Was Sports Authority’s implosion an omen for the rest of the sporting goods industry?
On the heels of the news of Sports Authority filing for Chapter 11 bankruptcy, other sporting goods companies are in dire straits, The Wall Street Journal notes.
Dick’s Sporting Goods, for one, reported disappointing earnings for the fourth quarter of fiscal 2015. Comparable sales for the fourth quarter decreased 2.5%.
Sports Authority wasn’t the first sporting goods store to report trouble; City Sports filed for Chapter 11 bankruptcy in the fall.
One potential reason?
It might be because the way people look at athleticism has evolved.
- Thomson Reuters
The Wall Street Journal points to a recent survey executed by the Sports & Fitness Association that notes that even though more people are participating in sports, people have spent less money on team sports since 2013. The survey also says that fewer Americans are inactive since the last survey was executed – which should be great news. However, this means retailers need to adapt.
This means that even though people are working out more, they might be working out differently than they used to – or they just don’t see a need for new sporting equipment.
It serves as a dissonance considering how many athletic apparel companies have seen skyrocketing sales; Nike and Under Armour continually report impressive results, quarter after quarter. But these companies have clear points of views, whether it’s bettering oneself or overcoming obstacles.
So these generalist have to really capture consumers.
After all, sporting goods stores like Sports Authority and Dick’s can get lost between specialty stores that appeal to those who maybe are obsessed with CrossFit or love indoor cycling – and the continual e-commerce boom.
The only way to hook customers into a store would be to make shopping there an ‘experience’ – but Neil Saunders, CEO of consulting firm Conlumino, pointed out that Sports Authority, for example, isn’t a “destination for consumers” and it’s “cheaper and more convenient to shop online or at rivals.”
It ultimately raises the question: why bother going to a generalist sporting goods store at all?
Further, pressure is mounting for sporting goods retailers. If they can’t stand out with a clear point of view and specialty, they run the risk of evaporating in the retail abyss. It doesn’t help that it’s already a tough time to be a retailer.
Dick’s CEO Edward Stack blamed some of the company’s most recent struggles on the unseasonably warm weather. That’s certainly been a problem for apparel retailers, but he also acknowledged that the industry is simply getting more competitive.
“This is certainly a unique time in the industry,” he said on a recent earnings call. “The competitive landscape is evolving which is creating pressure for some and opportunities for others.”
Dick’s has been trying to adapt, at least.
Dick’s has been focusing on a sector where it previously had paltry offerings: athleisure-style apparel. The company launched an athletic-wear offshoot called Chelsea Collective as well as an in-house line called Calia, by country star Carrie Underwood. In a press release, the company said that for the forthcoming year it would “make strategic investments of between $50 to 55 million in 2016 to enhance its shopping experience, build its brand equity and transition its eCommerce business.”