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 Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation 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

                                Recent Developments

                                Nov 3, 2022 - Lower Sales Growth Rate Expected This Holiday Season
                                • Retail sales are expected to increase between 6% and 8% year over year from November 1 through December 31 to between $942.6 billion and $960.4 billion, according to the National Retail Federation (NRF). The figures exclude spending at car dealers, gas stations, and restaurants. Sales increased 13.5% year over year in 2021 and totaled $889.3 billion. Consumers, especially lower-income shoppers, are grappling with higher prices this year on a range of necessities, but they are still spending, said the NRF. Sales volume—or amount of items purchased—is also expected to increase from last year. NRF noted that some holiday shopping may have started before November, as retailers have pushed holiday deals earlier each year, in part to boost overall spending.
                                • Online retail sales growth will moderate, according to FTI Consulting. Shoppers avoided stores to contain the spread of Covid-19, driving up e-commerce spending and creating what FTI described as “four quarters of hypergrowth.” Shoppers are now more anxious about high inflation and a potential recession that could upend their finances. “[T]he rocket-like growth of online retail during COVID-19 certainly will moderate. Online sales in the past two years were driven by necessity — shopping from home due to stay-at-home living and work conditions — as well as more discretionary income due to government stimulus, a speedy jobs recovery, and increased savings,” said J.D. Wichser, leader of the retail and consumer products practice at FTI Consulting.
                                • Sporting Goods Stores are likely to be affected by changing consumer demand that has resulted in overstocking by retailers of some products. Some Americans, mainly high earners, are reallocating their spending to experiences, says Kayla Bruun, an economic analyst with Morning Consult. Travel demand, for example, has soared as travel restrictions are eased. "There is a shift away from goods and to services, which is more Covid-related," she says. "People were locked down during the pandemic and they were spending more income on things around the home and now they prefer to spend their discretionary spending on goods outside the home."
                                • 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.
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