ABQ retailer finds success after ditching price matching

Duane Kinsley once feared the internet would kill his business.

Now, the 62-year-old owner of Sport Systems embraces it.

“I love the internet,” Kinsley said. “In fact, it helps me.”

Located in Albuquerque, Sport Systems is a 38,000-square-foot retail sport shop that specializes in bicycles, skis, snowboards and running gear.

The company has almost gone out of business twice in its history, Kinsley said. In both instances, the practice of matching competitors’ prices shrunk the store’s profit margins until its very existence was threatened. As a brick-and-mortar shop that staffed knowledgeable employees, Sport Systems struggled to compete with the prices offered by businesses that had lower overhead. First it was catalog companies, then specialty sporting goods sites online.

Kinsley said shoppers want to buy from local companies that are active in the community — Sport Systems has donated services, products or cash to over 60 different organizations — but they also have to consider their budgets. Many folks would only support Sport Systems if it matched prices.

“Retail used to be demoralizing,” Kinsley said.

Then five years ago, as he considered liquidating Sport Systems, Kinsley had a paradigm shift. Instead of competing on price, the store needed to compete on value.

While retail sales make up about 80% of his business, Kinsley said the remainder comes from rentals and after-sale services, such as tuneups and repairs. And services are one thing 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 wins over shoppers tempted to make an online purchase by bundling free or reduced-priced services with the product sale. Customers spend more than they would if they bought the item online, but they get more too.

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. On the sales floor, employees use the app on touch-screen tablets to facilitate discussion with customers about price and value.

Kinsley said he’s had a 250% increase in sales and profitability and nearly doubled the number of people he employs since implementing the app.

“I make my margin and I never have to discount,” Kinsley said. “I’m showing the value of my company, through my app, in dollars.”

Sport Systems also uses the internet as a sales tool in the store. When helping a customer, an employee might open the website of a manufacturer or popular online retailer 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 that reverse showrooming,” Kinsley said. “This is me now using the internet to help sell my stuff.”

Using technology allows Sport Systems to stay profitable while making deals that please the customers, Kinsley said. Shoppers get the expertise of fellow Albuquerqueans. Dollars and jobs both stay in the area.

“It’s bringing the best things of the internet with the best things of local retail.”

Why skiing? What got you into this?

“Well, I was a water sports guy. I went to Baylor, a Texas school, and I was a windsurfer. State champion in wind surfing. … Water sports is what I knew. So I started that, those companies. Then a friend of mine had a little ski rental shop that he started. It was actually started by a couple other guys, and then he said ‘Hey this little ski rental thing isn’t working out. Do you want to buy my half?’ And I said, ‘Great. I don’t do anything during the wintertime at a windsurf shop.’ So I moved my windsurf shop into their rental because they weren’t doing anything in the summer, I wasn’t doing anything in the winter. It was a good match. The two came together. And then I bought out the other partner a year later, and then it was mine from that point forward.”

How many people did you employ when you started?

“Nobody. It was just me and the partner I had. … We were very shoestring and just trying to figure out how to survive. We did more business on this Saturday than we did in the full year those first years — just this last Saturday. I talked to my staff. I go, ‘What we did today, took me a year and a half to do my first year in business.’”

To what do you attribute that growth?

“Persistence, stubbornness and hard work. You know, I’ve worked a lot of days, a lot of hours. I did every — I wore all the hats. In those early years, I worked all day, and then I’d come home at seven o’clock at night. And then I’d sit down at the kitchen table with my wife, and we do the books until 10 or 11. Wake up and do it again the next day. Now we have people in those different areas, marketing and accounting, makes it much easier to do. Now I don’t have to do all this stuff. But, yeah, it didn’t just end up like this.”

Has the growth that you’ve seen just in the last couple years created any problems? 

“Yeah, I mean, sometimes we are so busy that it’s hard to get to everybody. And staffing up. I don’t think there’s too many downsides, frankly. I think almost all of them are upsides. We’re seeing — just to give you an idea of the amount of people come through the door in the wintertime, our busy season — our whole wintertime, we see between 600 to 1,100 people per day come through the door. … I did the math last winter. We did a transaction every 93 seconds was our average, throughout all those months.”

Anything new coming up for Sport Systems? 

“Not really major things — other than we’re totally renovating 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 get to carbon neutral. We’re almost there now. I did the solar panels years ago. … We’ve done all the lighting to have, you know, more efficient lighting. We’re just kind of going step by step on all these different things. Replacing stuff. I’ve been spending a lot of money on that because that’s just kind of fun to try to get 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 out 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 someone’s gonna take it over. … So it might be an employee or an ESOP (employee stock ownership plan) kind of a situation, maybe, down the road.

“But right now, I think my only change is maybe working a little bit less. I love being in the business and doing this. It’s an amazing industry. I mean, you come to work and you sell fun to people. You sell experiences, you sell a lifestyle, you sell health. It’s a pretty good gig for the last three decades.”

About the business

Business name: Sport Systems

Leader: Duane Kinsley, owner

Industry: Sporting goods

Physical HQ address: 6915 Montgomery NE

Year established: 1985

Number of employees in year established: 1

Number of employees today: 65