Since JJB’s collapse in October 2012, the sports retail sector has evolved rapidly. Headlines have mostly been about Sports Direct and its aggressive strategies to increase market share, but the changes in the sector have not all been about Mike Ashley’s business.
The battle Sports Direct is taking to its competitors in the UK is fierce and the gap between it and JD Sports, its closest rival, gets bigger year on year.
CLEAR MESSAGE
Sports Direct acquired 116 Republic stores at the beginning of 2013 after the fashion retailer went into administration. This expansion into the fashion market – previous acquisitions include USC and Flannels – has contributed to Sports Direct’s recent growth and sent a clear message to JD Sports about its ambitions in this sector. While JD Sports still dominates the sports fashion footwear market, this new acquisition could strengthen Sports Direct’s position in the fashion apparel space.
Last summer Sports Direct acquired the outdoor brand Gelert and a majority stake in Yeomans. These acquisitions in the outdoor category, which is one of the largest sports markets in the UK, further increases the pressure on JD Sports, as the absorption of Millets and Blacks has proved difficult for it to handle. Although Blacks is the number one retailer in the category, it has lost 15 share points over the last five years, according to NPD’s Online Consumer Panel.
In addition, the difficulty JD Sports has experienced in turning round its Blacks and Millets businesses has proved beneficial for smaller retailers. For example, During the last five years GO Outdoors has gained market share and recently agreed a £33 million financing deal to accelerate its growth plans.
GEOGRAPHIC GAPS
The demise of JJB left the market with some geographic gaps and without a retailer focusing on sports performance apparel, footwear and equipment. JD Sports’ initiative to test this market through its JD Pro fascia has been mirrored recently by the value fashion retailer Matalan.
The chain has launched its own version through its Sporting Pro fascia. Matalan’s plan is to open 14 stores by the end of 2013 and 100 stores in the next five years. Matalan is relatively small in the sports footwear and apparel market – its market share is just above one per cent in the UK, according to NPD’s Online Consumer Panel – but seems to have a more aggressive strategy than JD Sports. Furthermore, Matalan has similar market coverage geographically as JJB, as its stores are principally located in out-of-town locations.
OWN-BRAND STORES
A number of sports goods manufacturers have demonstrated their desire to increase the number of own-brand retail stores in the UK. Nike wants to double its number of stores from 30 to 60, while Reebok recently opened a flagship store in London’s Covent Garden. Even brands with a small UK presence are keen to get in on the act. Canadian athletic brand Lululemon, for example, has opened three stores in the capital.
During a period when sales of discounted products are growing at a faster pace than full price ones, brands may wish to better control their price points via this retail strategy. In 2012, while full price sales were flat, discounted sales grew four per cent, according to NPD’s Online Consumer Panel.
Vertical retailers such as Gap and H&M have launched their own sports ranges, primarily intended for women in categories such as running and fitness. Many retailers believe there is a potential for growth in the female sports market, which accounted for approximately a third of total sports footwear and apparel sales in the UK in 2012, according to NPD’s Online Consumer Panel.
The NPD Group monitors the sales of sports footwear and apparel in many countries around the world. For more information call the NPD Group sports team on 01932 355580 or visit www.npd.com
