At the Goldman Sachs Global Retailing Conference, Ed Stack, Dick’s Sporting Goods’ chairman and CEO, elaborated on the growth potential and underlying drivers online and at Field & Stream.
Stack said that from 2010 to 2014, the company’s e-commerce business grew at a compounded annual rate of 45 percent and has increased to $628 million in sales in 2014.
“We've moved up to number 70 in 2015 on the Internet Retailer Top 500 list and we will continue to grow and win online, targeting sales of $1 billion to $1.2 billion in 2017,” the CEO said.
Supporting its e-commerce growth is its store base, which he likened to “619 distribution centers” that support both ship-from-store as well as buy online, pick-up in store. But he also noted that studies show a multi-channel customer spends three times as much as a single-channel customer. E-commerce sales in new markets typically double when a Dick’s store in the area opens. Added Stack, “With approximately 80 percent of our orders that are shipped to customers within a trade area of a Dick’s store, many of these customers are shopping us both online and in stores.”
Also supporting the company’s online growth has been efforts to improve capabilities from a regionalization standpoint to better customize home pages to local markets; expanding its assortment available for buy online, pick-up in-store; and the launch of a new platform for on-site search.
Taking e-commerce in-house
In January, the flagship website will transition away from a platform with GSI Commerce to an in-house one. The website for Golf Galaxy website has already been converted to the new platform with a Field & Stream’s website launch taking place later this year. With the in-house transitions, Dick’s is targeting annualized savings of $25 million to $30 million by 2017
“We'll have levers that we control to more effectively differentiate our online experiences from what GSI does today,” Stack said. “We will have easier access to our data and be able to use this to build more engaging cross-channel customer experience and marketing than we're able today with GSI. We'll have control over development cycles, which will allow us for faster testing and implementation. And finally, we'll be able to quickly stand up new sites and capitalize on market opportunities.”
White space in Houston
Overall, Stack said Dick’s SG has 10 percent share of sporting goods in the U.S. with four states – California, Texas, Florida and New York – representing roughly 40 of its new store development. He noted that while the leading chain in the U.S., it has no stores in Houston and only one in the five boroughs of New York. Added Stack, “There is still some white space where we don't have stores that we need to penetrate.”
Asked about sports participation, Stack remarked that while participation is declining in some team sports, athletes are participating in particular sports for a longer period of time because of the increase in specialization.
“Twenty years ago, a lot of people played three sports and today, really does anybody play three sports?,” asked Stack rhetorically. “Some of them may play two, a lot of them play one sport.”
He believes the longer focus on single sports is “underappreciated” and helping support sales of bats in the price range of $350 to $500. Similarly, the A2000s from Nokona “continues to do extremely well” with its appeal to athletes dedicated to baseball.
Stack also feels women’s growth in athletics “is not going to slow down anytime soon.” He sees growth in the two groupings the chain targets: the young girl, 12 to 22, that play soccer, lacrosse and basketball at their school as well as the older women into walking, running, Pilates, boot camp and other wellness activities. Added Stack, ” I think all of that is going to be around for a much longer period of time.”
