This week, Sports Authority, one of the largest “big box” sporting goods retailers in the U.S., announced they are closing all 450 stores, selling their inventory and shutting down. Dozens of other public retailers also announced slower growth, lower profits and took down their future estimates. This means fewer retail jobs, lower stock prices for these businesses and a changing retail environment.
Everyone is quick to cry “it’s the end of retail because of the Amazon effect.” It’s not the end of retail, it’s just the end of general retailers selling average stuff to “average consumers.” Department stores are out, specialist shops are in. And the specialists are doing pretty well, despite Amazon.
When stiff competition arrives and the overall market stops growing, it’s just a game of musical chairs – in any industry. The weakest players get weeded out first. The weakest players are almost always the generalist businesses that tried to do a little bit of everything for everybody. That may have been OK when they were the only store in town, but when the specialists appear and people have lots of online choices, the generalists are the first to go.
Sports Authority was just the weakest player in a competitive market. I had shopped there occasionally to buy a few simple things. Their stores are huge and always full of inventory (mostly clothes), but I had never seen more than a few shoppers at the store at a time. Crickets.
This isn’t a sign that the economy is off or that people don’t buy sporting stuff, it’s just a sign that Sports Authority wasn’t winning the sporting goods horse race. They were “whipping their horse” with aggressive coupons and discounts (always a bad sign), but it wasn’t enough.
Sporting goods is doing great for other retailers who specialize.
Each of these retailers’ shoppers visit often and enthusiastically say, “I love REI!” and “I love Cabella’s!” and “I love Lululemon!” Nobody was saying “I love Sports Authority – let’s go hang out there!” No connection with their shoppers, no lines at the cash register, no premium prices – and no business in the end. Might as well buy it online.
These specialty retailers focus on just their narrow target market of customers who REALLY CARE about their offering and want the best equipment and experience. They connect emotionally with the passion for the particular sport AND the type of person who is passionate about it. Their customers could buy this stuff online, but they’d rather go to a store to get expert advice, hang out with other people like them and find inspiration for their next outdoorsy or yoga adventures.
Sports Authority offered “average stuff for average sporting buyer with an average shopping experience.” Why didn’t this work?
What is average in the sporting goods world? Consider that about half of Americans don’t exercise at all or play sports, on one side, and only about 10% of Americans are serious about some different sport (running, hiking, baseball, skiing, yoga, etc.) on the other. Average means the “place in the middle, “but there’s really nothing interesting in the middle in sporting goods, and in most markets.
Average is between the big crowd who doesn’t care at all and the small percentage who care a lot; it’s a no man’s land where it is very hard to survive. Dick’s Sporting Goods is another big box sporting good retailer generalist that stands to gain from Sports Authority going out of business, but it’s still a tough business for them, too.
Say No to being average. It’s always tough business; it’s a mirage for thirsty entrepreneurs.
Focus on the 10% of your market who really care about what you do, then do great things for those passionate customers.