Retail Sporting Goods Stores - PDF

STATS Retail Landscape
                Sporting Goods Loses Market Share to Mass, Specialty Stores
         BY JASON NORMAN                           executive that we had overstated the               2008.”                                         9 percent.
  Sporting goods was the only chan-                full-line sporting goods market share                While sporting goods is more than               It seems sporting goods is in limbo,
nel not to grow in 2008, losing 200,000            in past years, so we adjusted in 2008,”            holding its own against the IBD and            sandwiched between the expertise, se-
units over a year’s time. The distribution         said Townley, who produces The Cy-                 mass merchant when selling parts, ac-          lection and quality of the IBD, and the
channel felt the squeeze from both the             cling Consumer of the New Millenium                cessories and clothing, the channel is         cheap prices of the mass.
specialty retailer and mass merchants.             Report.                                            having a rough go selling bikes.                  “Sporting goods has maintained its
  Jay Townley of the Gluskin Townley                  “Also, our sources tell us that some              While the specialty retail channel ac-       share of aftermarket because of pre-
Group said several reasons underlie the            full-line sporting goods retailers have            counts for 50 percent of all bikes sold,       sentation and merchandising of brand
decline in sporting goods. “We have                lost some volume to mass merchants                 and the mass accounts for 36 percent,          name products that are not necessarily
been told by more than one industry                as the economy contracted throughout               chain sporting goods stores come in at         available from mass merchants, but are
                                                                                                                                                     losing share in new bicycles because
                     Preliminary Estimates 2008 U.S. Bicycle Market                                                                                  many of the same brands are available
                                                                                                                                                     at lower prices from mass merchants,”
                           Features of Channels of Distribution                                                                                      Townley said.
         Mass Merchant                     Specialty Bicycle Retail1               Chain Sporting Goods                          Other
                                                                                                                                                     Specialty Breeds Diversity. Townley
 13.7 million units, 77% of the         3.2 million units, 17% of the           1.1 million units, 6% of the         371 thousand units, 3% of       said that more than 300 bike brands
           total units.                          total units.                            total units.                      the total units.          sell through the specialty retail chan-
                                                                                                                                                     nel. The majority of them have survived
 4 large retailers that do 60%         4,319 independent, Special-             30 sporting goods retailers:          A variety of outdoor / out-
 of MM channel total, or over          ty Bicycle Retailers. (Note:            • Dicks Sporting                      side retailers, mail order      over the past five years because of de-
 40% of all retail sales:              Performance retail stores               • Sports Authority/Gart               and internet retailers and      mand for variety.
 • Wal-Mart                            are included.)                          • Champs Sports                       all other local and regional       “The demand comes from the bike
 • Kmart                                                                       • Goods/Gallions                      retailers of bicycles.          shops that get it about the need to dif-
 • Target                                                                      • JumboSports                         • Mail Order                    ferentiate themselves in their market
 • Toys-R-Us                                                                   • Sportmart                           • Internet                      space, and their understanding of the
                                                                                                                     • Hardware Stores               adult cycling enthusiast market in their
 $1.1 billion in annual bicycle        $1.6 billion in annual bicycle          $284 million in annual                $158 million in annual          local community and area,” Townley
 retail dollars, 36% of total an-      retail dollars, 50% of total            bicycle retail dollars, 9% of         bicycle retail dollars, 5% of   said.
 nual bicycle retail dollars.          annual bicycle retail dollars.          total annual bicycle retail           total annual bicycle retail        “The adult cycling enthusiast is look-
                                                                               dollars.                              dollars                         ing for discovery and finding some-
                                                                                                                                                     thing new and different in their local
 $83 average unit retail price         $500 average unit retail                $255 average unit retail              $425 average unit retail        bike shop, and they want to stand out
                                       price                                   price                                 price                           as individuals among their local cy-
                                                                                                                                                     cling peers.”
 Major Bike Suppliers                  Major Bike Suppliers                    Major Bike Suppliers                  Major Bike Suppliers               Townley doesn’t yet track numbers
 • Dorel Industries                    • Trek Bicycle Corp.                    • Huffy Bicycles                      • Dorel Industries
                                                                                                                                                     for handmade/custom-built bikes, but
           Schwinn                     • Giant Bicycle Inc.                              Royce Union                 • Dynacraft Bicycles
                                                                                                                                                     he sees this as an emerging segment of
           Mongoose                    • Specialized                           • Raleigh America                     • Huffy Bicycles
           Roadmaster                  • Raleigh America                                 Diamondback                 • Rand International            the market that retailers should take
 • Dynacraft Bicycles                  • Dorel Industries                      • Dorel Industries                    • Kent International            note of.
           Magna                                 Schwinn                                 Mongoose
 • Huffy Bicycles                                GT                                      Schwinn                                                     Demand for Do-It-All Bikes. The spe-
           Royce Union                         Cannondale                      • Haro                                                                cialty retailer had much more trouble
 • Rand International                  • Haro                                                                                                        selling full-suspension mountain bikes
 • Kent International                  • Redline                                                                                                     in 2008 compared to 2007. Total unit
                                       Plus over 260 additional                                                                                      sales dropped by 100,000.
                                       brands and suppliers.                                                                                           This might not come as a surprise as
                                                                                                                                                     high gas prices and a souring economy
 MM channel stocks and sells           SBR channel stocks and                  CSG channel stocks and              Other channel stocks and          entered into the picture last year.
 a limited selection of bicycle        sells the widest selection of           sells a relatively wide             sells a wide selection of
                                                                                                                                                       Now more than ever, consumers
 parts and accessories, and            bicycle parts and accesso-              selection of bicycle parts,         bicycle parts, accessories,
                                                                                                                   clothing and shoes. It is
                                                                                                                                                     might be looking for a “do-it-all bike”—
 some clothing. It is estimated        ries and clothing and shoes.            accessories, clothing and
                                                                                                                   estimated that the Other          one that lends itself not only to dirt rec-
 that the MM channel does              It is estimated that the SBR            shoes. It is estimated that
                                                                                                                   channel does 18% of the           reation, but also commuting. This helps
 24% of the annual aftermar-           channel does an estimated               the CSG channel does 23%
 ket business at retail. $670          35% of the annual aftermar-             of the annual aftermarket           annual aftermarket busi-          explain why front-suspension sales are
 million estimated aftermar-           ket business at retail. $978            business at retail. $642            ness at retail. $503 million      up almost 300,000 units from 2007 to
 ket retail dollars.                   million estimated aftermar-             million estimated aftermar-         estimated aftermarket             2008.
                                       ket retail dollars.                     ket retail dollars.                 retail dollars.                     Moreover, cost-conscious consumers
                                                                                                                                                     are most likely attracted to the lower
Sources: The Gluskin Townley Group, LLC analysis; The Cycling Consumer of the New Millennium Report.
                                                                                                                                                     pricepoint on a front-suspension bike
   OSR, or Outdoor Specialty Retailers has been added as a separate Channel of Trade for the 2008 Report. Estimated retail sales are 182             as opposed to full suspension.
thousand units, for 1% of the total, and $85 million or 3% of the total retail dollars. In past years OSR was included in the Specialty Bicycle        “Full suspension has moved from be-
Retail, or Bike Shop estimates. OSR has been taken out of the Specialty Bicycle Retail estimates for 2008.

24       Bicycle Retailer & Industry News • June 1, 2009                                                                                                 
ing hot to being not so hot, and front                                         U.S. Bicycle Market Estimated Retail Dollars
suspension has moved up to the current                       2008 Total Market Share, Bicycles & Aftermarket by Channel of Trade
hot off-road category,” Townley said.
   Interestingly, high gas prices last year   Channel of Trade             SBR-Bike           Mass Merchant             Chain Sporting                  Other*             Total U.S.
didn’t spark a huge spike in sales in the                                   Shops                                           Goods                                           Market
comfort and hybrid/cross categories at
the specialty retailer.                       Bicycles                   $1,579.04†              $1,136.91†                $284.23†                   $157.90†            $3,158.07†
   “High gas prices didn’t generate a                                       50%                     36%                      9%                         5%                  100%
surge in new bicycle consumption,”
Townley said. “However, high gas pric-        Parts, Rubber,
es did contribute to a surge in used bi-      Accessories including        $977.87†               $670.54†                 $642.60†                   $502.91†            $2,793.93†
cycles being ridden by more Americans         Clothing and Shoes             35%                    24%                      23%                        18%                 100%
last year—and this will probably con-         (Excludes service
tinue this year as well, even though gas      labor and rentals)
prices have gone down, and will prob-
ably stay down through this year.             Total Estimated             $2,556.91†             $1,807.45†                $926.83†                   $660.81†            $5,952.00†
   “What surged in 2008 was demand            Retail Dollars
for bicycle service work and sales of re-
                                              Percent Share
pair and replacement parts and acces-
sories, including tires, tubes, saddles,      of Total Market                 43%                   30.4%                    15.6%                      11.1%                100%
                                              Retail Dollars
pedals, bags and baskets,” Townley
added.                                        * including Hardware Chains and Independent Retailers, Mail Order and Internet †In Millions
   What’s less of a surprise is road/700c’s   Sources: National Sporting Goods Association; The Gluskin Townley Group analysis and estimates.
decline over the last three years. Look
for this trend to continue well into the      longer this recession lasts, the more          said road will probably resemble 2003              more children and young adults to our
future.                                       permanent the changes in consumer              to 2005 volumes at specialty retail.               sport and activity, we will not have
   “There may be no stopping it,” Town-       buying habits will become. Some adult             Another category that’s taken a hit             much of a future,” Townley said. “It is
ley said of road’s decline. “The U.S.         cyclists will switch to urban cycling,         is juvenile bikes. All youth categories            essential that we get kids on bikes, and
consumer has been changed by this             and some will just age-out of the fit-         were down last year except for 24-inch,            if anything, it is even more important in
economic contraction, just as their par-      athletic thing and switch to upright hy-       which may not bode well for the future             the long-term to get more kids on bikes
ents and grandparents were changed by         brids or comfortable recumbents.”              (see story on page 1).                             more often than to get more adults on
the Great Depression. The deeper and            Once it does hit bottom, Townley                “If we, as an industry, don’t attract           bikes. Our future depends on it.”                                                                                         Bicycle Retailer & Industry News • June 1, 2009                         25

Description: Retail Sporting Goods Stores document sample