Sporting Goods Stores

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Quarterly Insight, Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 20,900 sporting goods stores in the US sell a wide range of sporting and athletic products to recreational enthusiasts and the general public. Products typically fall into three broad categories: apparel, footwear, or hardline merchandise (equipment and accessories). Specialty stores may focus on only one category of product, such as golf or skiing.

Reliance On Imports

A significant portion of the products that sporting goods stores purchase for resale, including those purchased from domestic suppliers, are manufactured abroad in countries such as China, Taiwan and Malaysia.

Intense Competition Creates Challenges

Sporting goods stores face intense competition from large chains, mass merchandisers, catalogs, and Internet retailers.

Industry size & Structure

The average sporting goods store employs about 12 workers and generates $2-3 million in annual revenue.

    • The sporting goods stores industry is comprised of 20,900 retail establishments, generating sales of about $54 billion, and employing 249,500 workers
    • Large sporting goods retailers include Dick's Sporting Goods, Cabela's, and Big 5 Sports.
    • In general, competition tends to fall into the following five basic categories, depending on a stores size and/or product offerings: superstores, traditional stores, specialty stores, mass merchandisers, or catalog/internet retailers.
    • Superstores - Stores in this category are usually 35,000 square feet or larger and tend to be in freestanding locations. These stores typically offer a very wide number of products, across all athletic and sporting venues, and emphasize high volume sales. They often offer their own private label branded products, in addition to nationally branded products. Examples of sporting goods superstores include Dick's Sporting Goods and Academy Sports & Outdoors.
    • Traditional Stores - These stores usually range in size from 5,000 to 20,000 square feet and are frequently located in regional malls and multi-store shopping centers. Traditional stores can be independent or chain stores, usually carry a varied assortment of athletic and sporting merchandise, and often position themselves as convenient neighborhood stores. Stores in this category include Big 5 Sporting Goods and Hibbett Sports.
    • Specialty Stores - Specialty sporting goods stores range in size from about 2,000 to 20,000 square feet and typically offer an extensive assortment of one specific product category, such as athletic shoes, golf, or outdoor equipment, or may focus on one or a limited number of sports. They often have a lower operating-cost advantage because of their smaller store footprint. Specialty stores typically carry higher quality lines of products, selling at higher prices but lower volume, and may offer more extensive services, like repair and maintenance, or pro-shops. Examples of these stores include Bass Pro Shops, Cabela's, Foot Locker, Gander Outdoors, and REI.
    • Mass Merchandisers - This category includes discount retailers such as Walmart or Target, and department stores such as Sears and Kohl's. They may be located in regional malls, shopping centers, or freestanding sites. These stores range in size from 50,000 to 200,000 square feet, but the space devoted to sporting goods merchandise represents a very small portion of their overall square footage. Their merchandise selection is usually much more limited than other sporting goods retailers, and is typically focused on popular sports and fast-moving merchandise. Mass merchandisers place less emphasis on customer service and equipment services, but usually have a price advantage over other retailers due to their greater purchasing power.
    • Catalog and Internet-based Retailers - This category consists of numerous retailers that sell a broad array of new and used sporting goods or accessories via catalogs or the Internet. These retailers typically compete by offering some combination of low prices and shopping convenience. They can offer low prices, due to their lower overhead expenses and often sales tax avoidance, as well as the convenience of shipping direct to the consumer. The Internet has been a rapidly growing sales channel, particularly among younger computer savvy consumers, and an increasing source of competition within the sporting goods retail industry.
                                Industry Forecast
                                Sporting Goods Stores Industry Growth
                                Source: Vertical IQ and Inforum

                                Coronavirus Update

                                May 13, 2022 - COVID-19 Spikes In China Will Affect Supply Chains
                                • Supply chain experts say that China’s strict Covid-control policy could cause renewed supply-chain disruptions in the US as shuttered factories there cause orders to back up. The effects of lockdowns in southern Chinese megacity Shenzhen — home to the nation’s most-important port after Shanghai — will affect the Los Angeles-area sea-cargo hubs, the busiest container gateway in the US, according to Noel Hacegaba, of the Port of Long Beach. Backups building at other ports in China may be indicate what's to come at Shenzhen, according to Alex Charvalias, of maritime-analytics firm MarineTraffic. The number of container vessels waiting to berth in the eastern city of Qingdao climbed to 22 from 9 in one week, he said, and the queue is also growing at the biggest port in Shanghai, he said. This will affect the US in the next month or so, because fewer vessels will leave for the West Coast, he added.
                                • An Institute for Supply Management (ISM) barometer of business conditions at service-style companies such as retailers and restaurants decreased 1.2 points in April to 57.1% and signaled that labor and supply shortages as well as high inflation are hurting the economy. Results over 50% are viewed as positive for the economy and anything over 55% is considered exceptional. Experts say that demand is not the issue — businesses still have more than they can handle. Ongoing shortages of labor and supplies, high energy prices, and the worst bout of inflation in 40 years are the biggest hurdles. Service-oriented companies have generally fared worse during major viral outbreaks like the coronavirus pandemic according to the ISM. Their workers deal directly with customers and their businesses are more affected by government restrictions.
                                • Click-and-collect sales are expected to increase about 21% to $101 billion in 2022, according to the market research firm eMarketer. Click-and-collect orders are online purchases retrieved through either curbside pickup or inside of stores. They're expected to increase nearly 20% in 2023 to an estimated $120.15 billion. "It's something people are used to doing now," said Suzy Davidkhanian, principal analyst for retail and e-commerce at Insider Intelligence. People began to accept the behavioral change during the coronavirus pandemic. Click-and-collect e-commerce sales are more profitable than other kinds of online sales because they eliminate the cost of delivering packages to people's doorsteps and allow store employees to double as order pickers. Retail giant Walmart accounted 25.4% of all Click-and-collect orders in 2021, the largest share of any US retailer, according to eMarketer.
                                • Sales at sporting goods, hobby, musical instrument, and book stores increased 3.2% month over month on an adjusted basis in March but decreased 5.7% year over year during the period, according to the US Department of Commerce. The sales data measures dollars spent at US businesses, so the increase partly reflects inflation in the cost of everyday products from food to gasoline. Consumer prices are increasing at the fastest pace in years, a phenomenon largely attributed to the uneven reopening of the global economy.
                                • Real disposable income, an indicator of demand for discretionary purchases like sporting goods, decreased 0.4% month over month in March, according to the US Bureau of Economic Analysis. It was the sixth straight month that real disposable income decreased. Consumer spending increased 1.1% month over month in March.
                                • Employment at sporting goods stores decreased 1.5% year over year in March.
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