The NPD Group Charts the Strategies Employed by Mike Ashley's Sports
Total Page：16
File Type：pdf, Size：1020Kb
NPD_SI Template 31/01/2014 15:49 Page 1 DIRECT APPROACH The NPD Group charts the strategies employed by Mike Ashley’s Sports Direct empire and their impact on the industry ports Direct was founded the Sports Direct website. At a time improved its ranges and developed its as a single store in when consumers’ purchasing power is offering in categories such as tennis, Maidenhead as Mike decreasing, they are more than likely to running and outdoor. Although own Ashley Sports in 1982. be alert to the massive discounts brands are sold at an attractively low S Today it’s the UK’s number offered by Mike Ashley’s business. price, they still manage to return a one sports retailer, is worth £4 billion, In fact, according to NPD’s Online healthy margin. The margins achieved has around 400 stores in the UK and is Consumer Panel, around two thirds of through its own products has allowed listed on the FTSE 100. Sports Direct’s products were sold at a Sport Direct to reduce the profit Key to the success of the discount in 2013. The average across all generated via brands such as adidas Shirebrook-based company is a policy retailers combined within the sports and Nike, making the retailer’s offer of high volumes and heavy discounting, footwear and apparel market in the UK appealing to the consumer. which has a strong appeal to cost last year was 51 per cent. This strategy has worked well so far conscious consumers. According to How can Sports Direct discount in and the increasing number of own NPD’s Online Consumer Panel, when such a manner? In the past, private brands in Sports Direct’s portfolio has UK customers were asked: “What labels were of an inferior quality and enabled the company to gradually gain influenced your purchase the most?”, received little marketing support from more control of its business. respondents said “price” was the retailers. Nowadays, the quality and Nevertheless, this strategy has created number one factor, followed by “the design of retailers’ own brands have tension with manufacturers such as look of the product” and then “fit”. improved, while they now also receive Nike and adidas, who on occasion have significantly more advertising support. been unimpressed to see their products PRICE SLASHING The main benefit of selling own sold at low prices. During the January 2014 post- product is the significantly bigger According to NPD’s Online Christmas sales Sports Direct slashed margin that can be achieved. Consumer Panel, adidas and Nike prices by up to 90 per cent. Consumers products are sold on average £4 and were able to purchase a Slazenger polo COMPANY ACQUISITION £5 lower respectively within Sports shirt for £1.29 versus its original £12.99 In the case of Sports Direct, as the Direct stores than in the rest of the price. Furthermore, while Nike’s company grew in size Mike Ashley sports footwear and apparel retailers in Manchester City 2013/14 home shirt purchased well-known brands such as the UK. Furthermore, comparing was being sold online for £52 by JD Dunlop, Slazenger, Everlast, Lonsdale Western European countries (France, Sports and £55 by Kitbag.com, the and Karrimor for relatively small sums. Germany, Italy, Spain and the UK) same shirt was being sold for £33 on Year after year Sports Direct has reveals the average price of adidas and Nike product is lowest in the UK. BRAND EROSION “WHAT INFLUENCED YOUR PURCHASE Recently adidas announced its THE MOST?” (% UNITS) intention to withdraw Chelsea’s replica shirts from Sports Direct stores. This is driven by the fear the brand is being eroded by poor store experience and low pricing. The battle adidas has engaged in with Sports Direct is not surprising and is part of a global distribution strategy that began in 2012 aimed at taking back more control of the brand. With strong growth year on year, Sports Direct has strengthened its negotiating power with manufacturers. The coming weeks might shed more light on who actually has the upper hand. Source: The NPD Group - GB Sports Footwear and Apparel Consumer Panel 08 Follow us @SportsInsightUK NPD_SI Template 31/01/2014 14:48 Page 2 RETAIL “AROUND TWO THIRDS OF SPORTS DIRECT’S PRODUCTS WERE SOLD AT A DISCOUNT IN 2013” The NPD Group monitors the sales of sports footwear and apparel in many countries around the world. For more information call the NPD Group sports team on 01932 355580. www.sports-insight.co.uk 09.