Sports Authority Concept Takes Elitist Approach
Sports Authority has announced plans to open a new small
box sporting goods concept targeting consumers of high-end apparel, footwear
and accessories.
The new S.A. Elite concept will have a smaller footprint than
the typical Sports Authority location that measures around 42,000 square feet.
Elite stores will measure in the 12,000 to 15,000 square-foot range and will
be "designed
to meet the needs of the elite sporting goods consumer while providing a unique
and compelling shopping experience."
The first S.A. Elite is scheduled
to open in August at a location in Denver.
"S.A. Elite’s brand and small store format was the brainchild of extensive
consumer research and customer insight including advanced basket analysis,
ethnography, and other innovative primary research techniques," said Jeff
Schumacher, executive VP, CMO and CSO of Sports Authority, in a statement.
"The S.A. Elite brand has tested well with consumers who believe it conveys
the elevated product assortment and experience, while still representing the
great value Sports Authority is known for," Mr. Schumacher added.
Nike, the North Face, Under Armour and many of the other brands currently
sold at regular Sports Authority stores will be displayed in the Elite format
but represented by their higher-end items. Additionally,
shoppers will find brands not available in Sports Authority’s regular stores,
such as Oakley, whose sunglasses retail for up to $200.
Sports
Authority, which is primarily owned by the Leonard Green & Partners
private equity firm, operates 460 stores in 45 states.
Discussion Questions: What do you think of the business potential of the S.A.
Elite concept? Do you think the company being owned by a private equity firm
either helps or hinders its chances for success?
Interesting idea to present a more focused selection in a smaller footprint, and this allows Sports Authority to develop sites in locations (malls, lifestyle centers) unable to take on a full-size store. It’s unclear, however, how the “S.A. Elite” name communicates the concept effectively. The smaller prototype seems to be geared toward a narrow selection of branded sport apparel, without the breadth of “hardlines” carried in a full-line store. Does “Elite” really put this idea across, and does it potentially turn off the customers that S.A. would like to attract?
Unless they change the culture of what a sports fan buddy of mine called “abysmal” the other day when referencing the Sports Authority store experience, it will have the potential of more expensive stuff waiting to be clerked. Hardly what a premium brand will demand in this day and age to be profitable. Initial reaction: wait and see.
The success of this concept is 100% based on how they staff the store. If they are going to focus on the very serious athlete they better be ready to answer the tough questions and give real advice. In fact, I would suggest they use the same model Home Depot used when they first opened or the model Best Buy uses today and hire staff members that are content experts. Do you really buy $179 running shoes or a $300 baseball bat from an out-of-shape staff member?
The sports world jogs along on nifty Nike-ies and SA has tried to keep up as new owners keep changing their shoes.
Founded 23 years ago (1987) in Lauderdale Lakes, Florida, SA expanded to 9 stores in 6 states and was acquired by Kmart in 1990. That strange union lasted five years and SA was sold to private equity groups, comprised of affluent folks who believe everyone should wear multi-hundred dollar sports shoes, apparel and sun glasses. Out of that mentality has evolved the SA Elite test in the heady thin air of Denver.
Now the Leonard Green Partners contemplate, “How green is our valley?” Time will tell but odds aren’t that colorful.
Elite is the right name. It describes a level of dedication and interest in sport that is above the ordinary. For the amateur, it means better equipment (read more expensive and prestigious). It means he/she is really serious about their participation, even if their performance is less than elite. In many cases, elite equipment is a substitute for performance.
But, John Boccuzzi is right. This operation better be staffed by experts. Part of the reason to go to the store will be to “talk to the expert.” The staff better have great interest, in-depth training, and have a great ability to not only talk about the products for sale but to talk about the sport that goes with them.
As my colleagues correctly point out, it’s all going to be about the execution. There are numerous stores like this in my city and they’ve done well for years; they offer personalized service, expert advice, and other perks that some customers are willing to pay for. If they can make it work there’s huge upside potential.
Not every consumer is looking to have their sporting goods experience in a big box discounter. However, this Sports Authority venture sounds more like an apparel/shoe base operation. If the execution and culture of the stores is run differently than Sports Authority, it has good potential.
Have a well-trained staff, make the flow of stores easy and comfortable to navigate, and provide consumers with a reason to linger around the store to experience the quality.
I have always had great experiences at Sports Authority with customer service and especially with selection. I believe the reason why shoppers go to Sports Authority is their selection. Some things I want higher end and some things that matter less, I can buy lower-end goods. I appreciate having the choice and would not be interested in their elite concept. But then again, I am not the Champ Sports or Foot Locker customer either. I would consider my family Sports Authority customers though. The elite concept doesn’t marry with their traditional customer base in my mind.
In this age of the empowered consumer, they are paying “private label” prices for name brand luxuries in several categories. SA is going up against tough competition, so, as most of the comments prior here, execution is everything. If the staff is top-notch and driven to serve the clientele, this just may work. Maybe. Good luck!
Sports Authority has a pretty dismal reputation when it comes to customer service, so I’m not sure that sticking the word elite on their brand will actually change brand perception. the culture of the company will have to change if they are really going to cater to the elite customer, and this requires more than a name change.
Can it work? Absolutely. Does Sports Authority have the right management team in place to make it work? Questionable. Do they have the patience to build a new elite retail brand? I doubt it.
I fear that a year from now we will read about this experiment as one that did not work, and is not being rolled out further.
Ownership by an equity firm works both ways. If they control management and keep the infighting under control, they have a good chance of success. As far a store size, 15k is a good sized, destination-driven outlet but they can probably fill in. My local “regional” mall has 5 different sneaker places including 3 different Footlockers. With mall rent and competition like that, I would stay out of malls.
While it could fail, I think it has promise, especially in markets like Denver where a lot of us love the outdoors and a lot are underwhelmed by the service levels at Sports Authority or the even worse ones at Dick’s (try finding someone in their shoe department on a Sunday afternoon–just try).
If they’re opening it where I suspect they’re going (unfortunately, the penny pinching Denver Post resorted to an AP story rather than providing their own article about this important Denver area-based retailer), however, they may indeed fail.
The mall is Cherry Creek, a top performer owned by Taubman, but the space I’ve heard rumors about S.A. leasing is down at the low-traffic dead-end of the mall, past the restaurant cluster. While there is a mall entrance there, hardly anyone uses it because it does not lead to the parking garages. Also, the name does not inspire confidence. If I were them I’d resurrect the Gart Brothers or Dave Cook names, both part of this chain’s DNA. That would at least give them something non-generic to work with, and for Coloradoans, at least, inspire fond memories.
Elite stores mean more than an edited and stratified assortment of product. The elite will come from the customer service that was traditional part of the local specialty sport stores. A knowledgeable staff who speak and participate in the sports being offered. Clinics, sponsorships demonstrations and a premium schedule of services to support the customer. Better product needs better service to be successful.
The idea of one merchandise mix fits all markets should be reviewed and challenged. The product offering in the Jackson Hole Wyoming store needs to fit the market as does the mix for the Manhattan store.
The big box theory has come full circle.
I’ve heard about this for a while now, as a part-time employee. The volume in dollars for these stores typically will be higher than the larger stores. No one knows for sure about the attractiveness to the consumer about this idea until it comes to fruition. Estimates could be wrong.
As for quality of service SA provides, I’d like to think that everyone I help when they walk in the door appreciates what I do and that it was a pleasant experience for them. There is a lot of work being done to try and raise the level of service, but it gets hard with staff on hand that is there for a part-time job, one being myself in addition to a full-time job with a broker.
As a loyal REI customer, I never think SA for any of my hiking – skiing – snowshoeing – apparel – GPS – Heart Monitor needs – REI has knowledgeable staff, promotional pricing via REI-Outlet.com and Dividends, a fantastic website and the absolute BEST RETURN POLICY in the world! They aren’t called “Return Everything Incorporated” without reason. I don’t abuse it but I returned a friend’s pair of hiking shoes, worn a dozen times but never ‘fit just right’ a full year after purchase and without a receipt for full refund! To me, this brings loyalty to REI. Return Policy is a critical component in my purchasing decisions–REI, Nordstrom, Southwest Airlines, Costco, Trader Joe’s–they all have very fair returns (or in the case of SWA, at least they give you a year to use the credit and don’t charge a restocking fee like all their competitors…). The type of customer SA Elite is seeking will require all of this.
If SA Elite expects an enthused, loyal following, they need to emulate REI with their selection, knowledge and return policy but at least for me, that field is already fully served by REI and SA Elite is unlikely to get my business. I wonder if I’m the norm? Or is it a pricey store for ‘posers’?
As incomes continue to polarize (20% of consumers are responsible for 41% of consumption and rising), retailers will have to move to one end of the spectrum or the other.
The move to smaller stores with a more definitive positioning is something I think we can expect to see from more and more retailers as we move through this decade.
Gravitating to a smaller store concept may be an idea whose time has come. Whether Sports Authority can be successful is another question. I am not sure SA will be able to do it; but I wish them success. The Denver area is where the corporate offices are located. So it is something that can be closely monitored. We have heard Best Buy is looking at a similar model. Maybe this is the beginning of a major change in big box retailer thinking.
I think when it comes to serious sports enthusiasts, affluence is not necessarily matched to “elite” shopping experiences. For example, I’ve been running for 20 years and done 14 marathons but I know very few serious runners like myself who would shop regularly in one of the branded “upscale” stores that Nike, Adidas and co offer. To us, they are just mono-branded, overpriced fashion stores for pretenders. What we do instead is find either a niche local operator who sells multiple brands and provides good service to repeat customers, or we buy online.
So from my perspective, S.A Elite will not work. What they should do instead is concentrate on improving the performance at their existing store fleet.
The elite store concept competes as much with locally owned running, golf and bike shops as with anything else.
I can understand the appeal of this sector to Sports Authority as the demographics of golf, cycling and triathlon is compelling. At the same time, this might be especially hard ground to recover from local retailers due to relationships and trust. Personally, I would not buy running shoes or a bike from anyone other than my trusted local sources.
Sports Authority can win here if they get better than average support from product manufacturers that give them competitive advantage over local outlets (dangerous ground for OEMs) and if they seriously upgrade the level of expertise walking the floor (seeing is believing).
Why not leverage the existing real estate footprint and upgrade the talent on the floor? Adding expertise to the sales force could yield much better results at lower investment and risk than creating a brand new store concept.