Renaissance Partners

Turnaround and Performance Improvement Advisors

Thomas H. HicksReprint from SGB February 1, 2000

Let the Super Show begin! It’s a new year, a new millennium. So much for Holiday ’99. We’re at a crossroads – it’s a “New Beginning”. So what’s it all mean anyway?

Where are we as Sporting Goods Retailers?

We’ve just emerged from another year of average to poor performance. Jumbo Sports is gone. Gart and Sportmart have merged Hibbett’s good regional sales growth has continued but its stock price is off 40% from its May 1999 high. Galyan’s has split from Limited and the big players, Sports Authority and Oshman’s have continued their course. Some regionals remain, such as Dunham’s, and sports apparel chains such as Dick’s and Bob’s continue modest growth. Footwear and related apparel have posted a relatively weak year and it’s taken a toll on footwear players like Just For Feet and Footstar as well as the sporting goods mass merchants. And now e-commerce! Fogdog Sports and MVP.com represent high profile new entrants, just to name a few, while brick and mortar retailers, manufacturers and catalogers heat up their entrées for direct consumer consumption (e.g., footlocker.com, nike.com, dsports.com, thesportsauthority.com, REI.com, Riddell.com and Varsity.com). E-commerce provides both another means by which to shop traditional stores’ assortments and a way for some players to create smaller, segmented, more specialized niches than can effectively be created by building stores. What can we learn from all this and more importantly, what can we do about it in the year ahead?

Where have we been during the 90’s?

It’s clear that for most industry players they buy, present and sell an assortment of highly recognized vendor branded goods, from apparel to footwear to equipment. Certain stores occupy stronger or weaker market positions due to their real estate density, quality and time of possession on a market-by-market basis. Many of these store chains, however, generally lack their own identity… an identity that is theirs and not that of the vendors whose goods they sell. These chains tend to reflect what has occurred in department store retailing as a result of consolidation and focus on cost cutting and inventory turns – homogenization. However, unlike the department stores, there has been little brick and mortar consolidation in sporting goods to create a truly dominant national player producing top-flight financial results.

The answer may lie in ………………….!

Differentiation!!! Create differentiation. Create top-of-mind awareness. Create a point-of-view. Perform editing for your customer. Stand for something. Stick with it. Send consistent cues. Make your store and your auxiliary distribution mechanisms (catalog, e-commerce, etc.) important.

Also remember that size (i.e., store count) is not that important. The Wall Street popularity contest and enterprise value creation will, in the long term, go to those producing consistently excellent results, staying power, and an ability to stay ahead of the invention and re-invention curve.

How to do it …Differentiate that is

Prior to going to market follow these steps:

  • Assess your heritage, your customer, your real estate, and the results;
  • Research your competition and your results by market, seeking to define store volume and assortment clusters;
  • Establish your strategic and tactical game plan;
  • Establish a game plan that can be executed and that you have the resources to execute on a company wide basis – not just one prototype unit;
  • Build an assortment plan and vendor matrix to support your differentiated strategy, recognizing that some stores may need to close and others may be positioned somewhat differently by store cluster group and taking care that the company, as a brand, can be presented singularly;
  • Go to market…Execute…Refine…Execute;
  • Create consistent cues for your customers and police them diligently – the cues must be consistent with the strategy and must send the right message about who you are and what you stand for, including the value proposition;
  • Cues include merchandise presentation, signage, exterior presentation, advertising, service level, staff appearance and knowledge, pricing, etc. – all cues must be consistent and must stand up to scrutiny

Do real, live examples exist out there to look at? You bet – some within and some outside of sporting goods (e.g., Bass Pro Shops Outdoor World, Old Navy) – where the “store brand” is recognized and wins!

In short, re-invent your business around your strengths and around your customer – and go to market with an intense, thoughtfully prepared game plan that you are committed to execute. It’s all about “branding”. Talk the talk…walk the walk… in the New Millennium.