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! 

Thank you for liking and sharing this, if you enjoyed the post! 

Advertisements

No Surprise, Sports Authority Teeters on Bankruptcy

Sports Authority misses interest payment

Update. Since this post was written, Sports Authority has since filed for bankruptcy protection…

Sports Authority, the Englewood, Colorado based sporting goods apparel and equipment mega-store has missed an interest payment on debt and bankruptcy is rumored. I can’t say this news surprises me.

What blows me away is that they are in the two hottest sectors of the apparel and footwear industries, athletic apparel and sneakers and couldn’t capitalize on it. We are in a multi-year athleisure trend, the wearing of sports apparel in and out of the gym, disrupting casual apparel and knocking even the venerable jeans business down a peg or two.

What’s wrong at Sports Authority?

Sports Authority is a big store with an enormous selection of sporting goods and apparel. The stores are dimly lit and cavernous, sort of like a warehouse club without the bright lighting, wide aisles and good deals. A visit to Sports Authority means walking long distances through a sea of me-too sweats and hoodies. There are no clear paths or sight lines. They are located in suburban settings, not particularly convenient for those key Millennial shoppers without easy transportation.

For a carrying products that consumers use in the happiest times of their lives, this store is seriously, no fun. They have tons of stuff, allowing little room for discovery. Great retail is emotional theater and Sports Authority falls flat. Bad music, poor lighting, safe selections, old technology and no creative displays. You are on a self-guided tour of a depressing warehouse. They try to be everything to everybody. They are water on the camp fire.

They could benefit from about 50% less SKUS and some focus on the hottest lines and equipment. Too much inventory and no foot traffic = missed loan payment. This store gives equal billing to down-trending golf product as red-hot sneaker lines. Their relatively small sneaker assortment in relation to their size, abdicates the business to mall competitors like Champs and Foot Locker.

The apparel assortment is the retail equivalent of safe-sex, run of the mill products from most of the usual suspects. Why not take a chance on some of the upstart creative athletic brands, mostly found online? Why not an area for discovery of new brands? How about some exclusives? Champion looks way better at Target. “Move on folks, nothing to see here.”

Where’s the creativity to drive traffic? How about fitness demonstrations, classes and athlete appearances? Healthy free snacks? Basketball half-court? Equipment testing areas? Contests? New lighting?  Hip music? You get the picture. Give up some SKUS to free up the dollars for the fun quotient. Tug at my emotions.

All retailers exist in a highly competitive environment today. Consumers are seeking the best experiences for their dollar. Whether it is a simple transaction on Amazon or a red-carpet experience at Neiman’s. They seek rewarding and entertaining retail experiences.

Bauer “Own The Moment” Experience Store

Sadly for Sports Authority, today was the day I decided to visit the new Own The Moment Hockey Experience Store by Bauer (Performance Sports Group, Exeter, NH), in Burlington, MA. My advice to any hockey store within a 100 mile radius, it’s time to retire. This store is state-of-the art retail theater at it’s finest. I see a lot of retail stores and this one takes my breath away. In fact, I just may learn to skate.

There is a huge selection of thoughtfully placed equipment and apparel in beautiful displays with spot halogen lighting. Halogen has a way of making things more precious. It’s like a futuristic hockey museum, with wide spacious aisles from front to back and in between. Everything is precisely displayed. You are intrigued to wander around corners, each area more enticing than the last.  In addition to a big open video viewing area, they even have an in-store ice rink for testing the latest equipment. They offer everything hockey for men, women and kids.

They truly capture the powerful athleticism of the sport. The testosterone soaked displays, images and edgy mannequins, got my heart racing. Who is that bearded guy anyway? Who knew hockey equipment could be so damn compelling?

A destination to visit, this store is an outstanding example of retail as entertainment.

The Dix & Pond Blog is the blog of  Dix & Pond Consulting,  a Boston-based, company that consults on trend and creative direction, brand experience and business strategy, product development, merchandising and provides executive coaching for retail, apparel, footwear & consumer products companies.  CONTACT US TODAY!  or call 617.733.7411

Thank you for liking and sharing this, if you enjoyed the post!  Follow me to get the latest posts!

 

Blog at WordPress.com.

%d bloggers like this: