I subscribe to a leading newsletter from a trading company that almost always nails what is taking place in the sneaker industry. The report informs or initiates a lot of concepts I present here on the site. A few days ago, I got a report on Dick’s Sporting Goods. In the report the analyst stated, “DKS’ has yet to realize any trading down by consumers, which we attribute to improved merchandise assortments and its evolving omni-channel efforts.” This quote reminded me that in 2017 I wrote the following post:
DICK’S Sporting Goods 3rd Quarter Results Show Clear but Difficult Direction
In this post I attempted to touch on two points, a marketing campaign for a new private label by Dick’s and I analyzed their quarterly report. In 2017 the industry was reeling as adidas had appeared to figure out Nike and Nike had given a name to their Direct-to-Consumer strategy, Consumer Direct Offense. Wholesale accounts with Nike were unsure if they would make the cut as Nike was chopping retail partnerships. Dick’s, instead of attempting to cater to the Swoosh, doubled down on their company. I wrote this response:
The interesting thing in this quarterly report is the use of the term “omnichannel” and the disclosure that growth would be limited as DSG looks to “increase investments in our eCommerce business, the technology in our stores and store payroll in order to enhance the customer experience. Meaningful investments will also be made to DICK’S Team Sports HQ, and in the development and support of our private brands.” This paragraph speaks to the clear understanding DSG has about where growth and recovery can take place for the chain. It’s one of the best statements on offsetting the difficult retail environment I’ve seen.
Yesterday I was asked a question by a reporter from the Portland Business Journal: What is so special about Dicks that Nike keeps its account but cuts off others? At the same time this question arrived I was reading the Defense World website and saw two notable stock purchases: Qube Research & Technologies “purchased 4,053 shares of the sporting goods retailer’s stock, valued at approximately $405,000,” and Huntington National Bank “firm owned 367 shares of the sporting goods retailer’s stock after acquiring an additional 366 shares during the period. Huntington National Bank’s holdings in DICK’S Sporting Goods were worth $37,000 at the end of the most recent quarter.” In the span of 48 hours, I got a report on DSG, found considerable trading activity on DSG and got a question from a journalist about Dick’s. I also discovered that Dick’s has a sneaker release calendar, which may seem insignificant, but is actually an extremely important thing.
I answered the reporter’s question quickly, “Dick’s has been able to grow without Nike. That’s a threat to the Swoosh. If other companies found a way to survive without carrying a big selection of Nike products the playbook opens up and Nike loses its power.” In 2017, Dick’s focused on building its private label, increasing pay for its employees and building out their omnichannel experience. That last one I can attest to as the parent of a track and field athlete and as a sponsor of two different track programs last season. I searched everywhere for distance, sprint and high jump spikes. I went to Dick’s and the person working the floor in the sneaker section was knowledgeable, but more important, she was adept at stock locating sizes and options on the computer, so that I didn’t have to keep driving from location to location. She even offered to have all of the spikes shipped to one location for pick up. It was an efficient process that highlighted the investment into e-commerce.
What was equally as impressive was the store-inside of a store merchandising for the various private labels and brands carried by Dick’s. Every brand had its own space. No brand seemed to be elevated over any other. In the footwear section it became apparent why Brooks has been doing so well as the merchandising at Dick’s was fantastic. Thinking back to 2017 Dick’s only carried low-end Nike product and that didn’t shape how the retailer did business. Dick’s amplified the brands they had. It is my opinion that Nike understood the threat of Dick’s continuing to improve their store experience without a reliance on the Swoosh. Removing Dick’s account would not have affected DSG as they had already developed a differentiated product mix including brands they developed and produced. Dick’s now has a Sneaker Release schedule. They have team sales sewn up. They have brands like VRST, Calia and DSG. They also have the best sports equipment section in retail. Their omnichannel experience allows items to ship from the closest location which means they have fast shipping. The hype around Dick’s Sporting Goods isn’t hype. It’s a model of efficiency.