Speaking this week at Goldman Sachs’ Annual Global Retailing Conference, Lauren Hobart, president and CEO, Dick’s Sporting Goods, said that beyond the pandemic, Dick’s had benefited from the structural changes it put in place in 2017, which helped elevate its assortment, including carrying more “high-heat” apparel and footwear products.
Dick’s invested in store “experiences,” including full-service footwear decks, adding HitTrax batting cages and golf simulators and
further investments in customer service.
Hobart said, “We leaned into trying to develop a fantastic service model, and that enabled us to open up access to an assortment that, frankly, we were not able to carry before because we didn’t have a high-enough service model.”
Navdeep Gupta, CFO, noted that Dick’s managed a 6 percent growth in the back half of 2019, showing that the investments in the in-store experience were paying off pre-pandemic.
“Whether it was HitTrax, whether it was the premium full-service footwear and then the deeper relationship that we have with the brands, all of that was already starting to show the evidence as much before COVID, and COVID significantly accelerated it,” said Gupta.
Gupta added that the retailer’s relationship with its major brand partners is at “an all-time high” not only because the company elevated the in-store experience but because brands have sought to gain more “control” in the marketplace over the last few years.
Gupta said, “You’re starting to hear more and more about the narrowing of the distribution, pulling out of the distribution channel that used to be the early price leaders. And those actions have benefited us in addition to our own core investments.”
Asked about the current macro-environment, Hobart said Dick’s has not noticed any signs that consumers are trading down from higher to lower-priced categories during current inflationary pressures. “We have found that despite the fact that all consumers are going through a lot of challenges with grocery prices and gas prices, our consumer has held up really well,” she said.
Hobart said Dick’s serves a broad range of income demographics, offering opening-price point items up to the “most enthusiastic player who wants a $279 soccer cleats.” The retailer said it had not noticed that an income demographic notably reduced its spending in the second quarter. “Our consumer overall has held up well. We’ve been pleased,” added Hobart.
Hobart also noted that Dick’s has had help because demand for sporting goods across categories re-based higher two years following the pandemic. She said that Dick’s focuses on four main categories—Team Sports, Apparel, Footwear, and Golf – and all four have re-based at sales levels “meaningfully higher” than in 2019.
“Golf, for example, was absolutely a category that surged during the pandemic,” said Hobart. “We had people coming into the game who hadn’t played before, they skewed a little bit younger, and more women joined the game. Those trends are still significantly higher than they were in 2019. So there may have been a little bit of a reset, and we saw that but even in our last quarter, golf sequentially improved from Q1 to Q2. That’s an example of something that we think has staying power.”
Team sports, she added, is “coming back with a flurry right now” as play has resumed after leagues were suspended in the early stages of the pandemic.
“And then footwear and apparel have absolute staying power since consumers are outside. They’re walking. They’re running. And then there’s been a bit more of a casualization of society, and we do serve products in our stores that can be used to-from the gym, to-from work and even at the office so that you’re ready to jump into a workout whenever, wherever you can.”
Asked about promotions, Hobart said Dick’s expects “some normalization” because inventory scarcity was a primary reason it was minimal the past few years. She added, “That said, it’s a guarantee that it will not be anywhere close to what it was before. What you might have seen in 2019 or before is ‘X percent’ or ‘dollars off’ the website for the day or a storewide promotion or promotion around a whole category. That is not what we are expecting. Maybe around the holiday. But this is going to be much more surgical, much more strategic in terms of whom we want to offer the discounting to. And it’ll be based on what’s right for us and what’s right for the marketplace. But we’re not going anywhere back to what 2019 was like.”
Gupta added that launching the Going, Going, Gone warehouse concept has also helped Dick’s become “much more surgical” about markdown cadence in handling clearance.
Photo courtesy Dick’s SG
