The opening of its first Field & Stream store, in Cranberry Township, PA, has so far been an unqualified success for Dick’s Sporting Goods. The grand opening on August 16 drew over 3,000 people standing outside, resulting in the most successful opening in Dick SG’s history, said Ed Stack, Dick SG’s chairman and CEO, at Goldman Sachs Global Retailing Conference.
With a month in business almost done, Stack said the store is operating “significantly better than any first month we've ever opened in any store.”
Stack said the opportunity with Field & Stream is to “capture a portion of the market that we're not capturing today inside the Dick’s Sporting Goods business.”
While the opportunity has been evident with the growth found by Cabela’s and Bass Pro, internal research found that that only between 6 to 8 percent of core hunters were shopping at Dick’s Sporting Goods. Added Stack, “They wanted to go to a true specialty shop.”
Given Dick's SG's roots as a bait and tackle shop in Binghamton, NY and its ongoing experience selling hunting and fishing gear, Stack said the venture lies well within the company's core competency.
Asked whether Field & Stream expects to take market share from the “Big Three” hunt & fish players (Cabela’s, Bass Pro and Gander Mountain), Walmart, or the many mom & pops, Stacks suspects the concept will take “a little bit of each of them.”
He cautioned that Field & Stream didn’t intend to get into “an arms race, so to speak” with the two leaders, Cabela’s and Bass Pro. He added, “We've got great respect for them. We think they're terrific retailers.”
But he sees an opportunity to take share from mom & pops and “some of the other retailers that aren't Bass Pro or Cabela's.” He also noted that a significant part of Cabela’s and Bass Pro’s businesses continues to be direct mail with each having about 50 stores each, leaving Field & Stream “a lot of green space to put stores.”
Although it has acquired Galyan's Trading and Golfsmith in the past, Dick’s SG decided to launch Field & Stream as a start-up because it wasn’t “enamored with” the real estate of any potential acquisitions in the space. Any acquisition would require a “huge per store capital investment” to compete with a Bass Pro and Cabela’s.
On its second-quarter conference, Dick’s SG officials indicated that it had signed three additional leases so far for Field & Stream, including a location to open in Kentucky in November.
Another touted growth opportunity continues to be online, and Stack reiterated management’s goal to triple the size of its e-commerce business by 2015. E-commerce is growing about 50 percent on an annual basis for Dick’s SG. It now represents 5.6 percent of sales.
Stack expects to see an even more compelling and profitable online business once it transitions away from its arrangement with GSI Commerce. It has partnered with IBM and WebSphere to build a new online platform, but internal e-commerce capabilities for Golf Galaxy, Field & Stream and its new True Runner run specialty segment won’t be ready until 2015. Even further down the road, internal e-commerce for the flagship Dick’s SG website is not expected until 2016 or even 2017.
“It can give us much more control over the site, much more control over changes that we'd make, make them faster and we're pretty excited about this,” said Stack.
He also noted that fulfilling online orders through GSI's warehouse is “much less profitable” than distributing from one of its approximately 500 doors. He noted that already “meaningful part” of e-commerce orders are coming from its own stores, which is also helping delivery speed.
Finally, Stack said adding internal capabilities will further enhance the “whole omni-channel experience.” Customers can already return items bought online to locations. Buy online and pickup from store is being piloted at roughly 100 stores this year.
Asked about the competitive landscape, Stack cited Sports Authority and Academy as its two main rivals.
“Academy continues to grow. We've got a lot of respect for Academy,” said Stack. “We think they're a very good retailer. We haven't seen much difference in what Sports Authority has done over the last several years. We feel that we'll continue to compete very effectively in this business.”
He said the chain has reacted to a “bit more price sensitive” business this year seen in the southern part of the U.S. Overall, however, the competitive tone is about “average” for the industry as it has been over the past few decades
Regarding current business, Stack reiterated that conditions are a “bit better” so far in the third quarter than the second quarter. As reported, the flagship Dick’s SG chain saw a small comp decline last quarter due to particular weakness in golf equipment, outdoor equipment, and fitness categories. The cool weather, a sluggish consumer environment, and lack of innovation hurt sales.
Stack said the golf business has revived in the third quarter with TaylorMade’s launch of the SLDR Driver, and the company is feeling “a bit more optimistic” about business conditions, However, he cautioned that several other retailers have also since noted that the consumer continues to be cautious with some dollars shifting toward auto and housing.
“We remain somewhat cautious, but we are a bit more optimistic, as we said in the call, about what's going on in the third quarter versus what happened in the second quarter,” Stack said.
