Not that too many major sports retailers are in a joking mood currently, but the easy joke to make — were one so inclined — about the spate of closures and bankruptcies in the space of late would be to attribute it to modern consumers’ laziness and lack of athleticism.
If that were a widespread reality, however, the retail sports industry certainly would not have experienced one of its biggest ever last year, and, in fact, it did, with Forbes noting that the specific subcategories of outdoor equipment, athletic footwear and active wear all saw surges in 2015.
How is it, then, that the recent bankruptcy filing by Vestis Retail Group — which owns Sport Chalet, Eastern Mountain Sports (EMS) and Bob’s Stores — is far from an outlier and instead very much on trend with the state of the sporting goods industry today, following as it did on the heels of Sports Authority, once a stalwart in the space, doing the same (being forced to cast off 140 of its 463 stores, while Sport Chalet will be closing all 46 of its locations)?
As PYMNTS previously argued in our initial story about the Vestis bankruptcy, the popular theory that the rise of specialty sporting goods retailers, such as Lululemon, bears substantial blame for the fall of established chains — a theory shared by Vestis’ own CEO, Mark Walsh — doesn’t exactly hold up to scrutiny. If anything, the very interest that consumers hold in athleisure wear and other spinoffs of sporting goods only provides more opportunities — not fewer — for retailers to stake a claim in the space, as evidenced by the expansion of related offerings at chains like Target, Walmart and Gap.
What arguably led to the demise of Sport Chalet and (the massive restructuring, albeit not total collapse) of Sports Authority was not that they were caught off guard by specialty players and brands that came from out of nowhere but rather that the chains didn’t pay heed to the changes in the vertical as they were developing. They, more or less, maintained their similar courses in (relatively) old-fashioned brick-and-mortar retail, a path that has now led them to a dead end.
The chains’ abilities to adjust their operations to better reflect the industry’s evolution in a timely manner were certainly not helped by their previously held debt. As Matt Powell, an industry analyst at market research firm NPD Group, commented to Los Angeles Times: “If a retailer's got a lot of debt, it means they're not spending money on stores, they're not spending money on systems, they're not spending money on the kinds of things they need to do to drive the business forward.”
In that sense, then, the beleaguered sporting goods outlets may have already been chasing their own tails, as it were, well before the writing was on the wall. A retail business that needs to adjust to make money needs to have money to make adjustments. A vicious circle if ever there was one.
But were the fates of Sport Chalet and Sports Authority avoidable?
A couple of examples involving one-time competitors of theirs suggest that they might have been.
Dick’s Sporting Goods, for one, was in the same position as every other chain in the space as the rise of specialty goods and omnichannel were first threatening to shake the tree. Rather than turning a blind eye to the industry changes or taking a “wait-and-see” approach, Dick’s got proactive about eCommerce. The chain is now putting its assets towards taking control of its online operations, handling them all in-house.
The potential upside for the company is that it will have more financial flexibility in the long term — which, somewhat ironically, puts it in a position to buy some of Sports Authority’s stores and intellectual property.
Shopping mall staple Foot Locker, meanwhile, has benefited from taking a contrary approach to Sports Authority and Sport Chalet’s prior disregard of the burgeoning specialty retail business. By instead shoring up its relationships with brands such as Nike, Under Armour and Adidas — with a dedicated focus on athleisure — Foot Locker has seen its sales grow, while those of competing chains falter.
To posit what chains like those owned by Vestis should have done to avoid their current situation is, admittedly, a little bit of Monday morning quarterbacking. However, beyond the fact that such a perspective is right in line with the sporting goods space, the examples set by some of Sport Chalet and Sports Authority’s competitors are worth nothing for a retailer in any vertical: In a constantly evolving and ever more competitive industry, having a game plan in advance can save it the trouble of having to ever wonder where things went wrong.