Are Sporting Goods & Outdoor in a Death Spiral?

Vestis Retail Group Files for Bankruptcy

Another one bites the dust. The Vestis Retail Group, owner of  Eastern Mountain Sports, Sport Chalet and Bob’s Stores of Meriden, CT is filing for bankruptcy. This follows the high-profile bankruptcy filing of Sports Authority of Englewood, CO and the recent closure of Boston-based City Sports stores. Prediction, the sporting goods graveyard will have more big-name corpses by year-end.

I also believe the outdoor, wood beam and hunter green team, Cabela’s, Bass Pro ShopsL.L. Bean and Dick’s Sporting Goods are seriously challenged these days. Because of the uniformity and proliferation of these outdoor/active mega stores, they are no longer the hot destination stores they once were. They’re surely feeling competitive headwinds from many directions. Dick’s will benefit from Sports Authority closures, but you can’t really say you’re a good student, just because the class average goes down.

In my view, the outdoor and sporting goods channels have reached saturation point and every niche has a ceiling. They will have to get smaller and find serious points of differentiation to thrive.

They also have an aging demographic and won’t have the same appeal to Millennials. 45% of this important demographic belong to a minority group (according to the US Census) unlike the Boomers and Generation X before them. The Millennial generation has more varied taste and less money to spend on apparel and accessories.

Apparel on clearance at EMS.

Apparel on clearance at EMS

What’s Happening in The Sporting Goods Channel?

Why is this happening in the sporting goods channel when sneakers are red-hot and athletic apparel has been biggest bright spot in apparel for almost a decade?

1. Amazon is an elephant in the room. According to a Slice Intelligence survey of 3.5 million consumers Amazon had a 43% share of all online sales last November and December. Their enormous selection, comparative deals, fast speed and free shipping are hard to compete with. According to Cowen & Co They are also on track to become the largest seller of apparel in the US, probably beating Macy’s by next year.

2. Sporting goods stores are no longer a key destination for women to buy athletic apparel. As the “athleisure trend” grew, so did the sources women and men have to buy these looks. Lululemon and Under Armour were the pioneers that challenged the category with fashion, quality and higher prices. Now the competition is fierce with traditional retailers increasing their assortments, specialty retailers like Athleta, brand-owned stores, online specialists and many wholesalers adding active to their assortments. Since women buy 80% of all consumer purchases, there is lot less traffic in sporting goods stores.

3. “Athletic inspired”, lifestyle apparel is far more important than performance apparel. The big expansion of active is wearing these clothes out of the gym. Many sporting goods stores and some apparel brands seem to think it is primarily about functionality and sweat reduction, not fashion and compelling design. Frequently, their lifestyle apparel offering is only the classic “outdoor” brands.

Many sporting goods stores devote enormous square footage to apparel and they generally don’t have the fashion chops to compete in a brutally competitive, rapidly changing apparel sector. Who needs another purple mock half-zip?

4. Sporting goods stores used to be the preferred place to buy sneakers. Performance sneakers,” sport-inspired” vulcanized cousins and fashion variations are the trending casual footwear today. Sporting goods retailers have not kept up with sneaker specialists and have treated the category as important as golf equipment. Women can buy “athletic-inspired” footwear from any of their favorite retailers from Forever 21 to Nordstrom today.

5. Youth participation is down trending for many sports. See this chart from Sports Business Journal in August 2015. There are many things going on here from the cost participation, fear of injuries, lack of interest, over specialization in one sport, etc. The drop in participation naturally creates less demand for equipment and related apparel:Youth sports participation rates.

What Should Brands do to Survive in This Climate?

What is an apparel, footwear brand or store to do in this highly competitive market? It demands creating real brand value, innovation, differentiation, targeting and understanding your competitive advantage in the market.

Competing just on price is a fool’s game. Fashion is emotionally driven by fantasy, hope or self-fulfillment, not just technical features or price. Wearable tech optimists, be warned.

Consumers want simple and exciting shopping experiences from brick and mortar or online stores. It’s time for the sporting goods and outdoor retailers to reimagine their stores for today, with nothing being off-the-table. Well conceived and executed brand experiences will turn this negative outlook positive.

 

You might enjoy these previous posts:

The New Definition of Athletic Apparel

Sports Authority Teeters on Bankruptcy- See The Reasons

Decoding  Millennial Shopping Traits & Habits

 

The Dix & Pond Blog is the blog of  Dix & Pond Consulting,  a Boston-based, company that consults on trends and creative direction, brand experience, business strategy, product development, merchandising and provides executive coaching for retail, apparel, footwear & consumer companies.  CONTACT US TODAY! 

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5 thoughts on “Are Sporting Goods & Outdoor in a Death Spiral?

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