Paul Sherratt of Solutions for Sport takes a closer look at the pitfalls facing any new entrants into sports retail.
As the cycle begins again and the sales meetings and trade shows come round I find myself on the road again visiting sports shops throughout the UK & Ireland and pondering what does the future hold for our industry?.
I’ve said many times before in this column that things are changing faster than they have ever done – the bigger are getting bigger, the specialists in many areas are doing well but the “all things to all people” stores are slowly dying – and I seem to be faced more and more with sports shops who are getting further and further away from what consumers except to find on the High Street.
Poor shop fronts, merchandising, point of sale, signage, ranges and more leave many of our sports stores seemingly stuck in the 1980’s, or best the 1990’s!
Of course, its not true for all, but I began to ask myself what does it take to open a sports shop in the UK & Ireland in 2015, what mistakes should one avoid and what best practice can be employed.
At first site there are a number of core areas to consider
Will you be online, bricks and mortar or both?
Understand that if you are launching a transactional website that this needs to be treated the same as if you were opening a physical store.
Time and time again I see retailers investing in websites only to be disappointed with the results when it is complete. The analogy is simple – you can build the best online store in the world with the best product range and prices but if you don’t know how to run it or don’t drive traffic to it it is the equivalent of opening a sports shop if the middle of a field. No one will visit, No one will buy and you will have no business.
Likewise if you are opening a store consider the area. Where is it. What are the local sporting amenities like?
Will you specialise? If so which sport(s)
Its clear the in the past few years the sports retailers that have specialised seem to be generating strong revenues.
Sports such as running, triathlon and cycling have all seen steady growth and sports participation trends seem to indicate a shift from traditional team sports to more individual sports.
Prospective sports retailers could do well to take note of these trends and establish where the future lies, whether there is still some growth opportunities or whether there is a new trend just around the corner.
Don’t underestimate the power of the multiple.
If you have a sports multiple on your doorstep look for a point of difference – alternative brands and different product ranges are a starting point. You will always find it difficult to compete on price and therefore don’t be tempted to go head to head – you will never win.
Instead focus on service and breadth of range and look to build a loyal customer base based on these stronger business development principals.
Consider a buying group?
As the industry consolidates so too do the buying groups. With STAG and Intersport now the only remaining UK & Ireland buying groups any new sports retailer has a clear choice.
Both offer support to in a variety of areas from preferential credit card rates through to merchandising and more.
Yes they have selective criteria for new members and both will consider the financial robustness of your business – admittedly if you are a start up this is something that is difficult to gauge if – however both buying groups will also happily engage in dialogue and may well provide invaluable advice.
Do you have links into local community?
If you are considering opening a high street store then consider closely where your audience are.
If you are providing a specialist offer then make sure that you have, or can create, close links with that specialist community i.e. if you are a racket specialist engage the local tennis, squash and badminton clubs or as a running store link into local running clubs.
These consumers will be the back bone of your local support.
Consider your specialist sports store as the artisan butcher or baker. If you can provide great product ranges and superb service then price becomes less of an issue.
Go that extra mile.
What else can you bring in to encourage the consumer?
Perhaps something to test the product such as a treadmill or gait analysis machine, or an added value investment such as a stringing and printing machine etc.
The more you can offer and the stronger the point of difference the more successful you will be.
How will you merchandise
Todays successful Hight Street stores focus on directing the consumer to core store areas and into core products.
Clever use of shop fittings, signage and point of sale is the key to this – look at some of your own favourite stores and try and apply the same rules.
Make sure you keep things clean. Less is more. Give the consumer clear sign posts as to what you are what you sell and what areas of the shop cater for
How will you connect? Social Media? Website -eCommerce or not
Multiple touch points are key. You customer will expect to find you online so you need to consider a website (transactional or not), your social media presence, local sponsorship/activity, perhaps even local press or radio.
The more relevant touch points you have the more successful you will be.
Use as many resources as you can to research the market.
Read the trade magazines, go to the trade shows, don’t be afraid to pick up the phone – you’d be amazed how much advise you can glean from such activity.
Don’t give up.
Do I believe that opening a new sports store in 2015 is viable? – theres no doubt that there still opportunities out there both and and off line, however the days of the slightly disorganised, old fashion, small and dark sports shop is over.
The modern day consumer expects an environment where they can interact and connect with the retailer and his product range.
He or she does not want to be wading through rows and rows of apparel on clothing rails and to unsure which area of the shop they can find what they are looking for.
Less is more is undoubtedly the current trend and if any new entrants into our industry (or any existing ones for that matter) can embrace this then there may well be a sounds future for them in the sports trade.
As I sit here enjoying my summer holiday I allow my mind the chance to wander a little.
I’ve just read the latest results from JustEat – The company, which listed on the London market in April of last year, said that sales had increased 62pc to £157m as the company processed takeaway orders worth more than £1bn for its 8.1m customers last year.
So whats’ that got to do with the sports trade I hear you ask.
Well, the core issue that JustEat addressed within the fast food market, and the reason why it has grown so rapidly, was the simple fact that whilst most local independent takeaway businesses knew that they should be online to attract a greater share of the market, most did not know how to manage this process or did not have the resources or expertise to implement such a strategy.
Which got me thinking. How many of our sports retailers face exactly the same issue?
I lost count of the number of conversations that I was having with sports retailers who could see that the sporting goods industry around them was changing faster than ever and yet they felt, for various reasons, unable to adjust and adapt to these changes to such an extent that I launched our own Solutions for Sport New Media division to address these demands and now continue to see an ever increasing number of clients come knocking at the door looking for simple eCommerce solutions.
Whilst each new business is different they all share a common requirement – supplier data. They need, as a minimum, images and product descriptions to ensure that their sites are up to date with the latest products.
Of course as we create more and more sites then this data becomes common to an increasing number of clients and as such we are slowly creating our very own in house database of the latest product information from multiple suppliers using this as the basis for site updates and effectively building our very own central database which holds supplier product information.
One giant database
If we think on a bigger scale lets imagine a database that could hold article numbers/product codes, product names, bar codes, images, descriptions, and perhaps even stock availability from the majority of core sporting goods suppliers.
One vast system that represented sports industry data on such a scale that subscribing members could access this data to use for their own purposes whether it be to populate their stock system, or even their own website.
For the forward thinking eCommerce retailers much of this type of information is already being requested and is already being supplied by many within our industry.
Lets take Intersport, for example, who are requesting supplier data to enable them to drive forward their central stock information strategy.
The ultimate objective is for all Intersport members to have an EPOS system enabling Head Office to better analyse, amongst other things, sell through and top sellers, however this system can only be effective if ALL supplier new product information is uploaded to the EPOS system.
And, of course, this is exactly what suppliers are, logically, being requested to assist with.
OK, it does not include product images or descriptions, however if one takes this principal forward and it did include such information, then in theory, each individual Intersport member could tailor an eCommerce offer specific to their store and to the lines that they stock.
One could imagine a website where the marketing of the site would be done centrally (as is the JustEat model) and the actual set up of a site for each individual member would be as simple as checking a few boxes.
In reality this is not the route that this particular business has chosen, instead deciding that a central site would be more effective, however what’s to stop another collective, STAG for example, taking this route and providing an exciting member benefit. Encouraging suppliers to submit this data and members to support the lines that are listed would be mutually beneficial for all parties.
Lets imagine a scenario where a retailer could set up his own online store by simply registering a domain name, adding his logo/colours etc and then choosing from an already preloaded database that has the bulk of all the latest products from his core suppliers.
No time spent uploading new lines – simply choose which price to sell at, select the lines that he has chosen to purchase, and hence have in stock, and amend any other element the retailer sees fit.
As easy as listing an item on amazon marketplace where, by simply inputting a bar code, all the required information is already to hand.
OK- maybe the infrastructure would need to be a little more sophisticated i.e. enable a huge variety of shop fronts, fonts, styles etc to allow the retailer to maintain a point of difference and reinforce their identity, but if the data was gathered then this future could be conceivable.
The biggest hurdle then is data.
Or is it.
As our eCommerce retailers become more demanding will it become every day practice for suppliers to simply provide a .csv file to our retail partners containing everything they need?
If so then a simple upload of these to the central database would provide everything required.
So there you have it.
It all seems so simple when you allow your mind to wander and to think what the future may hold -when I get back from holiday I might just start building that database!
As I settle down to pen this article there is one topic dominating the news in the sporting world – the FIFA debacle.
At all levels the game of football has been moved firmly into the spotlight and, as part of this focus, some parties are now looking towards FIFA sponsors for comment and pressure.
This got me thinking about the potential pitfalls in sport sponsorship and what, if anything, can be done by sponsors when events such as those happening in Zurich hit the headlines.
A little research soon brought up some interesting conflicts that have arisen in the sporting world over the last fews years.
But first some statistics;
In 2011, the worldwide total revenue generated through sport sponsorship was $35.13 billion (according to PriceWaterhouseCoopers) and was predicted to steadily increase to over $45 billion by today.
The principal of sports sponsorship is to transfer the goodwill that supporters feel for the sport to the benefit of a brands equity and therefore any dilution of this message is not welcome from a sponsors perspective.
Not quite perfection.
Lets take, for example the winning goal in the 2010 FIFA World Cup?
Germany’s Mario Gatze 113 minute winner was a dramatic conclusion to the event but bitter sweet for the sponsors – wearing adidas kit but Nike boots, neither brand was able to fully capitalise on this captivating moment and therefore exact images of the moment were not subsequently used by either brand.
Of course it would have been a very different story if Gatze had poked in the winner wearing Predators or if Germany had been wearing Nike kit.
Sticking with football, it comes as no surprise that most sponsorship conflicts tend to occur between player agreement and team agreements.
The Premier League model player contract (Form 26) contains provisions which obliges players to take part in official club events and promotional activities and attempts to anticipate how that should interact with the player’s own private endorsements.
One would anticipate that this ensures that the position is clear and that the player, whilst on club business, should wear the apparel relating to the club apparel sponsor, however in reality something as innocuous as a team photo can lead to direct conflict if a player has a separate apparel contract under their own commercial terms.
Neither party is in breach of contract, however there is no doubt that brand dilution and consumer confusion can occur in such circumstances.
Coca-Cola v Pepsi
Setting aside player versus club issues a 2013 Manchester United pre season friendly in Australia highlighted the importance of commercial sponsorships in football.
It appears, according to the Australian media, that Manchester United were willing to disappoint over 80,000 fans in Sydney in row over fizzy drinks.
Just 20 minutes before kick-off at the ANZ Stadium, United were refusing to take the pitch as long as the stadium’s giant screens were flashing up ads for Coca-Cola.
This was unacceptable to Manchester United’s commercial department who were on the brink of signing a multi-million pound sponsorship deal with Pepsi in the Asian-Pacific region.
The deal does not even include Australia, but United were not going to take any chances about offending Pepsi.
“Man U’s commercial department threatened that the team would not run out if the Cola-Cola sign stayed on the big screen,” an ANZ Stadium spokesman confirmed.
Coca-Cola are one of the main backers of the stadium which complicated the issue.
The Football Federation of Australia were even called in to help mediate proceedings and a compromise was finally reached where all Coke ads were replaced by ads for Mount Franklin water – another Coca-Cola Amatil product, but not a direct rival to Pepsi.
The Tiger Woods Scandal
In recent times the Tiger Woods scandal further highlighted the perils of brand association with disgraced athletes.
The Bedford Group recently reported on a US study following the breaking of the Woods story and the direct commercial impact that it had on two of the key sponsors that chose to stick by their man – EA Sports and Nike.
The study, conducted by Bruneau, C. & Crawford, A.(2010) concluded that, at initial release of the scandal, these two companies suffered the greatest cumulative stock loss of 5.55%.
The study shows that these two companies experienced the biggest initial negative impact from the scandal than the companies that chose to end their sponsorship deals with Woods.
In spite of this though, the study also shows that Nike and EA Sports appear to have recovered from those initial losses and that stock price reflects the perception of future profits and growth.
The case demonstrates that an athlete or team facing negative publicity can be forgiven by U.S. consumers in a fairly short time and overall, that the U.S. consumer public is relatively forgiving of companies that sponsor athletes or teams that incur the negative publicity.
Its clear then, that as sport and leisure becomes increasingly important, that sport sponsorship looks set to grow even further.
Being involved directly in the sport, many of us can recall the benefits of having the right athlete at the right time – think, for example, Freddie and KP for Woodworm or Nadal & Roddick for Babolat – sport sponsorships can clearly produce innumerable benefits but companies have to recognise that there are inherent potential risks.
Who knows what the FIFA fallout will be and it the likes of VISA, McDonalds, adidas and others will be forced to rethink their football sponsorship strategy.
What is clear is that companies should be sure to have a risk management strategy before entering a sport sponsorship agreement and be fully aware of the pitfalls that may arise.
In recent years the own brand, or private label, phenomenon has been making big headlines.
In grocery Aldi and Lidl continue to make huge strides with their combination of a small targeted number of branded products sitting alongside their own private label offerings.
In our own sporting goods industry many of our successful retailers follow a similar model.
Over time Sports Direct, for example, has grown its own label strategy by purchasing distressed brands and then selling them at a discount within the stores thus making a manufacturer to retail margin (as opposed to a manufacturer to wholesale margin).
Decathlon (still the worlds biggest retailer of sporting goods) uses exactly the same strategy but this time has simply pushed its own brands so much over time that they have in their own right become brands.
The trend can be seen right through our trade with the likes of JD Sport, MandM, the Intersport group, DW Sports and others all finding the right mix between the international brands and their own brands to boost margins and to provide a point of difference to the end consumer.
Online retail specialists, such as Wiggle and StartFitness are also getting in on the act
Consumers demand brands for the quality assurance and emotional satisfaction, however it is becoming ever more apparent in the sporting goods market that these brands do not have to be manufacturer brands.
The Decathlon Approach
For twenty years Decathlon followed a single brand policy with great success.
Today, the Decathlon Group has moved on from this approach and created specialised brands each one of them positioned on a precise sporting branch of industry: b’Twin, for example, specialises in mountain bikes and road bikes; Wedze in boardsport on snow, and Kalenji in walking, running and cross-country running.
Together, these “passion-brands” make the Decathlon group one of the first ten world’s manufacturers of the sector behind Quiksilver, Nike, Adidas, Timberland, Columbia, Salomon, The North Face and Patagonia
Interestingly this strategy has also allowed Decathlon to not only compete at the “mass market” end of the market but, by siting these “passion brands” in the areas where the product development teams can embrace the sport (e.g. in the mountain or by the sea) they have been able to create technically excellent products at higher price points with higher margins that can credibly compete against the international sporting goods manufacturers.
The Sports Direct Approach
If we compare the SDI approach with Decathlon the “passion-brand” approach has been developed not by stating from scratch and building up the brand through in house teams but, predominately, by acquisition.
This results in the lines between “international brands” and in-house/private label brands becoming blurred – arguably a good thing as the consumer is often presented with a “branded” product at an exceptional price unaware that the brand is, in fact, owned by SDI and to all intents and purpose is thus a private label.
The challenge and opportunity facing SDI is to develop the higher margin and higher price point end of the business by producing more technically acceptable product. This is easier to achieve if the acquired brands (e.g. Dunlop and Slazenger) have a heritage that allows price points to be pushed, however Decathlon appears to have a distinct R&D advantage over its rival in this area at present.
The Independent Retail opportunity
With this approach of private label business sitting alongside core branded lines set to continue in the near future the question is whether the smaller sports retailers are able to take advantage of this trend.
Clearly there are several areas to explore when considering an own label approach and these factors are often the main barriers to the smaller independent retailer looking at the topic more seriously:
Problem: You have no experience at all in dealing with factories, product design, importing etc.
Solution: Use a reputable agent or company that has expertise in this area, a proven track record and can site examples of the work that they have done and provide testimonials from past and current clients.
Minimum Order Quantities (MOQ’s)
Problem: As with any product line MOQ’s will apply based on a variety of factors such as material used, size of factory, type of item etc etc. Often these MOQ’s can be very high compared to the sale opportunity and thus the project cannot proceed.
Solution: Club together with fellow minded retailers and spread the MOQ amongst the members. This results in all the advantages of improved margin, points of difference etc but without the excessive cash flow risk.
Problem: small retailers do not often have the storage space to store large quantities of products and are used to operating a “little and often” business model.
Solution: rent some small space for a limited period time using cost effective businesses such as Big Yellow Storage.
Problem: lead times, particularly from the Far East can be as much as 4-6 months depending on factors such as time of year, type of product being manufactured etc.
Solution: Often this issue can simply be solved by improved planning. Once you get into the mindset of long lead times the business can be planned accordingly.
As my own business has begun to address these issues on behalf of clients we have seen for ourselves not only the ease with which many of the issues can be overcome but, more importantly, the additional revenue and margin gains that these businesses have experienced through developing their own brand strategy.
Some clients have progressed from taking generic branded products (such as a basic t-shirt or hoody) and adding some branding and changing the back neck label to trial the idea, whilst others have taken the leap having the confidence to commit to, for example, 1000 sock tri-packs knowing that, based on past sales history, that the stock can be sold.
Whatever your approach it is clear that, when done effectively, the own brand strategy can reap rewards.
I don’t know why, but in recent weeks I seem to be having more and more conversations with sports retailers about “checkout candy”.
Maybe its because many are online and understand the concept but for those of you that don’t, let me explain.
Put simply the phrase refers to “temptation at the checkout”. You know the sort – sweets around the till. In fact in the grocery industry there has been considerably pressure for retailers to withdraw from this strategy as it is too successful!- apparently consumers are simply unable to walk by a row of sweets without purchasing them thus affecting their health!
In simple terms checkout candy is recognising the ability to upsell which, according to Dr Jon M. Hawes, director of Akron University’d Fisher Institute for Professional Selling “spells the difference between ‘just getting by’ and having a very profitable year,” “Revenues from upselling are usually over and above a store’s break-even point, so the extra sales quickly turn into profits.” Retailers commonly enjoy sales increases of 20 percent or more when they start upselling.
OK. But are there simple ways to implement this strategy in the sports trade?
The surest upsell is to offer additional related items for something a customer is already purchasing.
If the customer is buying athletic shoes then you might like to suggest insoles. Why not place an insole in one shoe and not in the other so that when they try them on they can feel the difference.
This is a strategy that Footlocker employ incredibly successfully incentivising staff and ensuring that conversion rates remain high and that incremental business levels are maintained. You might also suggest things like shoe care products – a classic shoe shop upsell.
Consider the things you would want if you were the customer making this purchase – if you bought a camera, you would want to buy an extra battery, a case to carry it in, extra flash card and a card reader so you could get your pictures off to your computer, all the things necessary to create the best possible experience with the product.
In a wholesale setting, try and find out everything you can about the customer’s business and offer other related products. Appeal to most wholesalers desire to simplify and give them the option to get everything they need from one place–your place.
The accessories element of any retail business should be one of the most profitable areas.
Online retailers thrive on the “you may also like” or “customers viewing this also bought” prompts within their sites. If you are a bricks and mortar retailer use the same strategies.
Group your products
Group relevant product areas together – tennis rackets next to balls, bags, headbands and vibration dampeners rather than simply a wall of rackets.
Running shoes next to socks and insoles, hockey sticks next to grips and balls, goalkeeper gloves next to glove wash and glove bags – the list go on but all can lead to incremental sales.
Look for future events or to tie into local activities. For example many rugby retailers are driving steady business already from Rugby World Cup 2015 pin badges and keyrings and we are still some eight months out from the event.
As well as placing the products in relevant areas alongside upsell lines look at using the till space as effectively as possible.
In front of the customer works. Tucked away behind the till doesn’t.
But its not just about having additional products to upsell alongside the purchase. Don’t forget that the initial purchase itself is an opportunity to upsell.
Not all products are equal, and especially in the sale of higher-end items, it’s good to guide the customer through different features, highlighting the benefits of more-expensive items.
Make it practical for the customer.
In a wholesale setting, you might consider different size orders that would give the customer the same product at a better deal. Bulk items generally come with a benefit, so it’s a good idea to highlight the long-term price benefit in making the bigger buy now instead of waiting to come back for more.
Upping the ante
Upselling isn’t just “extra” pounds in your till—it’s vital to the long-term profitability of your sports retail business and, perhaps more importantly, is the reason why the specialist sports retailer can continue to grow and thrive in the face of stiff multiple retail competition.
According to the experts, here’s why:
Customers may believe they are shopping for price, but they really want value. They will return only if what they buy meets their needs.
Customers feel suspicious of a pushy salesperson, but at the same time they need shopping guidance from a sales staffer who is focused on their needs.
With more stores advertising huge markdowns and discounts, you have to keep your margins up by upselling with better merchandise and cross-selling with desirable add-ons.
So next time you are looking through a trade magazine, or walking through a show, don’t forget to spend some time looking at the accessories and upsell lines.
Pick them wisely, and to complement your product offer by category, and you might just find that additional sales lift you’ve been looking for.
When Nike ID was launched in 2006 we witnessed the first tentative steps that allowed the end consumer to customise their own products and bring an added element of cache and personalisation to the sporting goods market place.
Eight years later and the innovation trend of customisation is now reaching critical mass. From breakfast cereals and decorated cakes, to vitamins, sporting goods, and luxury automobiles, customers can now create a product that they can truly call their own.
In the case of Nike ID it now has an entire floor in London’s flagship Nike Town store dedicated to this topic.
In the past, retailing and manufacturing was predicated on scale, with companies mass producing goods to achieve efficiency. Customisation was rarely an option – as Henry Ford famously said, “You can have any colour you want, as long as it’s black!”
Customisation has been around for a long time now, so why is it continuing to appear as a key innovations trend?
Customisation is a way for retailers to fulfil the ultimate product of a customer’s fantasy. It’s not what you want to sell them; it’s selling them what they’re asking you for. Nowadays, consumers are fulfilling their ultimate product fantasies from designing their own shoes (www.shoesofprey.com.au) and creating handbags of their dreams (ethreads.com), to mixing their own organic cereal (mymuesli.com).
Thanks to digital technology, operations efficiencies, and advanced manufacturing capabilities, more and more retailers are in the position of satisfying customised product orders.
Todays retailers are closer to their end consumer through social media and are moving their customisation capabilities from clicks to bricks and creatively harnessing social mediums to procure feedback, interest and brand advocacy.
The result of these changes mean that the ability to offer such as service can now be done at a much lower cost but can create an exciting point of difference.
Many specialist sports retailers are seizing this opportunity and applying customisation principles to give their customers enhanced value. Customisation of, for example, football boots and goalkeeper gloves are now core added value elements for football specialists.
Of course this is just adding items such as names and initials to the product. At manufacturer level pure customisation is available in terms of selecting colours and design allowing the consumer to create a true fantasy product.
It was, in fact adidas, not Nike, who were the first to investigate the customisation opportunity within the sporting goods market. In 2000 a pilot programme was launched called miadidas with its sole aim being to identify the feasibility of having a customised adidas product line. Today the miadidas range offers over 5000 product lines!
Since the initial launch of miadidas, its fulfillment process has been improved continuously and, arguably, this is one of the greatest challenges in developing a mass customisation offer. The miadidas process starts with a configuration process between the consumer and Adidas via some form of consumer interface. A customer order then has to be processed by Adidas’ order management system. This process triggers a respective manufacturing process within a corresponding production facility. The process ends with the distribution of the final product to the end consumer after manufacturing has been completed and the product has been shipped to the customers’ order.
All these elements bring their own challenges, however it is feasible that even the smallest brands can embrace them and develop a core customisation strategy.
The Sales Channel
I have covered, in previous articles, the current trends within the European Sporting Goods market and the challenges facing brands whether to sell direct or not. Within the adidas strategy the clear published goal is to drive increased levels of direct to end consumer sales (mono stores or online) and therefore customisation is a perfect companion to this approach.
The process of customisation not only brings the end consumer emotionally closer to the product and brand but also enables data capture and the subsequent ability for the brand to reconnect directly with the end user at a later date – ideal for new product launches, special offers etc.
In fact the emotional element of customisation, in terms of connection, can be a key driver even for those brands that want to use the approach from a marketing driven exercise.
It can be the first steps for a brand to develop their direct to end consumer strategy but without effecting current distribution channels, or it can be complementary to a selective distribution strategy.
In the second example a brand may decide that they want to create a customisation programme but for the transaction and delivery to be completed by a specific retail partner or partners.
The end consumer can therefore customise his product, the retailer can offer a point of difference and the brand can drive targeted marketing activity through the project.
It is clear that customisation is here to stay – whether it be at independent retail level with the use of embroidery/embellishment machinery offering the ability to add names, initials etc – through to a fully customised product designed and created exclusively for an end user.
As part of a future brand strategy (and perhaps for the brand to begin to explore direct selling to the end user) it can provide a strong marketing platform and point of difference from competitors as well as creating enhanced emotional attachment for the consumer towards the brand.
As manufacturing and fulfilment processes become ever more sophisticated customisation will undoubtedly become more important within the sporting goods industry and thus those brands and retailers that embrace this trend today will very likely be the beneficiaries tomorrow.
For many sports retailers, selling to local teams/clubs is a critical element of their overall revenues.
Historically these retailers have used traditional methods to connect with, and service, clubs however technological advances are now enabling them to service these clubs more effectively, more efficiently and, importantly are opening up incremental business opportunities.
Perhaps the most powerful advance is the ability to drive teamwear business through online team shops.
Once the preserve of the large professional clubs, affordable software has now enabled sports retailers to build and run online club shops for even the smallest of sports clubs.
Sports retailers offering these services are winning business against those that are unable to by providing this additional service element.
Crucially an online environment allows the retailer to offer a much wider range of club products but without additional stock investment.
Retailers are offering team kit (shirt, short and sock – home and away) alongside training wear, bags, caps, scarves, mugs, pens and anything else that you would find in the club shop of a professional team.
Images are mocked up (or single samples purchased) with club logos, badges etc and presented with the relevant lead times associated with sourcing such lines.
With this approach club members can visit a unique team shop created for them by the retailer and purchase their club lines conveniently.
This ecommerce strategy is not open to the same issues affecting a more generalised ecommerce approach (pricing etc) and allows the sports retail to enhance his current proposition.
Click and collect
The “click and collect” trend has added an additional element to the club shop proposition as it now allows the retailer to offer, within their club shop, the choice to collect their order in store.
Experience with our own clients in this space shows that this acts both an additional business driver as well as helping to establish a deeper connection between club members and the “partner” retailer.
Typically club members order their kit online and come to store to collect the order. Whilst in store additional purchases (boots, shin guards, mouth guards etc) are often made bringing incremental sales.
Technological advances have also changed the way in which businesses can connect and prospect.
Social Media such as Facebook, Twitter and Instagram have created a perfect environment within which independent sports retailers can connect with their prospective club/team audience and drive them directly to the online club shop.
This can be particularly relevant and useful for teamwear dealers as they can begin to connect with those clubs that themselves are active on social media.
Begin to follow and comment on your local club activities and pretty soon you will begin to build a database of likes and follows which can then be used to market your teamwear services to.
Furthermore if you are already running and managing an online club shop social media can be used to drive special offers and calls to action directly back into the shop.
Interestingly the principles involved in building, running and operating an online club shop can also be applied to developing school shop strategies.
Many parents are now requesting that there school uniform be available online and, if you can offer this service to your local schools, this can both counter the threat from the national companies providing this sort of service as well as providing an improved local supply offer – the choice to either purchase online or locally is a powerful element in the decision making process for many schools considering their school wear supply partner.
An interesting retailer advantage running an online school shop is improved cash flow. School wear purchases can be spread across a longer period, rather then, as is often the case, a small window just before the start of term – this enables the retailer to bring in schoolwear lines across a longer period by “back to back/just in time” ordering thus helping cash flow.
As already discussed click and collect can also bring in additional business – the school uniform has been purchased and thus the parent has more time to focus on the additional sports wear required such as boots, shinguards, mouth guards etc etc.
The clever retailer can package these lines online within the school shop should they wish to or incentivise those purchasing school wear online early with an additional money off voucher or incentive once they visit the store for collection.
There is no doubt then that a targeted ecommerce team or school shop strategy can be a welcome business driver and business winner for the independent retailer who is looking to enhance their business proposition.
The set up and running costs are not prohibitive – many software providers offer a monthly fee that can cover anything from a basic website and hosting service through to a full service offering of product uploads, maintenance, email database marketing, social media strategy and more.
Without doubt when pitching for local club teamwear or school business the retailer who can offer an online club shop is more likely to win the business against the traditional retailer who is unable to provide this same service.
Society is looking for convenience in all areas of life and sports clubs/teams where kit is a required purchase is no different. The experience of our own clients underlines this shift in consumer demand and those retailers at the forefront of offering these services can certainly develop an interesting new business opportunity.
In my day to day discussions with brand clients, sports retailers and the sales team price is often discussed.
That is the selling price to both the customer and the end consumer. We live in such a transparent world that to find the latest price on an item is now as simple as one google search or even one scan of a barcode.
Inevitably end consumers want the best price however is this really the only criteria we use when choosing goods and can both brands and retailers be smarter in their pricing strategies and increase prices and margins.
In the 1960’s the marketer E Jerome McCarthyproposed a four Ps classification which has since been used by marketers throughout the world – Product, Price, Promotion, Place – all of which have a direct influence on the selling price of a product.
Today those P’s have expanded to become 7 or 8 (or even more) to address the different nature of services however their impact on business development and go-to-market strategies should not be underestimated and are equally applicable to the sports industry;
So, if we take price out of the equation what other factors should we be looking at from both brand and retailer perspectives;
Of course this is key. The product pipeline must be continually full and whether sports brand or retailer, without appropriate, attractive and relevant product the business cannot evolve.
Over the past ten years we have seen more and more niche areas of the industry being driven by product development as eCommerce, in particular, has allowed retailers to exploit the long tail and push more and more specialist products into a bigger specialist market place.
Innovative product development continues to be a key business driver here as the specialists (retailer and brands) demand more “fit for purpose” products than those in the “general” sporting goods category.
Because of the nature of these products – cutting edge, innovative, in-vogue – consumers do not expect to see products discounted and thus the retailer who immediately discounts a brand new to market line in this area is simply giving margin away. New products launches are the time to make hay and to maximise margins.
As a retailer one should take advantage of the marketing tools that are often available around new launches and piggy back on the brand spend to drive consumers to your own website/store – take any POS or co-operative support that is available.
It is the authors view that, as an industry, the sports trade can still learn from our FMCG cousins in this area.
If we compare brand and retailer activity with, for example, that of the grocery trade we often fail to address some powerful tools that are available to the brand and retail businesses.
Added value promotions, Buy One Get One Free (BOGOF), voucher redemptions, staff incentives, gondola end promotions (or equivalent), and direct call to action initiatives are all areas that we recognise as end consumers in other marketplaces but not necessarily throughout the sports market.
When used strategically these types of tools can be extremely beneficial and allow additional points of difference versus the competition.
These approaches work both online and in store and, most importantly, do not necessarily result in margin erosion.
Often you will hear marketers saying that marketing is about putting the right product, at the right price, at the right place, at the right time. It’s critical then, to evaluate what the ideal locations are to convert potential clients into actual clients.
From a brand perspective this might be a trade show, shop visits or dealer trips.
For sports retailers it may depend on your route to market – shop, mail order, eCommerce, event – but the same principles apply.
This marketing P is the one that on the surface appears less relevant but is the one that, arguably is having the biggest impact on the sporting goods marketplace. Put simply the “places” where goods are being purchased are changing.
Channels are merging – running and outdoor; embroidery/embellishment and sport; mail order and eCommerce etc. For sports brands to evolve they must address these changes and “find” this new business and the “place” where this new business exists.
With a continued decline in the sports independent base and a consolidation of sports multiples these changes will be fundamental for sports businesses to evolve.
It may seem simplistic to view our industry within these basic parameters, however if explored in depth then the answers to all successful business sales and marketing strategies can be embraced under these umbrella terms.
In recent years new P’s such as Passionate People, Packaging, Performance, Persona and more have been put forward as being equally and/or more important than the four terms outlined in this article, however it is clear that whatever your final list of P’s the discipline of reviewing your business in these terms may just help you find the answers you are looking for to help grow your business.
This is the ultimate component of marketing strategy; it’s all about the people. Keeping people top of mind in all your marketing efforts will be instrumental to success. From product development, customer service, accounting and senior management, the people involved in the making the product/service need to know that you are on board with them.
As eCommerce becomes more important where does that leave packaging? The balance between the brand/product message and the opening experience continues to evolve – look at the increase in unboxing product videos on youtube – the unwrapping of the package has become a vital part of the consumer experience and thus the brands must address this.
Sport at any level has a performance element. To compete, particular in niche product areas, product performance is vital and, perhaps more than in other industries, warrants its inclusion in the new P’s list for the sports industry.
But product excellence is not enough for a premium brand. The luxury brand must perform at an experiential level as well.
If we embrace those ideals originally laid out by E Jerome McCarthy then it is clear that it is not all about price price price. In fact, to take this to its logical conclusion, if it were then there would be no place for, for example, the likes of Aldi to compete with Waitrose where many many of the same lines are sold in both stores. If our buying criteria was just price then Aldi would be the dominant player and Waitrose would not survive.
Our emotions, ideals, shopping environments, moods, peers and so many more factors are the real influencers in the market.
Why do artisan butchers and bakers still survive when bread is so much cheaper in the supermarket next door?
Why shouldn’t independent sports retailers be able to compete with multiples?
Think about what your business is good at – service, added value, promotions, specialist products – and use those key strengths to counter the price argument.
The European Market
The 27 countries of Europe form a common market with a combined population of over 500 million people.
In reality, there are 27 different cultures, national purchasing idiosyncrasies and differing living styles that make it difficult to develop an integrated strategy across Europe as a whole. However, despite these issues, there are sporting goods retailers who are embracing these challenges with relish and expanding accordingly.
Decathlon have established a strong European foothold, Sports Direct are attacking the market aggressively and, forced to come together, independent retailers under the buying group umbrellas of Intersport and Sport 2000 are gaining traction.
The overall picture is not, however, as simple as first appears due to the “split” between old Europe and new Europe. The Old Europe, predominantly in the East of the region, has seen growth in alternative channels most notably sports brands driving an own brand /mono-store strategy as, historically, this approach carried less risk and was more easily managed.
The Buying Groups
Two large organizations spearhead the field of multiple brand name suppliers in Europe, whose turnover in sports goods and sports fashion hovers between 35 and 40 billion Euros – Intersport International based in Switzerland and Sport 2000 International based in Germany.
In the UK and Ireland Sports Direct are “under the Sport2000 umbrella” (although what that actually means is difficult to establish) and Intersport have a strong presence with over 300 doors.
Intersport is, in fact, the world’s largest corporate group in the specialist sports goods trade, and accommodates
5230 retail locations in 40 countries inside and outside Europe under its trade. With revenues of over 13.7 billion dollars the group’s market share amounts to 37 per cent in Germany, and to 20 per cent in Europe.
Sport 2000 International is the number two among Europe’s corporate groups. It is home to 3800 independent sports retailers in 25 countries recording sales of more than 6.5 billion US
Finally we have the French based Decathlon chain who, in 2011, recorded a turnover or more than six billion
Euros (7.8 billion US dollars) making it the largest specialist sports goods retailer in France, Italy, Spain and Portugal, but also one of the largest sports goods
manufacturers with a market share of 60 per cent of French sports goods production due to its own label strategy.
In the UK Sports Direct reported sales of £2.186billion in 2013 and with an aggressive 20%+ growth rate, future acquisitions and organic growth we are likely to see the retailer featuring more and more on the league table.
So, having established the background, what are the trends that are likely to affect the growth of these businesses into 2015 and beyond? Peter Thurl of Sportpress, Germany believes that there are currently seven key trends:
Exercise and fitness in the open air has a widening appeal and its popularity looks set to continue.
Whether it be trail running, outdoor gyms, indoor and outdoor climbing, nordic walking, skiing or just generally enjoying the great outdoors this trend will undoubtedly feature in the future growth of the sport industry.
Enjoying a similar boost to the outdoor sector, running looks set to continue on a steady growth curve. Once again the open air appeal looks set to drive growth albeit in, perhaps, more niche areas such as trail and off-road running as well as more extreme events.
The close links between the running and “health sports” market is also likely to ensure that the running boom seen across Europe will continue for some years to come.
Also on the back of the outdoor boom and, particularly in the UK on the back of high profile professional successes, Cycling will remain an interesting sector. The rising demand for electric cycles will help fuel this growth as will the relevant clothing – whether it be specific or more lifestyle driven.
4. Multifunctional clothing
A noticeable trend developing is the multie-use clothing. In particular generic walking/running/outdoor/cycling apparel will see significant growth in the coming years across Europe. This may well bring more sports fashion brands into the mainstream sports trade as, in future, the sports/fashion lines become more and more blurred.
The specialist brands will continue however with full-range suppliers playing a major role for leisure and mass sports products. The more individual and technical a sport is, the more frequently the ideal product will be supplied by a specialised business.
5. The Women’s Market
It is a criticism that has been frequently put forward in the time that I have been in the trade that there is a lack of good product for women.
This, however, does seem to be changing where women’s product is driving an ever increasing boost to sales.
Since this evolution is relatively immature this trend looks set to grow accordingly.
6. Team sports
Team sports still benefit from the positive development of soccer, above all the rising popularity of women’s football will drive increased revenue opportunities and further drive the women’s market.
7. Innovation & Smart technology
Across many industries technological advances are driving consumer demand – the sports industry is no different.
The innovatory boost coming from outdoor textiles, footwear and hardware will continue unabated in the future. New high-tech materials and technical improvements will involve a further optimization of the equipment’s functionality for the ambitious outdoor sports enthusiasts. Hence, it is certain to remain the most essential criterion for outdoor clothing,footwear and hardware to 2020 and beyond.
In summary we can certainly predict: In future, the sports market in Europe will not decline, since older people remain active and sports-minded for a far longer time today than in previous generations.
Many European nations will experience an ageing population which will, in turn, directly effect the growth drivers within the trade. In the forthcoming years, sports may well be determined by the 40-
In the longer term the generation of over 60-year olds are likely to drive change in the sports industry as sport becomes seen as a health provision. Employees may well encourage this activity to keep employees healthy and maintain the number of staff on sick leave
on a low level, thus driving the infrastructure of European companies to become increasingly geared towards
What is in no doubt too is that at retailer level there will be further consolidation and that eCommerce will become increasingly important.
The successful brands and retailers of 2020 and beyond will be those that are already considering this longer term picture and creating the most effective business model to react to this market evolution.
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.