We don’t specifically cover the world of retailing on these pages but we are always looking for interesting stories that may suggest the future of local commerce. One such company that we’ve been watching and find particularly interesting is Dick’s Sporting Goods.
The company released earnings for the three months ending May 1, 2021, and as of this writing, the stock is up nearly 15%. According to the company, the active lifestyle changes that the pandemic triggered are holding fast. And the pandemic drove strong demand for golf, outdoor activities, home fitness, and active lifestyles. With the re-opening of youth sports, there’s a surge in demand in that area as well. But there’s lots more that is interesting about the company.
At the top of the list is a female CEO is running a sporting goods company. That in and of itself is a key development. The company was started by Dick Stack in 1948 and most recently run by his son Ed Stack since 1984. Ed Stack turned over the CEO role to Lauren Hobart earlier this year. She joined the company via the marketing function and in a decade has ascended to the role of CEO.
Why is this important? There’s plenty of evidence that girls’ and women’s sports will have the greatest increase in interest and exposure in the coming years. In our mind, woman’s championship soccer is far more exciting than men’s. Just look at the performance of the U.S. national teams.
The Future is Experiential
The company, headquartered in the midwest — not on one of the coasts — operates some 855 traditional and specialty stores. The company’s executive chairman and interestingly head of merchandising Ed Stack had this to say about the future.
“We believe the future of retail is experiential, powered by technology and a world-class omnichannel operating model, we are reimagining the athlete experience, both across our core business and through new concepts that we have been working on for the past several years, which will collectively propel our growth in the future.”
Let’s break that down.
The future of retailing is “experiential”. That’s a view that others in the retail sector agree with. Take for instance what RH (aka Restoration Hardware) is doing. Its massive stores now include lounging and eating experiences. Or Lululemon’s acquisition of the fitness helper “Mirror.” And REI has always been deep into the “experiential” model. It is perhaps the only thing that will keep customers loyal since you can buy running shorts, towels, and Yoga pants from Amazon at the tap of your fingers.
And Also Omnichannel
The second pillar seems to be the “ominchannel” model. The company, with just a 7% overall share of the estimated $145 billion sporting goods industry, is now driving 30% of total sales via eCommerce. With 140 million “athletes” in its database, the company had nearly 7 billion digital touchpoints during the year. They’ve rolled out mobile apps that help reinforce their brand and with loyalty members spending 1.7 times online than non-loyalty cardholders.
Finally, of the some 8.5 million incremental “athletes” they added to their database in 2021, 70% came through digital channels. This is a lean-forward company indeed. The company intends to continue to differentiate itself via the “showrooming” concept. This will allow customers to touch and try on merchandise — and also is aimed at driving sales and attracting new customers.
What does this mean for the local sporting goods store? There are about 38,000 sporting goods stores in the U.S. Dick’s 855 stores represent just 2.3% of the total number of stores. And yet they’re driving 7% of total sales. We’d expect local sporting goods stores will have to adopt leading-edge technologies and marry them with authentic in-store experiences to keep pace with the progress a company like Dick’s is likely to make in the coming years. If not, we’ll see further consolidation in this sector.