Post Bankruptcies:What’s Next for Sporting Goods Makers?

Sporting Goods And Retail Space Are Shrinking

By now, most major sporting goods suppliers of apparel, footwear and equipment have taken a significant write-off from the Sports Authority bankruptcy and others, like Vestis Group’s Eastern Mountain Sports and Sports Chalet.

Sports Authority represented about 450 big doors for equipment, shoes and apparel. Under Armour has reported a $23 million dollar charge related to the bankruptcy, one of the largest reported losses. Some will be resurrected by buyers like Dick’s Sporting Goods, but most of these distribution points have gone away forever. This is natural pruning of a diseased tree.

The sporting goods channel is challenged by many factors. They have an over abundance of similar apparel, when the athletic apparel market has exploded in terms of styling, new brands and available outlets to buy. Women no longer need to shop in sporting goods stores for clothes. Young people have lower sports participation rates and more single-sport focus. Millennials are increasingly exercising in specialty fitness clubs like SoulCycle, Flywheel, Orange Theory, Pure Barre, Title Boxing and others, versus traditional sports participation.

Health and wellness are mega-trends, but we just don’t need as much square footage in traditional sporting goods doors. A lot of athletic apparel and footwear has migrated away to other retail doors and we are in a seriously over-stored environment for all types of consumer goods.

Sports & Athletic Manufacturers Must Get Creative

What does a traditional manufacturer of athletic apparel, footwear or equipment do when their available floor or virtual distribution space is shrinking? They have to get creative and take share from competitors. That means business focus, seeking alternative distribution points and sharpening their brand and product offerings. Here are six ways to improve athletic related sales in a diluted market:

Focus Your Strategy – Now more than ever companies cannot afford to dabble in duplicative or pet projects that drain precious resources. This means pruning and consolidating your company’s tree, to concentrate on fewer, but clearly promising categories or businesses.

Find New Distribution Channels – This means potentially selling into a channel, location, market or country that you have never considered before.

Under Armour just announced that they are going to sell the moderate channel starting with Kohl’s. This will help them reach more female, suburban customers. They have around 1100 locations, which could more than make up for the Sports Authority loss.

Sometimes creative distribution creates strange bedfellows, but everyone wins. A great example of this is Nordstrom selling J. Crew’s Madewell product, in their full-line stores. Nordstrom is supporting a retail competitor and J. Crew has become a wholesaler. They both have flipped the script and it is working out very well.

Brainstorm for new opportunities by imagining the mirror opposite of your current strategy and point-of-view. Consider complementary partner brands for co-promotion.

Grow Direct to Consumer –Wholesale brands can no longer count on their traditional retail customers for continued future growth. They need to have a strong direct-to-consumer strategy to sell to or introduce their brands to new consumers. This includes considering every possible format…brick and mortar, pop-ups, retail showrooms for e-commerce, e-commerce, brand ambassador selling, direct mail, shopping trucks, event and festival sales, VIP events, home shopping networks, parties, etc. What are the new ways to bring it to the customer, on their terms?

Think Product First – There is no fooling consumers, they know innovation and creativity when they see it. Marginal product always equals marginal results. Frequently companies pour millions into marketing, when their product doesn’t live up to the hype. Creating growth means product first, as they may never see your marketing messages in a splintered media.

Force Fresh Perspectives and Creative Risk Taking – Stella McCartney, Pharrell Williams and Kanye, put Adidas back on the map. Rihanna is growing Puma’s bottom line. These celebrity or designer collaborations can be game-changing and newsworthy (not always successful) to bring new converts into the brand.

The idea is forcing fresh perspectives and taking creative risks. For instance, this can be done by hiring fashion people to do shoes and shoe people to re-imagine apparel. How do you surprise and delight customers? If you are still working like it’s 2006, you’re probably not on an uphill track.

Great Brand Experience is Key – Clearly defined brands that offer a consistent experience to their customers, will fare best in a lukewarm market. Does you product have an identity that it can be identified without labels? Do your products, stores, website, packaging, marketing and service have a compelling and consistent promise for the target consumer?

When was the last time you went in a sporting goods or retail  store and felt excited to buy? Consumers increasingly want experiences from brick and mortar retail, so stores must innovate with decor, services, restaurants, bars, events, fitting clinics and loyalty programs to attract a consumer bombarded with choices. Own The Moment stores by Bauer is an exciting example of a completely reimagined sporting goods experience.

 

Some other posts you might enjoy:

Decoding Millennial Shopping Traits & Habits

Are Sporting Goods & Outdoor in a Death Spiral?

The New Definition of Athletic Apparel

The Dix & Pond Blog, by Stephanie Bernier is the blog of  Dix & Pond Consulting, a Boston-based, company that consults on business strategy, creative direction, brand experience, trends, product development and merchandising. Clients include retailers, apparel, footwear & consumer companies.  CONTACT US TODAY! 

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