Every sports brand has close out and every sports brand looks for the cleanest way to liquidate their close out stock with minimal market impact to protect both the core customer base and the brand equity.
Often European based stock lines are moved to other business units in “less sensitive” markets in the world and/or the stock is diluted across many markets and many customers.
Certainly sports retailers, in any market, are willing to embrace close out stock as a way to enhance margin and to offer the consumer substantial savings off RRP without margin erosion.
From the brand perspective however there always remains the trade off between the value of in-line stock commitment given and the close out business taken (where, of course, brand margins are massively eroded).
Certainly there are pure play close out specialists that are incredibly successful and where this trade off is less relevant. MandM Direct are one such example where, by working closely with selected brand partners and targeting end users by leveraging their database, catalogue and web presence they can provide an excellent solution for sports brands looking to move large volumes of excess stocks.
What started from placing newspaper adverts adversing close out has now grown to a multi million pound business working across sport and fashion.
However, in today’s new world, this traditional approach is being challenged by a new phenomenon – flash sale sites – which are not only taking close out products and pushing to a new audience but are also bringing wider sales opportunities to sports brands.
Flash sales are exactly what their name suggests – sales in a flash. With an air of exclusivity and luxury brand names, flash-sale websites host limited-time sales for members only.
How these websites work is simple. They order stock from brands after the sale has closed, enabling them to pass on the biggest savings. And with free membership and discounts of up to 80pc, shoppers are now logging on in the thousands.
The only drawback from these sites is that delivery can take up to four weeks, but many shoppers will think it is worth the wait.
Perhaps the most prominent of these sites is Groupon. Launched in November 2008, to target specific cities and their surrounding areas with special offers, Chicago was targeted first followed shortly by, Boston, New York City and Toronto. By October 2010 Groupon served more than 150 markets in North America and 100 markets in Europe, Asia and South America and had 35 million registered users and was offering flash sale opportunities across a wider range of goods and services including sports equipment.
As the number of registered users has grown in the UK Groupon has captured the modern consumer who, despite the recent tough economic times, love to spend money. They especially love to spend money where they get a discount or a perceived bargain. Groupon works because it provides motivating choices for its motivated group of consumers.
Secondly, Groupon can easily become viral, and its daily discounts spread quickly through email. Groupon subscribers like to forward the deal-of-the-day as recommendation links to their friend. In a world of social media and online personal suggestions, an email suggestion carries a lot of clout.
The initial success of Groupon, and other sites such as Wowcher, was initially driven by deals in local businesses such as restaurants, beauty salons and hotels however as the databases have grown so the opportunity to target these deal hungry consumers with almost anything has grown.
In the same way that consumers get swept along by a bargain within the likes of Sports Direct they are now getting swept along by sporting goods deals offered by Groupon.
From a brand perspective the appeal is growing – where else can you shift 20,000 units with a week long promotion?
For some brands however the Groupon environment it not where they want their products to be seen- something that didn’t go unnoticed. Sports Pursuit, launched in August 2011 and within the space of less than two years has grown its membership base to over 1 million users and continues to grow apace.
Initially targeting triathletes with limited time discounts on new gear the business has evolved to embrace over 600 brand name suppliers across sports in general.
A key business driver has been the use of social media with a high profile Facebook and Twitter presence allowing Sports Pursuit to gain traction very quickly and to take advantage of word of mouth referrals and to tap into the sports enthusiast.
From a psychological perspective consumers love to refer and recommend a new deal or an offer and uncover something that their peer group are not aware of.
Sports Pursuit takes full advantage to this.
Such was the immediate success of the business that within 12 months they had secured £1.4 million in a Series A funding round from angel investors such as Peter Draper, former marketing director of Manchester United football club, Zoopla CEO Alex Chesterman and Lovefilm co-founder William Reeve.
By February 2014 a further £5 million had been raised and many sports brands have now begun targeting the company for core strategic growth.
The proposition too has moved beyond clearance deals with core suppliers already developing SMU programmes and special activities to reinforce this air of exclusivity and “secret deals”.
Spots Pursuit are driving change within the sports trade and have certainly used social media to great effect to enable them to build a core database. They have then used more traditional direct marketing techniques to continue to grow new users and connect with existing users.
As the customer base for sports brands continues to evolve it is clear that flash sale sites do offer a new channel opportunity and, one would imagine, is an area that will continue to grow over the coming years.
Businesses such as The Clymb in the US have proven the model can be incredibly successful in the sporting and outdoor goods arena and Sports Pursuit, and others, will continue to offer new opportunities for the brands.