JackRabbit limped to the close of 2016 a hobbled beast. The nation’s second-largest running retail group, The Finish Line-owned chain of 65 run specialty stores across 18 states endured mounting losses and swelling liabilities. After years of hunting deals and purchasing well-known industry names such as Boulder Running Company, Run On!, Bob Roncker’s Running Spot and Garry Gribble’s Running Sports, JackRabbit struggled to be one cohesive enterprise. There was tumult and instability and a shaky, uncertain future.

But then CriticalPoint Capital appeared, confident in JackRabbit’s underlying portfolio and specialty retail’s potential despite a rapidly transforming retail landscape.

The Manhattan Beach, CA-based private equity firm, which touts “patient capital and a thoughtful approach to growth,” purchased JackRabbit from The Finish Line in early 2017 for the grand sum of zero. Over the last two years, CriticalPoint has bandaged JackRabbit’s wounds, restored its confidence and supported revenue-boosting moves that have helped JackRabbit find its footing.

“The business you see today is radically different than the one we acquired two years ago,” CriticalPoint Capital partner Brad Holtmeier says of the now 62-unit JackRabbit operation. “Our stores have comped up, our digital has grown and we’re on a mission to strengthen service, boost the brand and increase density in the channel.”

And industry insiders have noticed the shift.

One executive with a leading footwear brand says JackRabbit-owned stores continue working to re-establish their community credibility after The Finish Line “tried to sterilize” the business and install remote operations.

“I see a clear change in how they’re attacking things and much more focus on being the best version of themselves,” the executive says. “That’s definitely for the better.”

A veteran industry sales rep who regularly calls on JackRabbit units, meanwhile, cites heightened focus on operations and customer service as well as a more positive, optimistic tone among store staff.

“And that’s bred more confidence over the last year,” the rep says.

Holtmeier admits CriticalPoint, a run specialty outsider, had much to learn – and quickly – about the running retail landscape upon acquiring JackRabbit in 2017. He acknowledges CriticalPoint didn’t understand “all the things necessary to service the consumer,” both in brick-and-mortar stores as well as on the digital side, nor did the firm fully comprehend the important relationships between vendors and retailers in the channel.

“There’s been a lot of trial and error,” Holtmeier confesses.

And a lot of change.

Holtmeier and JackRabbit CEO Bill Kirkendall talked with Running Insight about JackRabbit’s evolution over the last two years.

On leveraging JackRabbit’s  larger size...

When CriticalPoint purchased JackRabbit, Kirkendall called the deal “an outstanding result” for JackRabbit, expressing confidence that CriticalPoint’s strong backbone would support the retailer’s growth and its efforts to gain market share.

Indeed, CriticalPoint’s focused presence has enabled JackRabbit to better leverage its size to improve store operations and optimize performance. The company, for instance, has actively wooed talent with enhanced benefits and internal growth opportunities; delivered enhanced resources and proven systems into its stores; and developed a robust omnichannel approach that allows JackRabbit’s stores to service the customer anywhere, anytime. As a result, negative comps have turned positive, digital sales have increased and JackRabbit’s margins have improved.

“We’ve created a platform that has grown and is positioned to grow further,” Holtmeier says.

On JackRabbit’s relationships with running vendors...

After previously chasing some affiliated endeavors like active and CrossFit, JackRabbit has worked to strengthen its ties with running-specific vendors. Through vendor-powered store events, shop-within-a-shop opportunities and more focused ordering, JackRabbit continues developing and deepening its relationships with the running market’s key brands.

“We’ve doubled down on running and that’s resulted in higher service levels, more knowledgeable staff and greater vendor support,” Kirkendall says.

At the same time, Kirkendall continues calling on brands to release innovative product and better control distribution so JackRabbit and its run specialty peers – those who give the vendors a valuable boost of authenticity – can best represent brands in the marketplace.

“If we have disciplined distribution and innovative product, then we will provide the experience to drive the customer in,” Kirkendall assures.

On the JackRabbit name...

Though once holding plans to convert all storefronts to the JackRabbit name, leadership has elected to withhold rebranding the entire fleet.

“During the due diligence process, we didn’t have a full appreciation regarding the powers of the brands we were acquiring,” Holtmeier says. “The reality is that some of these brands have great power in the markets they serve.”

While 22 stores currently bear the JackRabbit name, others, particularly those with potent names in their local markets like Boulder Running Company and Run On!, will retain their existing identity, albeit with some discernible affiliation to JackRabbit present in the store’s physical and digital identity.

“We will be selective about where we keep the name,” Kirkendall says.

On the biggest change of all, store autonomy...

Rather than simply existing as a local outlet of a national chain, Critical Point has given stores the ability to operate entrepreneurially and autonomously within their markets.

This critical shift has empowered individual stores to become the community hubs that running specialty shops are, by and large, designed to be.

Under The Finish Line, for example, store marketing was done from a central office in Denver. Today, however, individual store leaders oversee their own marketing budgets, which they can independently invest in the events, races or programming they regard as the most valuable.

“Giving stores more autonomy has been a tremendous morale booster and empowered store leaders to be more effective in their respective communities,” Kirkendall says.

Notably, Holtmeier says store events, which drive passion among customers as well as sales within the stores, increased in 2018 and will accelerate further in 2019.

“Retail is tough and we truly believe we have to create an experience for our customers,” he says. “Our management team has done a great job bringing traffic into our stores and our entire team is aligned to one goal, which is servicing the runner.”

On the next steps...

Just as it did upon the JackRabbit purchase, CriticalPoint leadership remains bullish on run specialty’s potential.

“Our view is that niche retail will survive, that it is something wanted and needed,” Holtmeier says. “And, frankly, that thesis has held out.”

With that optimistic outlook and a more stable business in hand, JackRabbit has returned to growth mode. Over the last year, the company has purchased Rhythm Running, a specialty retailer in Nashville, as well as Clever Training, a multisport e-commerce retailer. JackRabbit also opened its own doors with units in Houston, Fort Worth and Tampa.

“We have a healthy business that continues to grow and we expect this to continue down the road,” Holtmeier says, adding that CriticalPoint, which enjoys building through acquisition, will continue to monitor any and all growth opportunities, whether that’s adding stores or accelerating the digital business. “Our business is in a position to look at the next opportunities and we see a lot of different channels in which we can continue to grow.”

With confidence in its model for opening new units, leaders continue assessing different geographies, particularly the West Coast, as well as opportunities in JackRabbit’s current markets.

“We go from the East Coast to Salt Lake City, so we have runway … and there’s a lot more to be had,” Kirkendall says.