Scheels (1902), a company review

Scheels

Of all large outdoor retailers, Scheels is probably one of the most interesting case studies. (Read my feedback on the stores that I visited last week, below.) Again, theirs has been a long and winding road, and boy does it have a story to tell. Let’s start, at the start…

For many residents of North Dakota, the name “Scheels” evokes feelings of “tradition” and “family,” as the Scheels stores have been a part of the Scheel family legacy there now for five generations.

The story of Scheels began with Frederick A. Scheel, a German immigrant who was born in 1858 in Hanover, Germany. He made his way to America in 1885, where he eventually met and married Augusta Fraino in Illinois.

In 1892, Frederick and Augusta welcomed their son, Frederick M. Scheel, named after his father. I wasn’t able to find Margaret’s DOB (their other child who was born within a couple of years).

In 1900, the Scheel family relocated to Minnesota, where Frederick worked as a bricklayer in the small town of Sabin. The family eventually also cultivated potatoes on their paltry 3 acres of land - little did they know that they were laying the foundation for the SCHEELS legacy. The story goes that with the $300 earned from their initial harvest, Frederick made a down payment on a modest hardware and general merchandise store in Sabin (located about five miles southeast of Moorhead). Frederick A. Scheele decides to drop the ‘e’ from their surname, officially becoming Scheel. And so it started.

Young Frederick, or Fred M. Scheel as he was known, received his education at Sabin Public School and Dakota Business College in Fargo.

At the age of 23, Fred took over his father’s hardware store in 1915 after working at a bank. Following his service in the Navy during World War I, he returned home and married Mabel Benedict in 1919. By then the store had expanded to also offer groceries and farm equipment, obviously responding to market demands.

Scheel the younger soon expanded his enterprise by purchasing the Moorhead Hardware Company in 1926. Several years later, in 1930, Scheel bought the Swanson Hardware Store in Fargo at 220 Broadway, and from this first Fargo store, the Scheel’s legacy in North Dakota really began - as it would become the future flagship location.

A real connection to the military is front and center in their history, and remains to this day. From their website:

“In 1946 Frederick B. Scheel, son of Frederick M. Scheel, joins the business after returning home from WWII and a tour of duty as a Marine Corps Aviator flying an F4U Corsair in the South Pacific. Today, SCHEELS honors this family history of military service by supporting many local units before and after deployment, donating to numerous memorials, and contributing to organizations that support our veterans.”

A year later, in 1947, Charles Scheel, brother of Fred B. Scheel, also started working in the family business while studying at North Dakota State University. After Charles graduated, the brothers teamed up as partners. Over the next few years, with their father's assistance, they grew the business by launching new stores in North Dakota, Minnesota, and Montana.

Momentum grew between 1952 and 1956. Charles Scheel took on the role of company president, while his brother, Fred B. Scheel, remained the director and chairman. The family tradition carries on as Fred’s son, Steve D. Scheel, began his part-time work at just 8 years old. Robert Alin and Lloyd Paulson came on board and soon become partners at SCHEELS. Between 1959 and 1965 the Moorhead store moved to a new location, increasing its size to 20,000 square feet. Additionally, a second store is set to open in Fargo, while St. Cloud, Minnesota, will be the inaugural SCHEELS store to operate within a shopping mall. Following his service (continuing the family tradition) as a Marine fighter pilot, Robert Scheel, the third son of Fred M. Scheel, joined the family business.

Contd’ below this poll…

SCHEELS became an incorporated company in North Dakota and expanded the business throughout the Midwest opening stores in Montana, Minnesota, North Dakota, and Iowa.

During the 70’s and early 80’s SCHEELS partnership converted into a corporation with an executive committee board. The business continued to expand into Sioux Falls, South Dakota, and added stores in North Dakota, Iowa, & Montana. Despite initial pushback from his father, Steve Scheel pushes for a larger selection of sporting goods at the Sioux Falls location, and his efforts prove successful. In fact, by 1980 the store converted entirely to sporting goods, & other stores follow suit.

By 1984, with sporting goods accounting for about half of the business (proving Steve right), it was clear that newer and larger stores would need to be built to accommodate the vast selection of products, from hunting and camping gear to athletic apparel and footwear. In 1989, the first “All Sports Superstore” opened in Grand Forks, ND. This was considered their flagship store at just over 30,000 square feet.

Another generational milestone was reached in 1989 when Steve M. Scheel started working in the business as a part-time shoe stocker. The story goes that just two weeks later, he was already selling shoes. His father, Steve D. Scheel, took on the role of president and CEO, focusing on developing leaders as a key priority for the company. During the 1990s, the company expanded, opening new stores throughout the Midwest, including its first location in Wisconsin.

1991 was a red letter year, not just for Scheels but for the industry and beyond, as people stood up and took note. This was when SCHEELS converted from family ownership to an EMPLOYEE STOCK OWNERSHIP PLAN, or ESOP. This plan was to motivate associates by allowing them to benefit directly from SCHEELS’ continued success and growth. Today, SCHEELS is ONE OF THE LARGEST ESOP COMPANIES IN THE USA and “writes multi-million dollar ESOP retirement checks to longtime associates each year” as they say themselves. And there are many stories of longtime employees benefiting from this ESOP in retirement, with big payouts. Personally, I think this is wonderful, and I’ve found a number of examples online:

‘Marsha Kringstad, a former shipping, receiving and defects manager at SCHEELS, is now enjoying the weather in Lacey, Washington all thanks to the retirement benefit the SCHEELS ESOP provided her. Kringstad spent 31 years in freight rooms like the ones pictured on this page in both the St. Cloud and Fargo stores and was able to retire with over $1.5 million due to the ESOP retirement plan, something she wouldn’t have been able to do working at many other freight rooms. “SCHEELS made a lot of this possible for me,” said Kringstad. “Because of them, I was able to move out here and be closer to family.”’  https://fargoinc.com/100-employee-owned-scheels-and-its-employees-are-enjoying-the-benefits-of-employee-ownership/

1998 was the year that Steve D. Scheel’s vision to make SCHEELS a destination, rather than just a retailer became a reality with the centerpiece tree in the Iowa City store—which opened at 105,000 square feet and is the first multi level SCHEELS.

Steve Hulbert took the reins at the beginning of the ‘noughties’, and this decade marked the next phase of expansion, including many stores moving to larger locations and the beginning of www.scheels.com. As was typical of the time, the website began as a brochure or information site, before selling gift cards in 2005 and its first products in 2006. Today the website is one of the best we’ll find, which seems to lean heavily on Salesforce from a quick look at the developer tools.

In the meantime, the first signature Scheels Ferris Wheel took flight in Omaha, Nebraska in 2005. And in the same year marked the opening of the Des Moines store in Iowa, which was noteworthy as it was the World’s Largest “All Sports Store” at the time, measuring in at 179,000 square feet. In 2006, and after more than 40 years in the business, company President Steve Hulbert retired. Steve M. Scheel steps into the position of President, meaning the fifth generation of family leadership at the company. His father, Steve D. Scheel becomes CEO/Chairman. So, it’s back in the family… In ‘07 the company actually pioneered its own Visa program, which further encouraged loyalty.

The 2008-2012 period was difficult, putting it mildly, for everyone in retail - especially in retail that focuses on discretionary income. And while Scheels was no different, astoundingly, its weathered the recession, free of any layoffs or downsizing. In fact, just before the beginning of the recession, “SCHEELS tops the World’s Largest All Sports store record for the third time when it opens the Sparks, NV store at 295,000 square feet. This new store is nearly 100,000 square feet larger than the previous record store in Fargo, built two years earlier, and features dozens of attractions, including the first walk-though SCHEELS aquarium.” Nothing like timing, as they say. But, they made it through, and two years later, construction is complete on two new stores, each over 200,000 square feet with the first SCHEELS locations in Illinois and Utah.

In 2015, Bill Nelson became president, at a time that the company had grown to 6,000+ employees. Steve M. Scheel became CEO, & Steve D. Scheel became Chairman of the Board. 2 years later FUZZIWIG’S CANDY FACTORY and SCHEELS partner to bring confectionery in-store, further cementing the experience commitment. In 2020, SCHEELS passed its own record as the World’s Largest All Sports Store with the opening of The Colony, TEXAS location. At 331,000 square-feet, the store features more than 85 specialty shops and attractions.

The trend of passing the leadership baton to family and longtime employees continued as Todd Anderson became president in 2021. Todd started in 1991 in-store in Sioux Falls, SD. And, the great-great grandson of the founder of SCHEELS, STEVE M. SCHEEL retired this year, and was replaced as CEO by Matt Hanson. Matt started as a part-time cashier at SCHEELS in Mankato, MN, and astoundingly worked his way up. It’s refreshing to hear that this is still possible today.

Indeed much about this great name in Outdoors and Sports is admirable. Again, innovation is at the heart of everything they do - especially in store experience. Which is what sport and outdoors should be about - experience. I’ve been to a few of their stores, most recently in Colorado, near Fort Collins. And one thing that is striking is the affection with which it is spoken about among both employees and customers. This is down to the real authenticity of the company at ground level - across their 34 stores. Something that can’t be measured in a branding document, or even on social media. Not ‘pretend’ authenticity; it’s real. 

(Employee photos from scheels.com)

Brick and mortar - quick comments

While traveling in the US last week I visited a number of outdoor stores. REI in Austin, Cabela’s in Buda, Yeti in Austin, Patagonia in Austin, Dicks in Paramus NJ, EMS in Lake Placid along with 4 independent specialty stores in NJ and NY state. And, my impressions?

• Cabela’s - Old and jaded. Struggling for life, and, I think, identity. I’d imagine that Cabela’s big brother will be on these soon.

• REI - predictable at this stage and a little tired as well.

  

• Yeti - more lively for sure, but again, only the colors change. C’mon Yeti…..

• Patagonia - is, well, Patagonia. Again, only the colors change. I guess, if it ain’t broken, don’t fix it. Also, I sincerely admire their mission, but I sometimes get the impression that I’m being lectured to in Patagonia stores?!?

• Dick’s in Paramus, NJ - Winner alright! Fresh, vibrant, lively - even on a Wednesday morning. Noticeable that the outdoors specific section is getting even smaller though, as sports expands.

• EMS, Lake Placid, NY They’ve gone through a tumultuous 2024 at a corporate level, and it shows in store. Here’s hoping they get out of it under the new stewardship of Mountain Warehouse.

• Independents - It’s tough out there, but they’re fighting the fight. The good ones are finding solace and attempting to grow online, with the added benefits of having bricks and mortar. But none are making major capital investments in their stores, and who can blame them with the current uncertainty? The mid-sized ones with higher payroll are particularly hard hit. But all are looking hopefully towards 2025. Special shout out to our friends in Campmor, NJ, in business since 1978!

Closing thought: All are having to fight harder than ever to get footfall in store. So, how? Firstly, I think stores must be bright and inviting (take a bow, Dick’s). Assortment - I sometimes wonder if we’re trying to pack too many SKU’s in. Finally, can we use the space for small outdoor focused events? Talks? Discussions? Anything that brings people in and creates vibrancy? Can also create content for social?

PS, it’s clear that the future of Sports and Outdoor will be more and more closely intertwined, as SCHEELS and DICKS have already shown. Watch that evolve much further over the next few years. Amazon have categorized them together for some time now, and with good reason.