Hedging their bets: Stanley Cup playoffs force retailers to gamble on winners
Pittsburgh Penguins fans celebrate the Penguins 5-4 victory over the New York Rangers during the frist game of the Eastern Conference Semifinals of the Stanley Cup Playoffs on April 25 at Mellon Arena.
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In the final moments of today's playoff game between the Penguins and the Flyers, a pile of "if-when" contracts could be triggered.
If Pittsburgh clinches, thousands of Eastern Conference championship T-shirts and hats will be rushed into production and shipped to stores. If Philadelphia wins, those contracts sit in limbo for whenever the series comes to a decisive conclusion.
This is the "chase business," said John Horan, publisher of trade publication, Sporting Goods Intelligence. Even as Sidney Crosby and Scottie Upshall chase pucks around the ice, vendors and retailers are poised to chase the sales that victory brings. Blink and the business opportunity might go flying by.
"The key is to get the product to market while the fans are still euphoric about the win," said Matt Powell, an analyst with SportsOneSource, a company that tracks the sporting goods industry.
The National Hockey League may not be the massive merchandise mover, at least in the United States, that the National Football League or the National Basketball Association are -- NHL licensed sales here last year came in around $1 billion while the NBA's were around $2.5 billion, said Mr. Powell -- but the league and the merchants who carry licensed goods are stepping up their game.
Take the new strategy being tried by the league's online store. Officials there estimate the bulk of last year's sales involving Stanley Cup merchandise came within 72 hours after the final buzzer sounded.
This year, they're trying to buy a few more days. For the first time, Shop.NHL.com will allow fans of the two Stanley Cup playoff teams to demonstrate their confidence by ordering locker room T-shirts and hats even before the first game of the series is played.
But no harm, no foul. An order will be filled only if and when a fan's team takes home the prize.
"It's a good awareness builder," said Perry Cooper, vice president of NHL Direct. Consumers who check out the online store early in the series will be able to see what's being offered and make their plans. "It really lengthens our sales window."
Such a system also gives the league advance warning on the type of sales that might be generated by one team vs. another. That helps determine how much to order when writing up all those if-when contracts.
There are so many ifs in this game.
Karen Ford, retail manager of the store that Aramark operates at Mellon Arena, had been thinking through the various possibilities last week as her phone continued to ring off the hook with vendors offering merchandise.
The Flyers' victory on Thursday meant the Penguins have a chance to clinch at home. "If you win it while you're home and in your building, you're going to sell more," she said. A stack of T-shirts could be wiped out in 10 minutes as 17,000 mostly jubilant people pour out of the arena.
But a series that ends in an away game leaves retailers -- whether in Detroit, Dallas, Philadelphia or Pittsburgh -- wondering where fans might rush to pick up memorabilia.
Dick's Sporting Goods, a several hundred-store chain based near Pittsburgh International Airport, has locations in all four markets with teams still in the playoffs and contingency plans for most eventualities. "We're watching by the hour," said Jeffrey Hennion, executive vice president and chief marketing officer.
The retailer's staff is tracking sales of hockey merchandise to decide where to try to bring in more inventory and where to ease up. It also happens to be doing the same thing for the NBA playoffs.
"If we're seeing strong sales out of a certain jersey or a certain hat, we'll do our best to chase that product and get more in," said Mr. Hennion. The Penguins' call for fan "whiteouts" at some games spurred the company to stock up on white apparel.
Dick's stores in the markets that win conference championships, and later the one with the Stanley Cup, will rapidly bring in gear celebrating the achievement. They may stay open late or open early to give happy shoppers a place to spend in support of their team.
Other retailers are positioning for a potential rush, too. The J.C. Penney store at Ross Park Mall last week had posted notices on its doors saying, "When the Penguins clinch the Eastern Conference Championship, we will have locker room tees and hats available."
Just how many T-shirts and hats a retailer orders may depend on how long it has been since a particular team has been in a conference championship or Stanley Cup final. From a sales point of view: The longer, the better.
The last Stanley Cup seen in Pittsburgh arrived in 1992. The Flyers have been waiting even longer.
The Boston Red Sox 2004 World Series win, Mr. Powell said, was the biggest single event in licensed apparel history. Fans there hadn't been part of a World Series win in almost nine decades. Talk about pent-up demand.
Fan base size and location also can be a factor. The NHL shop staff estimated that both Pittsburgh and Detroit have vast numbers of followers who live outside easy reach of a team store, giving an online store plenty of opportunity.
About 50 percent of Penguins' sales through Shop.NHL.com come from addresses outside of the state, with heavy concentrations of customers in New York, Ohio, New Jersey and California. And 60 percent of Red Wings' sales come from outside of Michigan, with 10 percent of those orders from California.
Whatever orders the various retailers do commit to -- if and when -- somebody has to be prepared to get it done.
Pittsburgh's experience with the Steelers and the Super Bowl means there are businesses around the region that know how to handle the assignment. That might mean rushing to print up T-shirts or quickly glue the winning team's logo onto an embroidered cap.
"You can make 1,000 T-shirts in an hour," said Mr. Powell.
Even vendors outside the market can move pretty fast. Ms. Ford was considering putting an order in for a few Stanley Cup garden gnomes.
"I'm thinking about it," she said with a laugh. "They are sort of cute."
If it all works out just perfectly, all the stuff will sell out before that gotta-have-it feeling fades or new developments make the goods obsolete.
Markdowns were already in place at the NHL online shop for several 2008 Playoffs One Team One Goal T-shirts featuring clubs such as the Anaheim Ducks, the Calgary Flames, the Nashville Predators and the Montreal Canadiens.
Taking advantage of short-term opportunities is worth it, said Joslin Warren, director of E-commerce, who noted demand has been strong for a $19.99 Penguins vs. Flyers "Tickets Please" T-shirt that seems to have a limited shelf life. "Obviously, we're not going to buy thousands of units."
First Published May 18, 2008 12:00 am