For those that have been in the trade over twenty years the memory of Olympus Sports in their flagship 301 Oxford Street store is still one that burns brightly for many of us.
That was the the era of shell suits when brands like Reebok and Ellesse were dominant, and when the UK sports trade began to really take shape.
The sports multiple began to evolve with names like Sports Division, JJB, allsports all dominant High Street players and where the regionals – Giles, Hargreaves, Warners etc – still had a role to play.
In the 1990′s these retailers grew and flourished as sportswear became streetwear and as trainers became the default footwear.
Sports Division bought Olympus with JJB then purchasing Sports Division. Allsports came and went and Sport & Soccer (later to become Sportsdirect.com) came from nowhere.
Roll forward to today and, whilst the UK sporting goods market has continued to grow aggressively the number of retailer has decreased hugely.
Two sports retailers now dominate – Sports Direct and JD Sports – and continue to set the pace but why did these two, in particular, survive when those around them failed in this growing market.
Own Brand Strategy
Perhaps one answer is their own brand strategy thus enabling them to create exclusivity and obtain a higher margin.
In Sports Directs case many of these brands are often bought out of receivership or near receivership allowing the business to very quickly reduce costs and leverage the brand name to the benefit of the Sports Direct business as a whole.
Many see their proposition as “discounting” however, if we look more closely at the product mix then more often than not these products are not discounted versus the competition but, critically, there is an own brand offer that offers value versus the branded product.
Even if these “branded” goods are discounted this does not have to be detrimental to the brand – if confirmation is needed here then we only need to consider that TK Maxx is the biggest global retailer for both Ralph Lauren and Calvin Kelin underwear.
As Sports Direct continue to grow revenue each year, and with profits rising even faster, there appears to be plenty of headroom for the business to continue to grow.
JD Sports own brand strategy is perhaps less clear and is focussed more in the “sports fashion” side of the industry – perhaps one of the reasons why, to date, they have survived when others, most recently JJB, have fallen.
However there are distractions in the overall group, such as Blacks and Millets, which may not help when looking to the future of this business.
Interestingly picking up on the demise of JJB the latest overall market date suggests that the massive hole that was left has now been mainly filled by the two majors however there still remained opportunities in the market as a whole.
In a market rapidly becoming more multichannel and international the demand for professional marketing is becoming more paramount
Three Key Elements to survive
Patrick Woodhall of Pragma Consulting believes that there are three key elements necessary to survive and thrive in the current sports marketplace:
Image and saliency are obviously critical with a global approach becoming more and more relevant.
Accessibility need not be multi channel. ASOS, for example, flourishes without shops whilst Primark flourishes without online sales.
The offer is crucial, especially online, where service in all aspects has to be superior to the competition.
So where will we be in another ten or twenty years time?
Intersport continues to evolve a more integrated global strategy and the UK continues to get closer to Intersport International and benefit from this drive.
DW Sports is adopting an aggressive store opening programme and the trade as a whole waits with baited breath to see if Intersport Sporting Pro, a subsidiary of Matalan, can make an impact.
Decathlon continue to battle Sports Direct across Europe and may see the UK as future fertile ground.
The specialist sports retailers are finding space with clicks and bricks propositions and there are still a large number of highly successful independent retailers who continue to offer advice and service levels that sports multiples will always find difficult to achieve – these are the artisan butchers and bakers of our trade.
The market as a whole is still seeing grow however we will continue to lose independents as High Streets struggle to find relevance to the end consumer.
Today’s conclusion however is that it is the business that has been built on value that continues to be all conquering and, certainly in the short term, this shows no sign of changing.