DISCUSSION
Does Sports Authority's bankruptcy illustrate a big box problem?
Written by Guest contributor
Through a special arrangement, presented here for discussion is a summary of a current article from the Retail TouchPoints website.
As a former editor and publisher of Sporting Goods Business magazine, I vividly remember doing interviews with Sports Authority's founder and CEO Jack Smith on how the emergence of big box was changing the retail landscape.
In 2003, Sports Authority and Gart Sports, the two largest independent sporting goods retailers in the U.S. at the time, agreed to merge to improve their competitive position against Walmart and other discounters. It made sense back then for some smaller retail brands to get rolled into one larger brand, to build a national player that could leverage their marketing reach and supply chain efficiencies.
However, last week's bankruptcy filing shows that Sports Authority somehow wasn't able to benefit from the national brand it had built.
Competition and over-saturation in the sporting goods channel doesn't appear to be the biggest issue here. While some Sports Authority locations may have played second fiddle to a nearby Dick's Sporting Goods locations, Sports Authority had a dominant position in some markets.
The filing comes as Staples, Kohl's, Kmart and others are all in the process of closing big box locations. Sports Authority is so far looking to close 140 of its 463 locations. With the majority of retail growth coming from the e-commerce sector, replacement brands don't appear to be standing in line to take over many of these locations.
Moreover, given the continued omnichannel shift, will other big box brands struggle to survive? Wall Street analysts are beginning to take a harder look at how sales are growing across different channels, as well as the cost of acquiring and serving customers across these channels, so those metrics should be where every retailer is focused today. Looking at top-line sales and/or bottom line profits is no longer enough.
Darwinism is clearly part of the retail conversation these days, but it worries me that a retail brand of this magnitude could crash so quickly. I would argue that it should worry retailers and suppliers in all sectors.