The multisegmented and dynamic market for baseball-style caps has spawned a handful of stores that sell nothing but. In the early '90s, Ben Fischman was in college when he noticed that an overwhelming number of his classmates (both male and female) wore baseball caps on a daily basis. Although the students considered their headgear a vital fashion accessory, no one Fischman asked could remember where they had bought their caps. Malls and sporting goods stores carried them, but after checking there, Fischman found their selection and quality seriously lacking.
In 1993, Fischman started selling licensed sports caps from a kiosk at a Chestnut Hill, Massachusetts, mall. Sales of the caps were brisk, and soon Fischman, now 27, was able to move Lids into a full-fledged retail location. Lids Corp. now has 200 locations in 40 states and sells more than 8 million hats every year.
Jack Chadsey, 50, CEO of Lids Corp., attributes the chain's success to a strong focus on quality and assortment (the company typically stocks nearly 5,000 caps in each store), as well as surges in sales that result from event-oriented marketing. "We take advantage of different events that take place throughout the year," says Chadsey. "When football season begins and the Jets win their first three games, we will make sure we have Jets hats on hand. When the Denver Broncos won the Super Bowl, within 24 hours, we had Super Bowl Championship hats in all our stores; these sold out in two or three days. Events are huge opportunities for us."
In its fifth year of operation, Lids is growing at an astounding rate, with plans to open 100 to 125 new stores in the United States each year. Also in the works: opening stores in Canada and Puerto Rico.
Another type of cap store serves customers who want to design their own caps. Cap Factory, which offers caps that are custom-embroidered on the spot by a computerized sewing machine, has grown into a 10-store nationwide chain since its launch in 1994.
"While the marketplace for licensed goods is enormous, it seemed to me there was an older demographic group that would be better served by having a customized product," says Cap Factory founder Larry Sax, 36. "There is a point in people's lives where they're a little less inclined to wear what everyone else is wearing. Cap Factory gives them an opportunity to get a hat with the name of their boat, grandkid, business or anything else they'd like."
Cap Factory employees use a PC to show customers lettering styles and graphics, and when a customer is satisfied with the design, the information is downloaded into the sewing machine. Caps embroidered using this process, which takes five to 10 minutes, retail for $17 to $30--roughly the same amount a customer would spend on a licensed sports cap.
Mail order accounts for a growing portion of Cap Factory's profits, which Sax attributes to the company's Internet advertising. Putting the company's Web address and phone number on products' tags has gotten consumer attention. "There's a tremendous opportunity with the Internet," Sax says. "With very little effort, we get a huge response."