By Thomas J. Ryan
With its entry into Southern California through its acquisition of Chicks Sporting Goods, Dicks Sporting Goods is putting a long overdue spotlight on the action sports market. Since the demise of Galyans Trading Co. (ironically, due to a DSG acquisition), surf and skate vendors claim there hasnt been a good home for action sports at full-line sporting goods chains beyond the West Coast.
Given the hike in participation in many action sports over the past decade, coupled with the growing popularity of the surf/skate lifestyle, this appears to be a missed opportunity for sporting goods retailers.
“If you asked a group of 14- to 20-year-olds 10 years ago to name their top 10 participatory sports, snowboarding, surfing and skating would not have ranked high,” says Dick Baker, president of the Surf Industry Manufacturers Association (SIMA) and former CEO of Ocean Pacific. “Today, all three of those are in the top 10. So the definition of sporting goods doesnt mean the same thing anymore. A sporting goods store would have to be crazy not to be in the action sports business.”
Moreover, the opportunity looms larger as many of the premier skate/surf brands have become staples of youths wardrobes-whether or not they actually participate in action sports-and should continue to draw attention due to extensive TV coverage on ESPN.
“Action sports is no longer a niche business,” says a top sales exec at a company that owns several action sports-type brands. “Its very mainstream.”
However, there are a number of reasons sporting goods chains havent been able to capitalize on the action sports opportunity. One primary factor is that many sporting goods chains tend to be overly promotional, which is a turnoff for both the premier action sports brands as well as surf/skate customers. The other, according to action sports vendors, is that merchants with an “East Coast mentality” have just been slow to pick up on the surf/skate trend. Outside of Sports Chalet and Chicks, sporting goods retailers havent made enough of a commitment in terms of shelf space and attaining the best brands such as Volcom, Quiksilver, Element, ONeil, Hurley, DC and Billabong in order to succeed in the category.
“I think sporting goods in general has just kind of dabbled in surf brands over the years, and the ones that have been successful, like Chicks, have dedicated the type of in-store real estate required to support it,” explains Baker. “You cant dabble in it in this day and age. Its just too competitive.”
Vendors, who have been primarily relying on Zumiez, Pacific Sunwear and department stores to reach many of East Coast consumers, seem eager to grow in a channel with true authenticity around sports. The general sporting goods channel, according to surf and skate vendors, does to some degree attract a slightly different customer than other, fashion-first, accounts. But more importantly, with action sports becoming mainstream, its increasingly attracting the kid buying team gear who is also likely into action sports.
“Find me a 13-year-old without a skateboard,” says the action sports exec. (Like many other vendors contacted by SGB, the exec didnt want to be identified when discussing vendor/retailer relations.)
Observers also believe the stigma of an action sports brand selling to sporting goods chains has lessened as the trend has gone mainstream. Even Nike is finding success in its skate offerings.
But the action sports exec admits to being frustrated that few sporting goods retailers truly embrace action sports to succeed in those categories.
“The sporting goods channel works really well for brands like ours and its a channel we believe in and want to grow into,” says the exec. “But finding a management and merchandising team that truly understands and embraces the action sports lifestyle is tough. Its all about putting together a full collection of brands. You have to stand for a category. You have to have enough product so that if a customer walks into a store they say, Wow, this is an action sports store.”
Enter Dicks Sporting Goods. With its mid- to higher-price-point positioning and success in growing categories such as athletic apparel and footwear, many people are wondering what the retailer can do as it gains a deeper understanding of West Coast retailing via its acquisition of Chicks.
“Even since Galyans went away, weve been looking for that retailer in that channel that understands the potential of the [action sports] world, and Dicks is our best bet,” says the sales exec. “Who wouldnt want to be more meaningful to a 325-door retailer heading towards 800?”
So far, DSG has more than impressed the action sports crowd. At the time that the deal was announced in December 2007, many market observers assumed that the 15 Chicks stores would rather quickly be reformatted to mimic the highly successful DSG format. But DSG has purposely moved slowly as it studies its new opportunity out west. The plan calls for only one Chicks store to be converted to a DSG store in October; the remainder will not to be changed until the second half of 2009.
More importantly, West Coast vendors are relieved that merchandising assortments will not change at the Chicks locations at least through the end of this year. DSG chairman and CEO Ed Stack recently indicated that the company wont be bringing firearms to its Southern California locations, thereby leaving plenty of room for Chicks wide selection of beach, snow and skate apparel. On the hardgoods side, DSG will beef up some areas in which it has particular expertise, such as golf, but no radical overhauls are being planned.
While still taking a wait-and-see approach on DSGs ultimate impact on Chicks, most vendors were clearly hopeful about what the mega-retailer can bring to the table.
“Chicks was an important account for the action sports industry,” notes a sales head at an emerging skate brand. “They did a good job buying and presenting the category. They were really good at what they did. I dont know the Dicks people other than through a few conversations, but they seem to be nice, intelligent, and they have a plan.”
“We dont anticipate the merger making a change to our current business,” reports Mike Regan, brand director at Etnies, which sells to both DSG and Chicks. “This acquisition will give Dicks a much larger presence on the West Coast, which is a hotbed for the action sports industry. Chicks has seen success through staffing their stores with employees that know action sports, and it would be a great opportunity for Dicks to embrace this same strategy.”
Particularly reassuring to vendors is that Chicks key management has so far remained in place. Former Chicks president Jim Chick, and Larry Lucas, former GM, both retired June 30 after the earnings bonus payout period as part of the deal ended. But the core buying team is still at work, with a few signing contracts to stay on until the middle of 2009. Some may even stay longer to support action sports categories. For instance, while snowsports and athletic apparel buying is being shifted to DSGs Pittsburgh headquarters, the company plans to keep a small buying office in Southern California to accommodate beach and skate buying.
According to a leading skate footwear vendor that has sold to both chains, “Chicks has been great to us over the years, but Dicks has really great stores. So were just happy that its two companies that have been a pleasure to do business with. Were excited to see what happens.”
An up-and-coming snowboard apparel vendor that had only sold to Chicks has already gained its first order from an Eastern DSG account.
“Were going to be showing Dicks the line and we think [the merger] is going to be a good thing for us,” remarks one of the principals at the snowboard vendor. “Were really excited about it and hope that things work, but I think its pretty early still.”
Indeed, many continue to take a wait-and-see approach to the merger as DSG weighs the market opportunities in various action sports categories-particularly outside the Western states.
One of the challenges will be buying across different regions. East Coast consumers generally go for less edgy looks, even in the action sports world. If DSG moves more aggressively into these categories, it will face already well-established chains. In addition to Pacific Sunwear and Zumiez, retailers such as Hollister, Abercrombie & Fitch, and American Eagle tap into the action sports lifestyle, as well.
The head of sales for the smaller skate apparel vendor points out that the action sports category also lends itself to niche specialty retailing.
“You want to be in that store that lives and breathes the sports that they sell,” he says. “And in a smaller store, you have more salesmen per square foot. Its harder to do that in a big box store.”
Still, he notes that Chicks and Sport Chalet have been able to successfully tap into the action sports opportunity by bringing in ample product presentations and having knowledgeable staffs. “The more you can explain the features of products, the better off you are,” he says.
Steve Murray, president of Vans, has always believed there was an opportunity for full-line sporting goods chains to “build a more meaningful action sports platform” by bringing in more recognizable brands. But it has to be done the right way.
“Authenticitys key, as is making a cultural connection,” explains Murray. “Skaters and surfers want to feel that the retailer they shop at understands them and is genuine in their support for the sport or lifestyle, not just cashing in on a trend.”
Murray also believes that some sporting goods retailers, especially on the West Coast, have begun to understand this and have proactively changed their personnel, floor layouts, mindsets, breadth of product and brand mixes, accordingly. Indeed, while the stigma in selling to sporting goods chains might have lessened, action sports brands will likely only support retailers that can prove to consumers that theyre in these categories for the long haul.
“Its a huge opportunity for sporting goods retailers if they get it right,” says Murray. “Theyve got to be serious though; they cant just play at it.”
