The sporting goods vertical has experienced its fair share of misfortune in 2016, with brands such as Sports Authority and Sport Chalet closing down stores and Golfsmith recently filing for bankruptcy. The financial difficulties these three brands have experienced suggest that there may be a bigger issue within the sector as a whole when it comes to product demand, or that there are simply too many retailers that sell these products.
The RTP team debates which major factors contributed most to the recent struggles of these major sporting goods brands. Did the market for sporting goods become too over-saturated? How can sporting goods retailers look to remain relevant when Amazon and Walmart sell similar (or the exact same) merchandise?
Debbie Hauss, Editor-in-Chief: I am going to speculate that the general sporting goods retailers are getting pressure from three different segments: specialty sporting goods brands (such as Under Armour), stores focused on specific sports (such as Roadrunner Sports) and Big Box retailers (such as Target). This squeeze may be pushing out retailers that are not embracing digital innovation, personalized marketing and unique store experiences. Today’s shoppers are looking to build relationships with brands that share the same values and interests as they do, along with their peers. Also, in today’s Experience Economy, consumers (especially younger demographics) want to share their experiences via social channels. If their favorite brands are not offering shareable experiences, shoppers may lose interest and move on to a more compelling brand.
Adam Blair, Executive Editor: Not being much of a sports enthusiast myself (Little League position: right field), I’m not totally sure why this vertical has been having such a tough year, though I do have a few ideas. One is macroeconomic: though the country has for the most part emerged from the dark shadow of the Great Recession, there may be a “hangover” in terms of consumer spending on non-essential items. Another will be familiar to anyone in this industry: there’s strong evidence that retailers with a nimbler, more focused approach to e-Commerce, such as DICK’S Sporting Goods and Academy Outdoors, are better positioned to reach consumers than more store-oriented brands. The third involves long-term trends in participatory sports: according to VC firm Gordon Brothers Group, equipment-heavy sports such as golf, in-line skating, skateboarding and cross-country skiing have been on the decline, while running, gym workouts and target shooting have been on the rise. Children’s participation in tackle football has shrunk due to safety concerns, and among teenagers participation in most activities has dropped during the past decade. Of course, the firm’s analysis was written before Pokémon Go hit the scene, but that’s more of a benefit for electronics stores than sporting goods retailers.
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Alicia Fiorletta Esposito, Content Strategist: I think my colleagues bring up a really good point about how retailers like DICK’S have been eating their competitors’ lunch — largely because they’ve invested in really cutting-edge technologies and powerful marketing campaigns. I can’t help but think of that partnership DICK’S did with Uber to get Super Bowl shirts to fans of the winning team. But it’s also hard to ignore the fact that many brands are opening their own online and physical storefronts, thus cutting the middlemen (i.e. retailers) from the equation. Lululemon is a great example of a brand that never had to rely solely on retail partners because it had an extremely loyal following, high-quality products and even great experiences like holding yoga classes right in-store. Plus, we can’t ignore the fact that there are so many different brands cropping up by the day, which undoubtedly makes it more difficult for big retailers to keep track of in-demand brands. If a retailer doesn’t have the right tools, systems and people in place, it’s really easy to fall behind.
David DeZuzio, Managing Editor: In hindsight, a local option of two or three sporting goods retailers is certainly a sign of over-saturation, but ultimately, I think the downfall of the sporting goods industry comes down to specialization. If shoppers want yoga pants, they go to Lululemon. If they want sneakers, they go somewhere like a Nike Outlet or, as Debbie mentioned, Road Runner Sports. As always, it is the customer experience that trumps a 30,000-square-foot warehouse of goods. Of course, it’s difficult for a big box retailer to focus on one thing enough to carve a niche market, and given Golfsmith’s bankruptcy and golf’s 20% participation decline over a 10-year span, it’s not a guaranteed hole-in-one that the niche you pick will work. Also, with the overhead that big box retailers carry, the minute they accumulate debt they are no longer putting money back into the store experience; they are worried about the service of the debt. Trying to keep up with niche markets and e-Commerce are also huge tasks, as both chip away at the confidence and bottom lines of the once-venerable big box model. In sports, if you can play multiple positions, you are highly prized. In retail, when you try to do it all, you end up on the losing team.
Klaudia Tirico, Associate Editor: From a consumer perspective, when I think about sporting goods retailers that experienced store closings and financial difficulties (Sports Authority, Sport Chalet and Golfsmith), I can’t help but notice that they were all pretty outdated in terms of the shopping experience. Whenever I walked into a Sports Authority, for example, the atmosphere felt drab and boring compared to the liveliness of, say, DICK’S Sporting Goods. I truly think that is why more modern retailers reign supreme. As Debbie said, shoppers today want an experience that they can get excited for, and if they’re not getting it, they will go elsewhere. I believe it was only a matter of time that the over-saturated sporting goods market would fade away, and only the strongest would survive. Think of it this way: If two different sporting goods retailers offer similar items and brands at a similar price, would you choose the modern experience with endless aisle capabilities or a dingy, outdated warehouse-type store with sub-par inventory? Personally, I’d pick the former.
Glenn Taylor, Associate Editor: Like many other retail businesses, I think the difficulty within the sporting goods vertical simply came down to a lot of businesses selling the same merchandise. While Sports Authority was once a leader in this space 15 years ago, the emergence of other brands such as DICK’S and Academy Sports made their offerings repetitive in many areas of the country. The RTP team has already covered DICK’S omnichannel efforts, which I feel definitely played a part in the company’s ability to adapt where other brands didn’t move fast enough. Although the three brands in this discussion all had a great selection of products, it’s clear that none of them outpaced the others in the experience department, which is ever so important as the Walmarts and Amazons of the world make it easier to just seek products on price alone. There’s still room for sporting goods within retailing, but if I can buy lacrosse sticks or golf clubs at other major retail chains, then the incentive to go to a sports-specific store isn’t going to be as high for me.
