Could the increase in Nike heat be shaping the theft at the retail outlet? Above is a Release Calendar on Dick’s website. This is something usually done by stores carrying high heat product. DSG in the past focused on marketing a diversified product mix over highlighting one brand.
I recently visited a Hibbett Sports store. I had just left a City Gear shop where I learned that the store had been robbed. Employees weren’t certain sizes were available in shoes on the wall because of the theft. When I made it down to Hibbett Sports (both locations standalone stores) the door was locked. It was the middle of the day. A lady and her child were standing outside in the Memphis heat. She told me before I pulled on the door, “They aren’t letting more than one customer in at a time.” I asked why and she attempted to explain, but she was growing frustrated with the wait and couldn’t really explain why. Eventually the security guard came to the front and told me the store only had one employee working. With the amount of snatch and run, crash and grab thefts taking place, the employee and the security guard felt there wasn’t any other way to deal with the situation.
I dropped in on a Foot Locker and noticed a complete redesign of the floor plan. Front tables carried sneakers and apparel was limited in how it was merchandised. Traditionally, the visual merchandising of Foot Locker stores includes apparel displays and folded shirts sitting beneath elevated sneakers in complementing colors. Now many of the clothing items were in the back of the store. Clothing had been organized by brand with apparel next to a wall of sneakers, but the layouts shift in retail often and a change from this is to be expected, but the look in Foot Locker was more compact and compressed. I asked a few questions, and the response was that people are getting bold and it’s extremely difficult to keep an eye on inventory. These are stories which could be told for years. They never really hit the mainstream or shaped stock prices, but the thefts are now landing at stores typically untouched by “shrinkage” issues. I’ve witnessed standalone retailers close because of theft. Stores carrying “sneakerhead” or “urban” apparel have always had to be vigilant. In the last few years, it doesn’t matter what type of store it is smash and grabs are so prevalent retailers are paying to have giant concrete poles poured in front of their store entrances to avoid cars being driven through the storefronts. Malls don’t have this opportunity to slow down the theft. The open layout of indoor malls creates a maze of escape routes limiting any strategy retailers might attempt to implement.
Dick’s has always been one of the few retailers immune, but an interesting thing has happened with the chain. Visit the homepage of DSG Dick’s Sporting Goods (dickssportinggoods.com) and note the splash page and imagery. Dick’s has always had the ability to adjust quickly and adapt because the store utilized a strategy of selling private label and they highlighted alternative brands like Brooks, On and Hoka. In the last few years Nike ramped up distribution to Dick’s. They’ve gotten limited release drops and their homepage and marketing looks a lot like that of Foot Locker, Hibbett Sports, City Gear and JD Sports.
Could Dick’s allotment of better product from Nike be contributing to the smash and grab/thefts taking place for the retailer? “Organized retail crime and theft in general is an increasingly serious issue impacting many retailers,” Dick’s CEO Lauren Hobard said on Tuesday. “The impact of theft on our shrink was meaningful to both our Q2 results and our go forward expectations for the balance of the year.” I recently wrote about another container/rail yard theft of Nike product here in Memphis, but the theft is getting much more aggressive. Criminals are actually visiting Nike store locations and attempting to rob workers unloading product. Nike’s Grey Market team is in high gear as they organize with trucking companies like IMC to offset the container issues. According to local drivers they will begin to possibly unload containers from the train and move the product immediately into Nike trailers with direct delivery to Nike’s warehouses; removing steps in the transport and logistics of Nike products.
The Slowdown in Sales
As I’ve always analyzed retail through the lens of resale, an interesting correlation could be made in regard to the decline in resale margins. Stolen products tend to navigate their way through consignment stores and third-party e-commerce sites. Amazon and eBay have attempted to hedge this by creating Brand Registries, but with the rise of Tik-Tok and social media selling, e-commerce platforms are feeling the slowdown in sales. Nike’s abundance of inventory has always shaped resale and retail, but with the amount of product flooding stores leading to crowded storerooms and more floor displays in shops, theft contributes to an overall slowdown in the marketplace. Nike itself through store policies where Clearance Stores have to tear boxtops off of sneakers being sold contributes to a decrease in arbitrage resale. This should push buyers towards retailers, but it’s not. Buyers are wary of taking on inventory as sales on StockX, eBay and Amazon continue to dip. Dick’s placing shrinkage front and center could be a red herring. The number of deals that can be found at retail has led to the consumer becoming much more patient. Prior to DSG getting more product from the Swoosh inventories were better for the retailer. Stores have always had shrinkage built into their reports, but with elevated inventories shrinkage could be an easy justification for poor earnings reports. There is a lot to unpack, and this post is to drive dialogue. More research and analysis are needed to really get to the heart of the conversation.