John Forzani

The emergence of Chinese manufacturing companies at the Montreal Hockey Show in 1979 marked a significant shift in the sporting goods industry including hockey. The subsequent business environment stemmed from Chinese company’s need for scale and consolidation of the retail sector. John Forzani grew up in Calgary’s Little Italy. He was influenced from his father’s successful business ventures. His mother instilled her 3 sons with strong work ethics and a passion for achieving their goals on and off the field. In fact, his success on the field, particularly winning the Grey Cup during John’s rookie year elevated his status as a local hero. John decision to pursue a degree in Business Administration equipped him with knowledge and skill to navigate a $9000 investment of a single 1000ft store on Calgary’s 17th Avenue, to growing it to over 500 stores. His brother Joe and Tom attended University and became an integral part of the business.

In the early 1970’s the hockey industry was dominated by mom-and-pop stores. In fact, they had 75% of the market, which included groups such as Sports Excellence, and Source for Sports. However, it was Forzani Group that mimic rapid consolidation of large-scale consumer sporting good products on a retail level that brought in a new strategic approach. The CEO of Canstar Icaro Olivieri was the Canadian King of hockey gear. Canstar consolidation included Bauer, Micron, Lange, Mega, Daoust, Cooper, Flack and inline skates. Nike’s consolidation included Converse, Canstar Sports, Umbra, and of course Jordan. The Forzani group answered the call by consolidating various sporting good brand and retailers under their umbrella. Forzani Group was able to lower their retail cost by owning real estate, streamlining operations that enhanced their competitive position in the market place. The Forzani Group negotiated better deals with suppliers, optimizing their supply chain and improving overall efficiency. Additionally, having a diverse portfolio of brands and retail outlets enabled them to carry a wide range of consumer preferences and capture a large share of the market place.

John was smart by purchasing Gen-X Sports, a liquidator of manufacturer’s excess inventory. It enables the Forzani group increase margins in the footwear business. It was a license to print money and it help footwear manufacturers with less disruptions devaluating their brands. With new cash flow, John purchased the venerable National Sports name and its strong position in the marketplace. With hockey equipment, margins are substantially lower and unprofitable compared to footwear. It is tough to say how much John paid for National Sports. However, the deal added 486,000 square feet of retail space, expanding his reach in the hockey market. John added more real estate by purchasing Athletic World. Athletic World was owned by Beta Shoes and generate over $100 million in sales. However, they owed creditors $160 million. John scored big. He paid $1.5 million for the company and assumed $20 million in debt, paying creditors over 10 years.

Unfortunately, the Forzani Group faced many hurdles when American superstores such as Sports Authority and Sportsmart Inc entered Canadian territory. Rather than being strategic, John decided to fight fire with fire. John expanded his operations of the Sport Chek stores duplicating inventory, overstocking stores, and created management disorientation throughout his corporate expansion. John had to refinance the group’s debt to delay bankruptcy.

Forzani Group troubles gave some breathing room for independent stores. When faced with a powerful adversary, traditional rivalries often give way to a united front, aimed at preserving collective interests. Sports Excellence at that time faced financial woes and sport distributors decided to sit on the sidelines. Toronto Hockey Repair was dealing with 20 independent retailers with respect repair services. It was an uneasy alliance because everyone wanted to tear each other apart. However, I managed to get Pete Martin, the publisher of the Sporting Scene involved. We wrote several articles attacking the Forzani Group and the American superstores. In fact, we succumb to the same ruthless tactics as the big box stores, eliminating our moral high ground and winning at any cost. We highlighted the importance of fragmentation and confusion in the market place and a means of disenfranchising consumers. Thereby necessitating the survival strategies for independent store owners in an increasingly hostile environment to terminate us.

The independents hastens their own demise temporary by getting the message across, highlight the importance of strategic differentiation that sheer size and power does not determine success. Sports Mart and Sport Authority left Canada all the independents rejoiced in their victory. The independents reverted back to attacking each other and hating each other. But lurking in the horizon was John Forzani. He became stronger and he learned from the experience and over time the independents became the vanquished. When John Forzani died, his brother said “it is unbelievable what he accomplished in 67 years, astronomical! It is a sad day.” John sold his business to Canadian Tire for close to a billion dollars. John Forzani was extremely intelligent which made him a great figure in the sporting goods industry. Indeed, he was a great warrior and opponent that deserves respect.