Will a CEO’s crowdsourcing plea save Modell’s Sporting Goods?
Family-owned chain Modell’s Sporting Goods, a familiar retailer throughout the northeastern U.S., has hit the skids, and the CEO has taken an unusual step of reaching out publicly to crowdsource funds in order to keep the company afloat.
In an interview with Fox Business, Modell’s CEO Mitchell Modell announced that he was for the first time planning to sell equity in the company and that he was hoping people who were watching the show and are fans of the chain would invest in it. In the face of an ongoing downturn, Modell’s has been forced to close more than 15 percent of its stores.
Mr. Modell also created a video, posted online, in which he personally details the onset of the financial issues, discusses the company’s 130-year history in New York City (featuring members of his family) and makes a pitch to outside investors to help keep the company running.
Among the causes for the decline Mr. Modell cites are a broad shift in power from the retailer to the consumer in the past decade and, more directly, fallout from a Wall Street Journal article and a season of bad weather in 2019, which provoked a liquidity crisis. At that time the chain had more than 150 stores.
Modell’s really began wrangling with its decline early last year, when it brought on a restructuring advisor to determine how to fix the company, according to the Journal. At that time, the chain was in a position to file bankruptcy as one possible way to restructure its debt.
While brick-and-mortar sporting goods as a whole has faced challenges, some companies seem to be finding ways to successfully compete in the new economy.
Dick’s Sporting Goods, for instance, has shown signs of improvement recently, which it has ascribed in part to its increased investments in employees. In 2019, the retailer launched a new associate training program and began to focus on employee recognition, offering tiers of rewards for employees demonstrating different types of exemplary service.
- Mitchell Modell Executes Precedent Setting Crowdsourcing Campaign To Save New York Institution Modell’s Sporting Goods And 3300 Jobs – Modell’s Sporting Goods/PRNewswire
- Interested in investing? – Modell’s Sporting Goods
- Sporting-Goods Retailer Modell’s Hires Restructuring Adviser – The Wall Street Journal
- Will its culture of recognition be a game-winner for Dick’s Sporting Goods? – RetailWire
DISCUSSION QUESTIONS: Will Modell’s crowdsourcing campaign help pull the chain out of its downward spiral? What other steps will Modell’s need to take to turn its business around?