From nuts and bolts to sporting goods giant
By Jonathan Knutson
The Forum - 08/14/1999

Three acres of potatoes planted the seed for Scheels All Sports.

In 1902 Frederick A. Scheel bought a small hardware and general store in Sabin, Minn. He raised the $300 down payment by selling the harvest from three acres of potatoes.

"The store cost $600. So the potatoes got him about half of it," said Steve Scheel, company president and great-grandson of Frederick A., a German immigrant and merchant seaman.

The spud-financed store in Sabin has grown into Fargo-based Scheels All Sports, which has 20 stores and 2,000 employees in six states. The company recently began building its 21st store in Lincoln, Neb.; the store will open next spring.

Despite its success selling sporting goods, Scheels' roots are in hardware.

Frederick A. and his son, Frederick M., who bought the business in 1919, initially sold hardware and farm implements at the Sabin store. In 1925 the farm implement line was dropped.

The Sabin store closed in 1927, but Frederick M. remained in the hardware business. He bought Moorhead Hardware Co. in 1928 and Swanson Hardware in Fargo in 1930 and converted both to the Scheels Hardware banner.

The company opened stores in Casselton, Hillsboro and Fairmount, all in North Dakota, between 1940 to 1945.

In 1946 Fred B. Scheel, son of Frederick M. and father of Steve, joined the business. Fred B., a prominent amateur photographer, remains active in the company.

Said Steve Scheel of his father, "He analyzes most of what we do, which is a great help. He has the freedom to sit back and think" about the company and the industry.

A number of other members of the Scheel family have held, or currently hold, prominent positions in the company.

The company had a turning point - one of many - in 1954. It opened in stores in Breckenridge, Minn., Wheaton, Minn., and Jamestown, N.D. And in a portent of things to come, Scheels added a small selection of sporting goods to its other lines of merchandise. At the time, company officials say, nobody at Scheels realized that sporting goods eventually would become the company's mainstay.

In 1965 the company opened a store in St. Cloud, Minn. - the first Scheels store to be in a mall. Today, most of the company's stores are in malls.

By the early 1970s, Scheels found it much easier to sell sporting goods than hardware. So in 1972 the company added athletic shoes and clothing and cut back on hardware.

The evolution from hardware to sporting goods continued in the 1970s and 1980s and culminated in 1989, when the company opened its first All Sports Superstore in Grand Forks, N.D.

Today, Scheels operates a single hardware store - Scheels Ace Hardware - at 1417 S. University Drive, Fargo. Its other 19 stores sell sporting goods.

Scheels continues to evolve. Most noticeably, its stores are getting bigger. Much bigger.

In 1995 a Scheels All Sports store opened at 3202 13th Ave. S, Fargo. At 50,000 square feet, the store was roughly three times bigger than most other Scheels stores.

The Fargo store "was so big we weren't quite sure we'd be able to fill it up" with merchandise, Scheel said.

But the Fargo store has prospered, which encouraged the company to build even larger stores. The Scheels All Sports store that opened last year in Coralville, Iowa, has about 105,000 square feet and has been highly profitable.

Scheel said the company expects to add a new store - most likely a big one, given the success of the Coralville store - every 12-24 months.

Scheels is evolving in another way, too: toward bigger cities.

Today, its stores are in mid-sized cities such as Fargo, Grand Forks and Sioux Falls. But the company has begun eyeing larger cities such as Omaha, Neb., and Minneapolis-St. Paul.

"We've built up a lot of talent in this organization. We've begun to realize we might be able to go into bigger cities and dominate there, too," Scheel said.

But don't expect Scheels to abandon its time-tested philosophy of slow, prudent expansion.

"We've always been a conservatively run company. That's not going to change," Scheel said. "We're concerned with the quality of our stores, not their quantity."

Another thing that isn't changing at Scheels: The company's high expectations for its employees - and its willingness to reward employees who measure up.

Scheels likes to hire competitive people who have succeeded in sports and academics and make the commitment to succeed in business, too, Scheel said.

In return for that commitment, Scheels pays relatively well and provides a employee stock ownership plan established in 1989. Just as importantly, perhaps, Scheels offers the possibility of professional advancement for its employees.

"One of the reasons we like to add more stores is to create new opportunities for our employees. That's very important to attract and keep talented people," Scheel said.

"And that's something we have to do, because it's the employees who make this company successful," he said.

"That was true in my grandfather's and great-grandfather's time, and it's still true today."