15 Mar, 2017

Gander Mountain files for bankruptcy – another sporting goods retailer bites the dust

 -sporting goods - future of the retail store

In the words of Queen, “another one bites the dust.”

Gander Mountain is the most recent sporting goods retailer to file for bankruptcy. They follow a string of failures including MC Sports, who filed in February this year.

“Despite aggressive actions to improve the efficiency of the company’s retail operations,’ Gander Mountain said in a statement, “the underlying financial impact from underperforming stores and unproductive, excess inventory hampered efforts to create a sustainable path forward.’’

We know that the retail industry as a whole is struggling, with consumers spending less and less time in-store. Online sellers continue to win big over traditional retail stores, as yet another corner of retail, sports, falls victim to a plague of insolvency as big-box chains, specialty stores, and mom-and-pop shops dominate.

“The traditional concept of a store is in trouble as foot traffic as never been lower, especially over the holiday season. Online and mobile apps won the holiday race in 2016.”

Many of the biggest losers in the sporting retail space have been those offering a wide assortment of products. Online sellers can undercut store-based retailers on price and on options. Another factor playing a role in these losses are the emergence of specialty retailers, who lure customers away with upscale items and expertise.

Who are the big losers?

  • Sports Authority – was the nation’s second largest sports retail chain with over 400 locations nationwide.
  • Golfsmith – a golf equipment chain, closed two-thirds of its stores towards the end of 2016 and is in the process of selling the remaining ones.
  • Sport Chalet – the California-based 47-store chain was forced to close after 57 years.
  • Eastern Outfitters  owners of Bob’s Stores and outdoor retailer Eastern Mountain Sports filed for bankruptcy protection in February this year.
  • Total Hockey – a specialty retailer for hockey enthusiasts sought bankruptcy protection in July and sold itself to competitors TSG Enterprises.
  • MC Sports – sporting goods chain who reported a net loss of $5.4 million on sales of $174.6 million.
  • Gander Mountain – the latest victim has become closing its 32 stores across 11 states.

Other sporting franchises have seen these closures as an opportunity. Dick’s Sporting Goods has acquired dozens of stores from its bankrupt competitors, including converting 22 Sports Authority locations into its own stores. The company also purchased Sports Authority’s intellectual property, including its website, which now redirects to their website.

How are Dick’s Sporting Goods avoiding the same fate of Sports Authority?

Dick’s Sporting Goods has not fallen victim to the sporting goods retail curse hitting its competitors.

In fact, the company is now scooping up market share, absorbing the remains of its competitors.

Ed Stack, CEO of Dick’s Sporting Goods, spoke recently about the state of sporting goods retail. Although he predicts that 2017 will bring more rocky waters to navigate, he is confident that Dick’s will continue to grow. took a step back to diagnose the health of its core business.

Stack’s first step to forming this conclusion was to take a look at the health of Dick’s core business. What he noted is that although the chain has not been impacted like many of its competitors, it cannot sit idly by and not innovate.

The CEO plans to continue absorbing market share where it can, as more chains begin to fail. Interestingly, part of his strategy includes opening stores where the failures of competitors have left a gap in the market. This will further enable Dick’s Sporting Goods to continue to target new customers in their existing markets.

At a time when many retailers are closing, Dick’s will actually be opening 43 locations. 19 of these locations were former Sports Authority stores.

Stack was also keen to note that they are looking to strengthen the chain’s position by cutting 20 percent of its lower-volume vendors. Instead, they are favoring a plan to focus on their important suppliers creating leaner business partnerships. The company will also be more selective in site selection for future expansion. This comes as other large retailers like Macy’s and J.C. Penney are planning hundreds of closure.

Despite clear plans, Stack has not fully appeased the investors of Dick’s Sporting Goods, who shares reported at 9% lower at the close of 2016. Investors in retail, in particular in the sporting goods sector are more cautious, not solely because of the recent company closures. Huge brands like Under Armour have reported losses, which will impact retailers like Dick’s.

Adapt or file?

What is clear is that the sporting goods industry needs to adapt, and quick. Retailers need to answer changing consumer demands or risk following in the footsteps of those listed above.

Many point to the popularity of online platforms as a key driver in the demise of sporting goods stores, and other traditionally brick-and-mortar retailers.

Retailers everywhere are attempting to predict what the next disruptor will be. Many are predicting Virtual or Augmented Reality platforms will be the next driver in retail innovation.

By quite literally adding a new dimension to your shopping experience, VR/AR technology will affect how consumers shop in your store.

Eliminating several pain points, such as queueing for a fitting room, the technology is geared to the needs of the consumer. The data collected will also impact how retailers respond to changing behavior, offering deeper insight.

VR/AR will also enable retailers to engage with their customers on a 1-on-1 basis, personalizing their experience within the store.

According to Fortune magazine, fashion designer Rebecca Minkoff’s LA now has smart mirror technology in every fitting room. This technology allows consumers to view the clothing in a variety of lightings and also request clothing in different colors and sizes, without leaving the fitting room. The data is also sent to customers’ mobile phones so they can order online, thus closing the engagement loop.

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