Sporting goods has to be one of the most exciting sectors in the entire retail industry now. Consider this: There’s a new brand specializing in outdoor goods that just opened last month; new in-store experiential merchandise formats are introduced regularly; one big legacy operation is remodeling many of its locations to take advantage of favorable business conditions; and a national chain is opening its own free-standing outlet division rather than moving close-outs to the off-price channel.
[callout]Dick’s is committed to championing girls and women in sports. We know that when young female athletes have access to the proper equipment and can look up to other female athletes, they are more likely to remain in a sports program and gain the skills to help equip themselves to be future leaders.[/callout]
But here’s the thing: All these new retailing initiatives are coming from just one company: Dick’s Sporting Goods. Even in a retail landscape where every company is looking for new variations on its existing business model, Dick’s seems to be in a league of its own.
A Kid with an Idea
Founded in 1948 in upstate New York by – you guessed it – a fellow named Dick (carrying on a long retail tradition, now largely abandoned, of using family names for stores), Dick’s is now a $9.5 billion company with some 730 stores around the country. With the demise of some other big chains over the past few years, including Sports Authority and Modell’s, it is now the sector leader with only Academy, Big 5 and Hibbetts as like competitors.
Dick’s founding story is both classic retail history and a made-for-streaming series. As its website recounts, “Dick’s Sporting Goods was founded in 1948 when18-year-old Dick Stack was working at an Army surplus store in Binghamton, New York. An avid fisherman, Dick was approached by the store owner to come up with a list of products needed to get into the fishing tackle business. After Dick presented his suggestions, the owner told him he was a dumb kid and had no idea what he was doing. Dick was upset and promptly quit. He went to his grandmother’s house where he spent a lot of time as a kid and told her what had happened. Dick’s grandmother asked how much it would cost to build the store himself. Dick said it would cost $300. His grandmother then went to the cookie jar where she kept her life savings and gave him $300 and told him, ‘Do it yourself.’ Dick used that money and his relentless work-ethic to open a bait-and-tackle shop in Binghamton.”
You can’t make this stuff up and the rest, as they say, is sporting history. Even though it took until 1971 to open his second store, Dick Stack built his company to today’s dominating position with grit and determination. His son Ed ran the company after his dad retired — and only this year did Ed move onto the executive chairman role with Lauren Hobart becoming the first non-family-member CEO.
The Team Gets Larger
But as steady as Dick’s growth has been, the past year or two have been extraordinary for its roll-out of new formats and spin-offs, even as its core business continued to grow, partially due to the pandemic conditions that encouraged outdoor sporting activities. The Dick’s expansion reads like a what’s what of modern retail:
In September Dick’s opened the first of what it calls a store with a “focus on helping more people get outside to explore and protect America’s public lands.” At 50,000 square-feet the location, just outside of Pittsburgh, includes a 30-foot rock wall, in-store gear repair and rental department and individual shops for various outdoor activities including biking, camping, fishing, paddling, skiing, climbing, running and hiking. The company says one percent of all sales will be donated back to local and national conservation efforts.
Women in Sports
Dick’s has made a commitment to champion women, highlighting the importance youth sports play in the lives of girls. President Lauren Hobart says, “Dick’s is committed to championing girls and women in sports. We know that when young female athletes have access to the proper equipment and can look up to other female athletes, they are more likely to remain in a sports program and gain the skills to help equip themselves to be future leaders. We intend to stay at the forefront of advocating for female athletes and athletics.” Among several female-focused initiatives, Dick’s Sporting Goods Foundation donated 100,000 DSG Brand sports bras to under resourced female athletes across the country, partnering with Good Sports, a nonprofit organization that provides athletic equipment, apparel and footwear to young athletes in need. And the company\’s first-ever Girls\’ Power Panel for girls ages 13-17 the gives a younger generation of females a voice to provide general insights on sports issues
An independent brand within Dick’s, Golf Galaxy is a specialty operation with 98 units, up nearly double since Dick’s bought it in 2006. It has been the beneficiary of a resurgence of the overall golf sector during the pandemic after the sport began to slide as baby boomers aged, millennials didn’t take to the game and the most iconic figure in the sport, Tiger Woods, lost much of his luster. But now the brand is being substantially invested in by Dick’s which says it is creating an “immersive golf experience” with the use of golf simulators and in-store AI technology. A recent research report predicted the overall golf industry would grow by three percent a year through at least 2025.
House of Sports
Not a free-standing brand but rather a super-sized format under the Dick’s banner, the first two stores with this moniker opened this past summer, each measuring out at 100,000 square-feet including playing fields that can be converted to ice skating rinks, batting cages and all sorts of other immersive environments, all designed – naturally – to get shoppers to purchase more of the products used in these activities. The stores are also test labs to evaluate which elements can be rolled out to existing and smaller locations in the Dick’s stable, according to the company.
Going, Going, Gone & Outlets
Rather than clutter up the back of existing stores with close-out goods – or even worse dump them into the off-price channel – Dick’s has been building out its close-out business under a variety of banners. There are now several such locations with Going, Going, Gone as the newest, launched earlier this year.
And More …
In addition to all of these initiatives, there are also several freestanding Field & Stream locations, Soccer Shop in-store shop-in-shops and assorted in-store experiential areas for a variety of sports.
Organic & Acquisitional
While the recent initiatives have been organically developed, over the years Dick’s has made a number of acquisitions as well. Besides Golf Galaxy, it has bought Gaylan’s Trading Company, Chick’s Sporting Goods, the game-streaming company GameChanger Media and the intellectual properties of The Sports Authority. It has built out its private label merchandise, saying it hit $1 billion in “vertical brand sales” as far back as 2017. It has also been on the leading edge of omnichannel capabilities, launching ship-from-store in 2013, BOPIS a year later and curbside pick-up last year during the early stages of the pandemic.
Dick’s has also been active in social issues, establishing a foundation for athletic programs in 2014 and, more controversially, stopping sales of assault-style rifles and high-capacity ammunition magazines in 2018 while raising the age to purchase other weapons to 21 at the same time.
And at the risk of this sounding like a cheering section for Dick’s, it has to be noted that its stock has gone from barely $16 during the first days of the pandemic retail shutdown to recent trading over the past month near its all-time high of $144 a share. If there are any foul balls coming at Dick’s or the overall retail sporting goods sector, they aren’t readily apparent. Retail sales in the category are estimated at about $45 billion, which gives Dick’s a market share bordering on about 20 percent, meaning there’s plenty of upside potential particularly as researchers expect sporting goods to outpace the overall consumer products business in growth over the next few years.
As a consumer purchase that often requires a hands-on shopping experience the Dick’s physical store strategy would seem to make plenty of sense even as it also continues e-commerce initiatives. While climate change conditions could inhibit outdoor activities, the aging out of baseball’s fanbase and ever-changing demographics perhaps deemphasizing sports could all be red flags on the Dick’s playing field, it truly appears that it is the right store in the right place at the right time.
Dick Stack’s old boss certainly didn’t get it right and one has to hope he was thrown out of the retail game not too long afterwards for lack of vision. Dick’s Sporting Goods, to beat this cliché dead horse one last time, has been a game changer.