues of $16 million, earning it a second consecutive notice on the annual Outdoor Business Retail Top 25 list (see page 22). The owners say the company has been profitable in recent years, with the exception of 1999.

"Four years ago, there was a downturn in sales, [increased] competition, and we were not minding expenses as well as we do now," offers Nauss, 55, who is originally from Scarsdale, NY, and met the future founder of Blue Ridge, Peter Rice, as a student and lacrosse player at the University of Virginia. (Rice was a graduate student at the business school and the assistant lacrosse coach.) "We [assessed] the business and each department had one more person than we needed."

A disheartening company layoff came in 1999, but since that time Blue Ridge has launched initiatives such as publishing a catalog?"Outdoor Guide"?and joining a small consortium of independent, outdoor retailers in quest for novel, specialty product lines. Such measures were essential in the face of proliferating competition, especially from big box businesses.

"The landscape 10 years ago was a single [outdoor] shop in each of our markets. Now we have big box operations as competition," says Smith, noting that Dick's Sporting Goods (which has entered Charlottesville and Richmond) and Galyan's both maintain significant outdoor presentations, along with REI.

Each time a chain opens a store in a Blue Ridge market, adds Nauss, the company must adjust its own product mix. He adds that multi-million-dollar retailers will always win a price war with a business such as Blue Ridge, which has no venture capital or public investments. "We don't have the monetary backing or capital to play their game," says Nauss.

The company does invest about 3.5 percent of its annual revenues into marketing, including local TV and radio advertisements and its Outdoor Guide, which publishes about 150,000 copies and runs from 16 to 26 pages, two to three times each year. The Outdoor Guide highlights events, including the 26 in which Blue Ridge is involved. Day hiking trips and on-water demos are also promoted as ways to encourage and foster new outdoor participants. The company's Web site is informative and product-oriented, and is equipped with an e-commerce feature.

Perhaps the most onerous adjustment has been the search for product lines for which independent, privately-held retailers remain the sole?or at least preferred?dealers. "Almost every line in our industry has become broad-based and premier lines have been commoditized by the big boxes," affirms Smith, a graduate of the University of Tennessee who worked his way through the ranks at Blue Ridge by managing the Knoxville store, and then eventually moving to the head office. "We have to differentiate ourselves from the big boxes. Our product mix should look different. Steve and I feel strongly about loyalty and in the last five years, vendor loyalty [to specialty retailers] has been the exception, not the rule."

To obtain true specialty lines, Blue Ridge joined a group of about one dozen, upper-end shops committed to specialty as part of a miniature buying consortium, says Nauss, who rejoined the company in 1998 as the sole owner following his own two-year "mini-retirement," during which he lost 25 pounds and played enough golf to garner a handicap of 13. Operating without an official name, the retailers have traveled to Europe and previewed lines. As a result, Blue Ridge will begin carrying a small, renowned French technical line called Millet, which will appear in four or five of the company's stores this fall. Other retailers in the group include the Boston-based Bob Smith Wilderness Shop, Neptune Mountaineering in Boulder, and Hudson Trail Outfitters in metro Washington, DC.

"If we are committed to specialty retailing, we have to have specialty product," asserts Smith. "With the [big box retailers], customers may go up the escalator, pick something off the rack and go to the register. Our goal?we have a long-standing tradition in the company?is to [focus] not only on getting customers to purchase something [one time]. We want customers to come every week to see what is new."

Blue Ridge accomplishes this goal by not only seeking distinct product lines, but by hiring a retail staff notable for its knowledge and genuine ardor for the outdoors. During a visit to the company's Williamsburg store?one of its four stores in Virginia?a visitor who merely mentioned that hiking the Appalachian Trail was a one-time objective is offered an animated discourse on everything from backpacking gear and cooking utensils to helpful Web sites, trail maps and books?including information on the best places to stock up on supplies along the trail.

"People call up [the store] all the time and ask, 'Where is a good place to go hiking?'" relates store manager Morgan Newlon, 26, who rides his bike to work and attends numerous environmental and outdoor events, such as adventure racing, throughout the year?often on his own time. He frequently suggests Shenandoah National Park to callers.

The store often offers "Trail Talks," in which a professor from The College of William & Mary in Williamsburg discuss a hike. Many Blue Ridge employees frequently hike or bike with their customers, adds Newlon, who mentions a 57-year-old man who began tackling the Appalachian Trail last year by hiking it in stages of two to three days and had covered 700 miles within one year.

The Williamsburg store is one that has been remodeled, with more than 5,000 square feet of retail space and 14-foot ceilings from which kayaks and canoes dangle. Nearly two sides of the store are windows, allowing a good portion of the interior to be naturally lighted. It is clean and well-organized, and the staff does indeed seem ready to take any customer or visitor out for a day on the trail. Merchandise includes daypacks ranging from about $60 to $80, backpacks from about $100 to $200 (although stores carry models priced as high as $400), and apparel brands such as The North Face and Pacific Trail. Newlon attended the company's managers' meetings, held this past spring at the Outer Banks in North Carolina, in which morning strategy sessions readily merged into afternoon paddling and cycling outings.

"Customers are surprised we have more than one store [because] we retain a single-shop atmosphere," says Newlon. "I like that anybody in this company from the newest employee to the oldest employee can pick up the phone and talk with Steve or Jeff."

According to outdoor vendors, Blue Ridge's forte is indeed the people it has on its sales floor. "One of the hardest things for any [retailer] is turnover with sales people, and [grooming] knowledgeable sales people," says Jack Gilbert, president of Mountain Hardwear. "Blue Ridge has some loyal employees who have been with them for a while and are [genuine] outdoor enthusiasts."

One manager has been with the company nearly as long as the owners. John Holden, who oversaw the relocation of the Charlottesville store this spring?effectively increasing the flagship venue from about 4,800 to 12,600 square feet?has been at Blue Ridge for 22 years.

"Most people in the [local] communities think the store is our store," says Holden, 59. "In any given town, the [customers] think the manager is the owner because the manager is making all the decisions. We have incredible involvement in our communities and we hold a lot of events. I exceed my [event] budget every year and I've never been questioned about my judgment or asked, 'Do you need to spend that money?'" Recently, Holden gave away 180 T-shirts as part of National Trails Day, one of nearly 200 causes the store donates to each year.

For Smith and Nauss, affording managers the authority to run their own stores and invest themselves in the local community results in an outdoor retail business that marks them as true specialists. "I'm not a retailer at heart," says Nauss, who majored in psychology at UVA. "Outdoor is the only product I could ever be selling. I like the gear and I like the people that come in to buy the gear. It is a great clientele. They have environmental concerns and they are a good customer base."

After 30 years at Blue Ridge, Nauss says it may be time to edge slowly into retirement for good, even as Smith makes him promise to keep an office and return regularly. It seems feasible. "That's one of the parameters [for working at Blue Ridge]," says Smith. "You have to be interested in the outdoors."