Internet Being Blamed, at Least in Part, for Demise of Sport Chalet

The once-popular chain, which had a strong presence in the Inland Empire, fell victim to online shopping as well as competition from another brick-and-mortar sporting goods retailer. Now, some mall managers have space to fill.

Little by little, the Internet continues to eat into traditional brick-and-mortar retail.

Five years ago, Blockbuster, Circuit City and Borders were all leaders in their respective market sectors: video rentals, electronics and books and music.

Today, all three of those retailers are gone, put out of business to one degree or another by the Internet and Amazon, which has made it convenient for many shoppers to buy certain goods without ever leaving their house.

Radio Shack and J.C. Penney can also be on the long list of U.S retailers that fell victim to Internet shopping.

Both have filed for bankruptcy, and while they’re still in business – Radio Shack is currently partnered with Sprint, the telecommunication giant – neither enjoys anything close to the market share or customer loyalty it once did.

Now another well-known retailer can be added to the list of probable Internet casualties, this time in the sporting goods sector.

Sports Chalet, founded in 1959, announced April 16 that it was closing all 47 of its stores by the end of this month.

The chain operates 40 stores in California, six of which are in the Inland Empire along with a warehouse-distribution facility in Ontario. Sport Chalet also announced that it was suspending its online sales immediately.

In its statement, the La Canada-based chain thanked its patrons for nearly 60 years of loyalty but offered no explanation for its action. All that was left was two weeks of closing sales so that as much merchandise as possible could be moved.

One Inland Empire economist said he was not surprised by the announcement.

“Not at all,” said Chris Thornberg, director of the UC Riverside Center for Economic Forecasting at the School of Business Administration. “Anyone who knows anything about retail knows there are some [traditional] retailers that are having a difficult time competing with the Internet, and sporting goods stores are one of them.”

“Sports Chalet is kind of high end, which I think made it a little more difficult for them.”

There’s no question that more and more people are shopping on the Internet. Online sales during the 2015 holiday season were up 20 percent compared with the previous year, according to internetretailer.com, which cited data from MasterCard Advisors.

Total e-commerce sales in the United States last year were $341.7 billion, an increase of 14.6 percent compared with 2014, according to the U.S. Department of Commerce.

E-commerce sales accounted for 7.3 percent of all U.S. sales in 2015, up from 6.4 percent the previous year, the commerce department reported.

Sports Chalet was under assault from several fronts, according to one long-time Inland Empire real estate broker

“I think they had a lot of competition, not just from the Internet but also from Dick’s Sporting Goods, which has a lot of good locations and seems to be doing well,” said Rick Lazar, senior vice president with Coldwell Banker Commercial Sudweeks Group Redlands. “That hurt them, but the Internet is having a major impact too, without a doubt.”

Some mall managers now have to find a way to fill space that Sport Chalet will soon vacate.

Aldi, the discount grocery chain that is making a major move into Southern California – it plans to open 45 stores in the region by the end of this year – might be a good replacement for a vacated Sports Chalet location, Lazar said.

“There are a lot of options, but if I were recommending someone I would probably say Aldi,” Lazar said of the chain that has opened nine stores in Riverside and San Bernardino counties since March. “It’s a solid business model and they’re looking for more locations. Dick’s Sporting Goods is the other one. Those are two that come to mind right away.”

Citrus Plaza in Redlands is looking for a retailer to fill the approximately 40,000 square feet that will soon be vacated by Sports Chalet.

Fortunately there are several retailers interested in the space, so it shouldn’t stay empty for long, said Tom Cozzolino, senior vice president and director of development for Majestic Realty Co. in the City of Industry, the plaza’s owner.

For now, Majestic Realty officials are waiting for the bankruptcy procedure to play out, a process expected to take about two months. That will determine the fate of Sports Chalet’s lease with Citrus Plaza and how quickly the space can be filled.

“It can be difficult to find one retailer to fill 40,000 square feet, but in this case we should be able to do it,” Cozzolino said. “There are enough interested parties – maybe four or five – and Citrus Plaza has always been successful. We should get if filled pretty quickly, and don’t expect to have to subdivide it.”

In most cases, filling a vacancy created by a Sport Chalet closing should not be difficult, Thornberg said.

“It depends on what kind of a mall you have, but the economy is in pretty good shape and there are enough retailers who are doing well and are looking for space,” Thornberg said. “If it’s a mall that people want go to, then filling the space shouldn’t be a problem.”

U.S. shopping malls currently have an average occupancy rate of 93 percent, the highest it’s been since 2007, so retailers aren’t having a difficult time finding space, said Jesse Tron, spokesman for the International Council of Shopping Centers in New York.

Tron acknowledged the growth of e-commerce during the past 10 years of so, but said economists and retail analysts might be overstating its impact.

“It’s not growing as much now as when it started, and it’s making up about seven or eight percent of all retail sales,” Tron said. “That isn’t a big number. I think it has plateaued.”