Sporting goods goes after specialty, grows private labels

Full-line sporting goods stores are competing more strongly with specialty retailers as more of the big-box stores are developing, rolling out, or improving “store-in-store” concepts.

That was one of the themes in presentations by executives for four full-line stores who spoke at the 17th Annual Financial Day at The Super Show. Stores represented included Dick’s Sporting Goods, The Sports Authority, Gart Sports and Galyan’s.

In addition, most seem to be planning for continued and aggressive expansion, as well as for stronger steps to develop private-label product that they say brings higher margins and name cache for the store.

“Our real key here is to leverage what we got,” said Gart Sports CEO Doug Morton.

Here are capsules of presentations — sales pitches you might call them — by the four full-line stores to about 80 Financial Day attendees, mostly analysts, media and representatives from other stores:

Dick’s Sporting Goods — After going public just last October (NYSE: DKS), the chain’s current CEO Ed Stack talks about his dad founding the store with borrowed money in the late 1940s. Now, with 141 stores in 25 states, Dick’s is still forging ahead with plans to open 15 to 20 more stores this year in existing and contiguous markets — all east of the Mississippi. In the next few years, Stack said, they will double the size of the chain within the same geographic region. Dick’s sells 60 percent hardlines and about 20 percent each in apparel and footwear. And, like the others, plans to grow its private labels strongly. “We’re extremely enthusiastic about this aspect of the business,” Stack said, pointing to the margins. Private labels will be about 15 percent of the business in a few years, he added.

Gart Sports — Gart dates back to the late 1920s, and was also founded on borrowed money in Denver, Colo. The chain now includes both Sportmart and Oshman’s. Growth? But of course. Currently at 181 stores, 15 more are planned this year alone, said CEO Doug Morton, in existing and adjacent markets. Gart opened eight in 2002. “Where we are, we’re big,” he said. He points out that Gart successfully operates everything from mall to free-standing stores. About 52 percent of the business is hardlines, where fitness and exercise equipment are performing extremely strongly, he said, with growth in the mid- to high single digits and prices in the mid- to upper mid-end. Private label represented about 3 percent of the business in 2002 and is expected to climb to about 5 percent this year. Reasons for its expansion in this area? To offer what Morton called “quality and performance” at bigger margins for the chain.

The Sports Authority — In contrast to the others, CEO Marty Hanaka started his talk with a slide that left you cross-eyed — a tiny printed version of a “safe harbor statement.” Alrighty… Then he shot ahead straight to the core: “We’re going after the business of the specialty shops,” Hanaka said. “There is an opportunity for us to take business for other channels.” He pointed out statistics that show that 13 percent of fitness sales happen at specialty, while 14 percent are at full-line, and 21 percent of outdoor sales are at specialty, with 33 percent at full-line. TSA sells about 50 percent hardlines, about 30 percent footwear, and about 20 percent apparel, he said. TSA has worked hard under his guidance to dump the old, dark, warehouse, discount image to create bright, open, full-service specialty shop-like areas, he said. The chain has 204 stores, but only 53 have “the new look,” he said, but more makeovers are on the way as quickly as the chain can get them done. Private labels, he said, will be about 9 percent of sales in 2003.

Galyan’s — Its goal is to become what it calls the “premier active lifestyle retailer in America,” said CEO Bob Mang. With only 34 stores in 17 states, it was the smallest of the chains represented but, said Mang, its goal isn’t just to grow, although it has certainly done that with nine stores opened in 2002 and nine more (including a replacement for a tornado-destroyed store) expected this year. Mang said that only about 17 percent of its business is what he would call “true sporting goods.” Hardlines make up about 48 percent of sales, with apparel at about 38 percent and footwear only about 14 percent. Its core is still outdoor equipment and apparel, totaling about 46 percent of sales, which includes hunting and fishing. Galyan’s is also know for allowing customers to try out goods, but it will tone that down a bit, taking the climbing wall from front-and-center to more central and seeking “other engaging features.” Mang said, “We don’t want to become an arcade. We are a family destination for active people.”

SNEWS View: Whether you deal with big boxes or not, the stories of their goals being told are provocative — and should pique the interest of anyone in retail or the trade. Specialty retail has always laid its claim partly on full service and individual attention, as well as having brands that can’t be found in full-line stores. However, as the big boxes become “collections of specialty shops” (also bringing in unique brands as well as their own that have a perception of being unique) and train employees more carefully (so they are also enthusiast-participants who can help a customer), the lines between specialty and big box are being blurred. And this means that specialty will have to work a lot harder to find a niche that will allow it and the big boxes to co-exist.