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 19,800 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 19,800 retail establishments, generating sales of about $64 billion, and employing 296,100 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, and REI.
    • Mass Merchandisers - This category includes discount retailers such as Walmart or Target, and department stores such as Macy's 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

                                Mar 2, 2023 - Dick’s Sporting Goods Grows Recommerce Efforts
                                • Dick’s Sporting Goods plans to host 200 trade-in events in 19 states in the first half of 2023 in a partnership with SidelineSwap, according to Retail Dive. SidelineSwap, an online marketplace for sporting goods, will use its trade-in software and value guide of customers’ sports equipment and gear. During its trade-in events in 2022, attendees received an average of $88 in the form of a gift card to Dick’s. People can donate all or some of their trade-in value to local sports organizations. Dick’s also uses Out&Back to sell used items through buyback programs; Dick’s is an investor in SidelineSwap and Out&Back. More retailers have been capitalizing on the growing market for used items. Other sporting equipment and apparel retailers engaging in “recommerce” include Patagonia, Eddie Bauer, and REI.
                                • Sports participation by Americans increased in 2022 for the fifth consecutive year, posting a 1.9% gain over 2021 and a 9.2% increase from 2017, according to the Sports & Fitness Industry Association’s Topline Participation Report. The report found that 77.6% of Americans, or 236.9 million people, participated in at least one sport, fitness exercise, or outdoor research activity in 2022, which is higher than in the previous five years. The report tracks participation rates of Americans aged six and older across more than 120 different sports, fitness, and outdoor activities. Pickleball remains the fastest-growing sport, with participation nearly doubling in 2022. The racquet sports category is performing well, with higher total participation numbers for all racquet sports compared to the previous year for the first time since 2015. Since 2019, golf and tennis have each grown more than 20%, while yoga has increased by more than 10%. Basketball, outdoor soccer, and flag football have all posted increases since 2019. Activities not yet returning to pre-pandemic levels include facility-based elliptical, group stationary cycling, and weight-resistant machines.
                                • More than 60% of retail companies are operating with a shortage of frontline staff, according to a study published in Chain Store Age. The survey of more than 500 global business leaders, commissioned by digital frontline workplace company WorkJam and conducted by Forrester Consulting, found that only 8% of companies plan to invest in improving the frontline experience in the next year to address their labor shortages despite the deficit. More than 80% of decision-makers across industries and geographies want to leverage technology to improve the frontline experience. However, more than 70% of retail decision-makers say digital transformation initiatives have yet to reach the frontline. Frontline employees are also expressing their dissatisfaction with the current conditions. Per the survey, 74% say frontline employees are rejecting work conditions that went unchallenged two years ago, and 80% say frontline turnover has increased, which challenges companies to deliver a positive customer experience.
                                • Three-quarters of sporting goods company executives said they plan to expand nearshoring by 2025, according to an annual report by McKinsey & Company and The World Federation of Sporting Goods Industry in FashionUnited UK. The report, titled “Sporting Goods 2023 – The need for resilience in a world in disarray,” cited supply chain disruptions, geopolitical considerations, trade tensions, and rising labor costs in Asia as reasons to move to nearshoring. Companies should consider several variables when researching nearshoring: lead times, risk exposure in the supply chain, labor costs and skill requirements, and sustainability. The report also said sporting goods companies could achieve 5 to 10 percent savings by building supply chain resilience through reviewing sourcing and supply chain options and applying next-generation solutions.
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