Gregg Throgmartin, a scion of the h.h. gregg family, worked his way up to chief operating officer of the retail chain and was part of the team that helped the company grow and eventually go public, before he left his position at the end of March.
But he isn’t resting on his family’s laurels. Instead, Throgmartin, 36, is spearheading the growth of a burgeoning new Fort Lauderdale-based chain of specialty bike stores, called Bikestreet, which he helped found. He has just moved with his wife and children from Indianapolis to Boca Raton, after becoming Bikestreet’s majority owner, chairman and chief executive.
With a passion for retail, he says he has found an industry niche that had remained fragmented. His goal is to elevate Bikestreet, which now has 17 stores in Florida and the Carolinas, to become a nationwide retail chain. In two years, the chain already has become the nation’s second largest, after Performance Bicycle, he said.
“We think we can become an iconic brand in the industry,” Throgmartin said.
We met with Throgmartin at Zimmerman Advertising’s new Fort Lauderdale offices, which is his founding partners’ base of operations. We then emailed him these questions, to which he responded.
Q. Tell us about your background and how your family's business got started.
A. My great-grandparents founded h.h. gregg in 1955 in Indianapolis, Indiana. They kept things very simple: Treat your employees like family and provide outstanding customer service. Like most retail concepts the idea is simple, but executing it at a high level day in and day out is the challenge. Years later, my grandfather, Gerald, had a very lucrative job selling appliances at Sears (back when Sears had 50 percent market share in appliances), but he decided to join the family business. The company made $22,000 the year before he joined and $44,000 his first year so he was always able to pay for himself. He was and is a tenacious negotiator and salesman. My father worked his way up the company (starting in the warehouse) and eventually took over as CEO.
From the time I could walk, I loved going to the office with my grandfather, and that love for retail never changed. When I finished my last class at Indiana University, I drove straight down to our store in Nashville, Tennessee, to begin my job as a salesman for h.h. gregg. I skipped the graduation ceremony and had them mail me my degree.
I had many roles along the way including a store manager, district manager, regional manager, and VP of sales/operations. I was blessed to have amazing teachers throughout my career and ended up becoming the COO. My father, who passed away over two years ago, taught me everything I know. But not everything he knew. Not a day goes by that I don’t miss talking shop with him.
Q. Tell us about h.h. gregg’s growth over the years?
A. h.h. gregg had 33 stores when I started at the company and today has 228 and does about $2.5 billion in annual sales. A lot of the credit for that goes to Dennis May, the company’s current CEO. I’ve been around many retailers across a broad range of products and Dennis ranks in the top 1 percent. The company has made a profit every year since 1955, and I believe it’s because the leaders at the company all began working in the warehouse or on the sales floor. Our corporate office served as a store support center, and my father would always preach that “you either sell something or serve someone that does.”
My father had a great talent for keeping things simple. I started my sales career in Nashville for two reasons: It was the farthest away from home, and it was an underperforming store. My father did me a big favor by putting me in challenging situations and being tough on me. I’m sure there were negative comments about me, but I would highly doubt that anyone would say I was handed anything. Wonderful mentors, luck and a small pinch of talent helped me grow throughout the company.
Q. What about the ownership change at h.h. gregg? Is your family still involved?
A. Around 2005, my father saw a window opening in the market that would require h.h. gregg to speed up our growth, and he knew that we needed to find a partner that had experience in growing retail concepts. We found that partner in Freeman & Spogli, a private equity firm based in Los Angeles. The company went public on July 20, 2007, and my family is still a shareholder.
Q. How did your next venture, Bikestreet, come about, and when?
A. Bikestreet was an idea that Pat Patregnani, CEO at Zimmerman advertising agency, had about two years ago. He assembled a group of investors, which I was part of, and acquired our first group of stores. I was so attracted to the concept because it’s one of the few remaining industries that’s completely fragmented. Ninety-four percent of all the shop owners in the U.S. have two stores or less. When you have one or two stores, you simply can’t afford the people or the systems to operate in an efficient and sophisticated manner. One example is the Web. We are in the process of rebuilding our website to provide our customers a cutting edge research and shopping experience. We are only able to do that because of our scale.
Q. What was your initial involvement and ownership share and your role now at Bikestreet?
A. I started out as a very small investor, but as the concept started to prove itself out, I decided to make a major investment. On March 31, I left h.h. gregg and started April 1 as the chairman and CEO at Bikestreet. I also became the majority shareholder.
Q. What was it about the bicycle industry that appealed to you.
A. Most people would assume that I got into this business because I’m an avid cyclist. I do ride, but it’s one of many hobbies that I enjoy. My real passion is retail.
What’s so exciting about this opportunity is we can have a win/win/win outcome. The small independent shop owners can join a team that provides capital, systems, buying power, e-commerce, and back office support. Most shop owners got into the business because they love to sell, service, and ride bikes. Not because they love the bookkeeping, logistics, etc.
I’ve also found that these people want to be part of something bigger. They want and need people to share ideas with and to compete against. In addition to all that each shop owner owns part of the new company so they have a chance to build some wealth as the concept grows. Win for the shop owner.
The suppliers in the bike industry have to deal with over 5,000 outlets. So it’s difficult for them to have their brands presented in a consistent fashion and its also costly for them to ship bikes one to two at a time.
Bikestreet’s goal is to have the best-educated and most helpful associates in the business. I’m confident we can achieve this because at h.h. gregg we were able to win that distinction five years in a row from JD Powers. Win for the supplier. Finally, Bikestreet as a company can win because we’re able to gain significant leverage over our costs and enjoy some synergies.
Q. How does Bikestreet fit into the industry, and what is its philosophy?
A. One of the biggest challenges I see in the industry is it can be intimidating. Our goal is to be approachable. That means our people, but also our prices. There are customers that buy $5,000 to $10,000 and that’s great. But we get just as excited about selling a $299 cruiser bike to someone who wants to stroll around the neighborhood. People spend so much time talking about price, but in an age where you can pull out your mobile phone and see everyone’s price, I think price is the table stakes to be in retail. We happily compete on price but really differentiate through our experience.
Q. What are you looking for in bike stores that are candidates for acquisition?
A. Volume is important, but that comes second to the shop owner. We want someone who can make the transition from being their own boss to being a team member. We also are looking for shops that do one thing truly outstanding that we can replicate throughout the company. Finally, we want a shop owner who is engaged in their community. We believe we can still operate as the local bike shop, only with better resources.
Q. Who is your target customer, and how do you differentiate yourselves from other stores?
A. Our value proposition to the customer is pretty simple. You can buy a bike a big-box store, like Dick’s, for X. Or you can buy your bike at Bikestreet for the same price, but have it custom-fit to your body and have it worked on by trained mechanics. Probably two out of three people I see riding their bikes are improperly fitted.
Q. What was Bikestreet’s revenue in 2013, and do you have projections for 2014?
A. For competitive reasons we don’t disclose our revenue, but I will say that it’s well in excess of $10 million a year and growing double digits every month.
Q. How do you want to see the company grow?
A. Our first order of business is getting our stores to have a consistent look and feel. We have an exciting prototype store we’re developing, an enhanced fitting system, and additional service offerings that I believe will be industry-leading. We are in the first inning of refining this concept.
We’re growing because we think the customer deserves a better experience. The minute we are unable to execute on our promise of a better experience, we will slow or stop growth. Being private is a beautiful thing because we don’t have a growth number to hit. If we find 20 shops this year that meet our criteria, then we’ll grow by 20 stores. If we only find three that meet our criteria, then we’ll grow by three.
Ultimately, I believe we can build a brand that is the Lululemon, Zappos and Whole Foods of bike retail. Brands that transcend the product.
Q. What is next for Bikestreet?
A. Our new website is a top priority along with enhancing our employee training platform. We want to continue to strengthen and deepen our relationships with our suppliers. With regards to acquisitions: We have some shops that we are in talks with and some that we are admiring from afar with plans to engage this summer.