Scheels All Sports Inc. History

Address:
3218 13th Avenue Southwest
Fargo, North Dakota 58103
U.S.A.

Telephone: (701) 232-3665
Fax: (701) 232-3735

Website:
Private Company
Incorporated: 1969
Employees: 2,000
Sales: $170 million (2003 est.)
NAIC: 451110 Sporting Goods Stores

Company Perspectives:

Scheels People Have a Passion for the Sport. Our 20 Stores Offer You the Midwest's Most Complete Selection of Sports Gear and Apparel for the Athlete, Fan and Outdoor Sports, Hunting & Fishing Enthusiast.

Key Dates:

1902:
Frederick A. Scheel opens a general store in Sabin, Minnesota.
1928:
Frederick M. Scheel acquires hardware stores in Fargo and Moorhead.
1954:
A small selection of sporting goods is added to the stores. New stores open across the Midwest over the next decades.
1972:
Athletic shoes and clothing are introduced as sales of sporting goods rise.
1989:
The first Scheels All Sports superstore opens in Grand Forks, North Dakota.
1998:
Scheels opens a two-level megastore near Iowa City.
2004:
Three megastores totaling 470,000 square feet are scheduled to open.

Company History:

Hunters, cyclists, golfers, runners and nearly all other sports and outdoor enthusiasts can find the gear they need at the stores operated by Scheels All Sports Inc. Centered in Fargo, North Dakota, Scheels has nearly 25 retail locations in mid-size Midwestern cities. Its stores span seven states: North Dakota, South Dakota, Minnesota, Wisconsin, Nebraska, Montana, and Iowa. The first Scheels store, opened over a century ago, was a general merchandise and hardware store. The company added a line of sporting goods to its stores in the mid-1950s and steadily expanded across the Midwest over the next several decades. As sales of sporting goods grew, hardware sales were gradually phased out. Scheels' newest locations are two-level Scheels All Sports superstores of over 100,000 square feet, organized as "boxes" containing several separately managed specialty shops. The company is owned by store managers, employees, and the Scheel family and is led by Steve Scheel, great-grandson of the founder.

A Chain of General and Hardware Stores: 1902-64

In the early years of the 20th century, Frederick A. Scheel, a German immigrant, moved to northwestern Minnesota from Chicago with his wife, Augusta. The couple gave their children, Frederick M., age 10, and Margaret, age 8, the job of planting and tending a three-acre potato plot. The field produced 300 bushels of potatoes, which the family sold for $300. The proceeds were used as the down payment for the first Scheels store, a hardware and general merchandise store in the tiny town of Sabin, Minnesota, near the North Dakota border. The total cost of the store was $600.

Frederick M. Scheel, son of the founder, bought the business in 1919 after returning from service with the U.S. Navy in World War I. At the time, the store was selling hardware and farm implements. The farm implement line was dropped in 1925. In 1927 Carl "Charlie" Buth and Chris Kuehl took over management of the Sabin store.

Frederick M. stayed in the hardware business, moving to the Fargo-Moorhead area on the North Dakota/Minnesota border. He bought the Moorhead Hardware Co. in 1928 with his partner Memfred Nelson and the Swanson Hardware Co. in downtown Fargo the following year. Both stores were converted to Scheels hardware stores.

Between 1940 and 1946, Scheel opened hardware stores in Casselton, Hillsboro, and Fairmount, North Dakota, all small communities in the Fargo area. The Fargo store also moved to a new downtown location. Frederick M.'s son Fred B. joined the family business in 1946 after a stint as a Marine fighter pilot in World War II. A second son, Charles, became active in the business the next year.

Several new stores opened in the early 1950s: first in Wheaton and Breckenridge, Minnesota, both communities a short distance from the Fargo-Moorhead area, then a few years later in Jamestown, North Dakota, about 100 miles west of Fargo, and finally, in a great leap west, a Scheels store opened in Billings, Montana, in 1955.

In a propitious move, Scheels added a small selection of sporting goods to its hardware stores in 1954. More and more sports lines were added over the following years in response to customer interest. In 1962, the company opened a second Fargo location, a hardware and sporting goods store at the Southside Shopping Center. That year Scheels also relocated its Moorhead store, doubling its size, and shortly thereafter moved the downtown Fargo store to a location about a block away. Robert Scheel, a third son of Frederick M., joined the business in 1964.

Expanding the Sporting Goods Line: 1965-88

Scheels store managers found that sporting goods were easier to sell than hardware, and sporting goods sales drove the steady expansion of the Scheels chain over the next four decades. In 1965 the first Scheels store to be located in a mall opened in St. Cloud, Minnesota. Another store started operations that year in Bismarck, North Dakota, followed by a store in Great Falls, Montana, in 1968. In 1969 Scheels was incorporated in North Dakota. It opened stores in Mankato, Minnesota, and Waterloo, Iowa, that year as well.

Athletic shoes and clothing were introduced at Scheels stores in 1972. That year the company opened a third store in Fargo, at the West Acres Shopping Center. The West Acres store was a small 7,700-square-foot shop almost entirely devoted to sporting goods, particularly athletic apparel. Meanwhile, hardware lines were being cut back at most Scheels stores.

In 1974 the Scheels partnerships were converted into a corporation with Charles Scheel, grandson of the founder, acting as president. Rapid expansion continued: stores opened in Minot, North Dakota, in 1974; on the north side of Fargo in 1975; in Cedar Falls, Iowa, and Sioux Falls, South Dakota, in 1977; and in Sioux City, Iowa, in 1981. The Minot store moved to a mall location, the Dakota Square Mall, in 1980.

Although the Scheels corporate offices were in Billings, Montana, in the 1980s, most of the corporate control came from Fargo. A central advertising office coordinated direct mailings and newspaper ads for the Fargo-Moorhead area and offered advertising support for more far-flung locations. To a great extent, however, individual stores were allowed to function independently. Each store took care of its own buying and the corporation pooled orders for price negotiations. Store managers determined benefits for their own employees. Managers were allowed to buy into the company up to a point depending on their store's size and were also allowed to reserve a certain percentage of profits for distribution to employees.

By 1984, sporting goods accounted for about half of the chain's business. The Southside Fargo store, for example, operated like two stores under one roof: the awning on one side of the storefront advertised a sports shop while the other half of the 24,000-square-foot site was a hardware store. By the mid-1980s, Scheels was operating 15 Hardware and Sports Shops in five states. Several of the early hardware locations, including those in Casselton, Hillsboro, Fairmount, Wheaton, Breckenridge, and Jamestown, had closed. The hardware store in Bismarck, North Dakota, had also closed, but a new store opened there in 1984. It was the first Scheels store devoted exclusively to sporting goods.

Opening Sports-Only Superstores: 1989-94

In the late 1980s, Scheels began opening a series of sports-only superstores. The company was getting ready to leave hardware behind and market its sporting goods lines on a much larger scale than previously. The first Scheels All Sports Superstore opened in Grand Forks, North Dakota, in 1989. The 30,000-square-foot store was larger than any of the company's existing sites, and none of the space was needed for hardware. But as the sporting goods displays started to be installed, the company found it had no problem using up the floor space. Steven Scheel told the Fargo Forum a decade later, "We looked at it when it was done and thought, 'How are we going to fill this up?' And then it was full!"

Scheels also introduced an employee stock ownership plan in 1989. The company was interested in attracting high achievers with a personal interest in sports and the outdoors. Scheels paid employees more than many retailers and offered full-time associates the opportunity to become involved in product display, buying, and management, thus developing a long-term career at the company. Sales associates took part in Scheels "universities," where they went directly to the outdoors to test and become experts in the products they were selling.

In 1990 Charles Scheel stepped down after a 15-year tenure as company president. His position was filled by Steve D. Scheel, a son of Frederick B. Scheel. Frederick B. had become well known as an amateur photographer but remained involved with the family business in an advisory capacity for another decade. In 1991 Scheels opened a store in Sioux Falls, South Dakota, its second in that city. The company moved its existing Mankato location to the River Hills Mall in 1993 and opened new stores in two new cities in 1994: Rapid City, South Dakota, and Appleton, Wisconsin. The Appleton Scheels store was the company's first foray into Wisconsin.

Another Scheels All Sports Superstore opened in 1994 on 13th Avenue in south Fargo. The Grand Forks superstore that had been opened five years earlier had filled up so easily with merchandise that the company was ready to make another leap forward in terms of size. With 45,000 square feet of retail space and 30,000 square feet of office and warehouse space, the 13th Avenue site was about three times as large as an average Scheels store. The company spent an estimated $750,000 to $1 million to renovate the building, which formerly held a Best store. With the opening of the new superstore, Scheels planned to close the nearby Southside Scheels Hardware and Sports. However, area residents said they still wanted to be able to buy hardware from a Scheels store, so former store managers Bob Scheel and Bob Alin took over the site as partners and converted it to a hardware-only store. As a result, Scheels closed its north side Fargo store instead. The West Acres site in Fargo continued operating as a small neighborhood store with a focus on shoes and apparel. The new 13th Avenue store proved to be very popular. Another large store--50,000 square feet--opened at the Oakwood Mall in Eau Claire, Wisconsin, a year later.

Ever Larger Megastores: 1994-2004

Now that the superstore model had been tested and proven profitable, Scheels moved ahead with new locations that dwarfed the original superstores. The company had touted the size of the 13th Avenue store in Fargo, but in 1998 a site twice that size opened near Iowa City. The 105,000-square-foot two-level store would be one of six anchors at the new Coral Ridge Mall near the intersection of interstate highways 80 and 380. In the center of the store was a realistic looking 66-foot-high Sequoia tree. The new Scheels superstores were operated as "boxes" that housed a number of independently managed specialty shops for everyone from bowlers to baseball players. Special merchandise areas within the Iowa City store included small shops set up by adidas and Nike, a section devoted to University of Iowa Hawkeye gear, and a part of the gun department featuring premium guns costing $10,000 to $30,000.

Scheels began expanding and relocating some of its older stores as well, moving many of them to mall locations. The Cedar Falls, Iowa store moved to the College Square Mall and the Billings, Montana store moved to the Rimrock Mall in 1999. The Eau Claire store was expanded to 80,000 square feet in 2001. In addition, a new two-level 80,000-square-foot superstore opened at Southpointe Pavilions in Lincoln, Nebraska. This was the first Scheels site in that state.

With grandiose superstores opening up around the Midwest, the 13th Avenue store in Scheels' home town no longer seemed so impressive. Even though the site had been open less than a decade, Scheels made plans to replace it with a true superstore. The company acquired land in a southwest area of the city that was expected to become a retail destination in the coming years. The plan was to construct a $19 million, two-story, 140,000-square-foot building at the site. The Moorhead and West Acres sites would still remain open to serve the customers in their respective areas.

Scheels celebrated its 100th anniversary in 2002. That year it consolidated its two Sioux Falls, South Dakota stores into a single 109,000-square-foot superstore. In 2003 the company opened its fifth double-decker megastore in the Fox River Mall in Appleton, Wisconsin, replacing the existing 16,000-square-foot store in the same mall. The site also featured a 65-foot artificial tree in the middle and carried goods ranging from fishing poles to fudge to running shoes to Northwoods gifts in a log cabin lodge. Later that year the Sioux City, Iowa store was moved to a new location at the Southern Hills Mall and expanded to 65,000 square feet.

Three store openings were planned for 2004. In March a 128,000-square-foot store opened in St. Cloud, Minnesota, after relocating within the Crossroads Center mall. A 177,000-square-foot store was scheduled to open in Omaha in May and a 179,000-square-foot store was expected to open in August at the Jordan Creek Development in Des Moines. This would be the largest Scheels All Sports store in the United States.

Principal Competitors: Gander Mountain, Inc.; Cabela's Inc.

Further Reading:

  • Gilmour, Gerry, "Scheels Plans Fargo Superstore," Forum (Fargo, ND), August 21, 2000.
  • Knutson, Jonathan, "From Nuts and Bolts to Sporting Goods Giant," Forum (Fargo, ND), August 14, 1999.
  • ------, "Largest Scheels Store Opening in Iowa City," Forum (Fargo, ND), April 4, 1998.
  • ------, "Scheels Planning to Close North Fargo Store," Forum (Fargo, ND), April 27, 1994, p. A1.
  • "Scheels Hardware & Sports: Changing with the Times," DIY Retailing, November 1984, p. 84.
  • Wallenfang, Maureen, "Scheels Tries to Reel in Families," Post-Crescent (Appleton, WI), June 19, 2003, p. 8D.

Source: International Directory of Company Histories, Vol.63. St. James Press, 2004.