Go back to the late 1980’s, 90’s and into the noughties, and no self respecting sports retailer would be seen as credible without the likes of adidas and Nike as core to its product proposition.
A large base of independent and multiple retailers continued to allow these brands to grow and thrive globally and become the Goliaths that they are today. But as the industry has changed and evolved so these brands have become less reliant on this customer base. They continue to transition to a model that encompasses more direct to consumer business and one where they look to work with a fewer number of global retail partners.
Minimum Purchase Thresholds
Over the past ten years both brands have slowly implemented ever increasing annual minimum purchase thresholds, higher and higher standards regarding representation and ranging of product and provided less and less support for the smaller customers. Even the rank and file Intersport members are reduced to selecting future Nike products from rendered CADS. No physical samples. And sometimes (if the launch is sensitive) simply “shadow” products.
The door is closing for the smaller independent sports retailer to have access to these major brands – either because they cannot justify the ever increasing minimum spend or because they have already had their account closed.
So where does that leave them? Are Nike and adidas the key pull that they were and can they live without them?
Do I need adidas and Nike?
Certainly there is no doubt that a retail store focussing on soccer without these two players would be at a major disadvantage, such is their dominance within footwear and apparel around this sport. However, in more general sports their dominance is less of a loss. Think running, triathlon, swimming, hockey, cricket, netball, table tennis, badminton, squash, darts…the list goes on…..here the major players are not adidas or Nike.
Here a generalist retailer perhaps has a chance to succeed. However, these sports are not the major markets. Not the major traffic or revenue drivers within the industry and, as such, many sports retailers in these areas have evolved to become online only since there simply isn’t the footfall to drive consumers to stores carrying these lines.
The revenue drivers for sports retail are exactly the areas within which adidas and Nike dominate and, one could argue, helped establish. It was these two brands that created sports shoes as street fashion. These two who drove every day consumers to wear basketball shoes – even though they had no intention of going anywhere near a basketball court in them. It was Nike and adidas who created sports fashion footwear and spent millions of marketing dollars to appeal to the guy and girl on the street as well as the guy and girl on the court or the pitch.
And therein lies the crux of the issue. Many small sports independents are outdated. The stores are old fashion and they cannot afford to update them. The environment is not aspirational and not a place where Nike and adidas want to see their products. Not a place where their marketing messages and imagery comes to life.
In their own stores they can join up the dots between social media, sponsorship, advertising and global marketing messages in a seamless way to the consumer. So too with key partners who are prepared to invest and work together with these brands to achieve a common goal. Not so the independent.
One independent sports shop owner, Ace Sports in Kentish Town, has, according to the Camden New Journal, decided to fight Nike and is taking them to court after he was blocked from selling boots and kits for being too small scale.
After being told that he could not place any more orders with Nike, since he was not hitting the minimum annual spend of £85,000, Nick Mavrides, owner of Ace Sports had his account closed but has decided to take on the global giant in court and sue for loss of earnings based on an £8,000 order that he had cancelled and therefore could not fulfil. A small fight in a much bigger battle?
But its not just the independents. The battle with Sports Direct and adidas and Nike has been well documented over the years and is undoubtedly one of the drivers behind Mike Ashleys push to become the “Selfridges of Sport”.
In a recent statement he was keen to stress that frustration saying that “The sports industry has long been dominated by the must-have brands such as Adidas. These must have brands hold an extremely strong bargaining position vis-à-vis the retailers within their supply networks and use their market power to implement market wide practices aimed at controlling the supply and, ultimately, the pricing of their products,”
Without Nike and adidas a huge slice of Sports Direct revenue is under threat and he knows it!
And what about the buying groups? The key argument for many Intersport UK members used to be the ability to access Nike and adidas where others couldn’t, but with changes looking likely within the domestic Intersport operation who knows whether this appeal will now be applicable across the entire membership (in whatever future form it may be).
So the changes are here. They are happening now. Adapt or die is the mantra and, for many, this will be a further nail in the coffin on the sports independent. We can’t pretend that this has come out of the blue. On the contrary this has been coming for a long time and those that had the foresight have adapted accordingly and continue to thrive.
However, if today it is Nike and adidas tomorrow it will be Puma, Under Armour…….
All sports brands are pursuing the direct to consumer model and working with fewer and fewer customers. On the flip side pure play direct to consumer brands are launching daily putting further pressure on the independent sports shop.
Sad as it is perhaps the question is not ‘how can the independents survive without Nike and adidas” but more “how can the independents survive at all’ in a High Street landscape that is becoming less about retail and more about leisure and in a world where online continues to grow at breakneck speed.