The nation’s largest sporting goods chain Dick’s Sporting Goods said Tuesday it plans to eliminate some brands that are less popular with shoppers, as the retailer continues its push to capitalize on the death of rivals Sports Authority and Sports Chalet.
The retailer plans to refocus by dropping up to 20% of its vendors. CEO Edward Stack said changes are coming to “deliver a more refined offering for our customers” and enable Dick’s stores to “stay ahead of consumer trends.”
Stack noted that none of Dick’s 10 largest vendors will be cut, but he declined to say which vendors will get the boot. He also declined to specify which categories will be targeted, although he said Dick’s is reevaluating products across the store. In some cases, Dick’s will replace apparel and gear with private brands such as Field & Stream, to boost profits and differentiation
Stack went on to say, “These strategic vendors will also provide us exclusive and differentiated products in the marketplace. We will overtly move market share to these partners in an effort to drive growth in our respective businesses. Segment B will be vendors that we simply have a transactional relationship with and segment C will be vendors who we will eliminate from our stores.”
In discussing private brand he positioned them as key pillars of our new merchandising strategy.
“For example, we remain extremely enthusiastic about CALIA which has risen to become our third largest women’s brand in less than two years. Looking ahead, we will expand offerings and CALIA, Field & Stream, Reebok and other key brands. We will also be launching two exciting new brands this spring. As a result, we expect our private brand business to reach approximately $1 billion in sales this year.”
And private brand came up numerous times in the analysts Q&A.
David Magee, of SunTrust
You mentioned the success of the footwear decks which makes a lot of sense to us. Are there other things that you’re doing in the stores that would have also have an impact, whether it be additional vendor shops or what have you?
I think a big piece of what we’re doing are two things. The vendor consolidation that we’ve implemented and re-looking at our vendor structure and what segment a vendor is in and then what rights or privileges those vendors have inside our business, the investments we’re going to make, the investments they are going to make.
And then also, what we’re going to be doing from a private brand standpoint. We have gotten much more aggressive with private brand. You can see what we’ve done with CALIA. Field & Stream has been great from a private brand standpoint.
One of the biggest issues that we have going forward — biggest opportunities — is private brand and we’re investing very heavily in them. From an infrastructure standpoint, you’re going to see more marketing of these and over the next few years you will see our private brand business grow pretty dramatically.