Category Report: Sporting Goods

Sporting goods manufacturers had their best year yet in 2006, reaching an all-time high in sales. But from an in-store marketing standpoint, brands continue to face challenges brought on by retail consolidation over the last couple of years.Two major chains dominate the marketplace -- industry leader Sports Authority and Dick's Sporting Goods -- and brands attempt to keep up with their fast-paced growth. On top of that, brands must tailor their growing number of fixtures to meet each retailer's in-store requirements. Not to mention, there's really not that much floor space to go around.What's SellingA nationwide increased focus on healthy lifestyles -- a response in large part to daily routines that go from the car, to the desk, to the couch -- helped push the $60 billion sporting goods industry to its best year ever last year, a trend that the Sporting Goods Manufacturers Association (SGMA) expects will continue. In 2005, sales of sporting goods equipment, sports apparel and athletic footwear increased 10% over the prior year, reaching a then-record $57.6 billion.According to research from SGMA, Washington, DC, three of the top five sales categories in sporting goods last year were again directly related to the outdoors: fishing, hunting and camping. Exercise equipment again claimed the top spot on the sporting goods sales pyramid.In fact, the fitness category continues to outsell all other sporting goods by a wide margin, reaching $4.2 billion in wholesale dollars in 2005, according to the SGMA's most recent Recreation Market Report. Treadmills lead the niche with $1.2 billion, an 11% jump since 2004, followed by institutional sales, home gyms and other consumer equipment. Golf, another outdoor-oriented sport, ranked second overall with $2.9 billion.ConsolidationPositive gains aside, the world of sporting goods, like many retail sectors, has gone through dramatic changes in recent years. Instead of the independent shops and regional chains that defined the niche a generation ago, these days it's a select number of large retailers -- mainly Dick's Sporting Goods, which swallowed up Galyan's in 2004, and Sports Authority, which acquired Gart's in 2003. Specialty retailers like REI and Golf Galaxy have carved a niche, and mass merchants Wal-Mart and Target are now selling the majority of the sports equipment in this country. It's a similar story on the manufacturing side, where a small number of firms are now making most of the gear we buy.For manufacturers, this new landscape has changed the industry in more than a few ways. First of all, fewer retailers mean fewer outlets, more competition and less shelf space for products. As a result, vendors have had to work that much harder to please their clients. "It's given the retailers a little bit better bargaining position at the purchasing table," says Mike May, SGMA director of media relations.This trend toward retail consolidation has had an impact on P-O-P, placing additional burdens on manufacturers. Large retailers now limit display dimensions, dictate colors, and even have the final say on themes and messaging."It's a constant balancing act," says Lindsey Naber, assistant marketing manager with Rawlings Sporting Goods, Fenton, MO. "We have to work hand in hand with the retailer to determine what their needs are and what messages we're trying to convey."Rolling out a P-O-P campaign in a large national chain can also pose some logistical challenges for visual merchandisers. "Just the scale is the challenge," says Brad Holder, visual marketing manager for adidas Golf, Carlsbad, CA. "National retailers like Dick's, Sports Authority and Golfsmith are on a growth curve that we have to keep pace with, so from a pure fixture quantity and scale standpoint, it's a big issue."Display MessagingBut scale isn't the only part of the P-O-P game that sporting goods retailers have had to adjust to in recent years. The content and messaging presented by those displays has changed with the times as well."In the sporting goods industry, the big thing is connecting with individual customers," says Larry Weindruch, director of communication with the National Sporting Goods Association (NSGA), a Mt. Prospect, IL-based trade association that represents retailers and dealers. "The large format, big box stores probably don't have as much of that customer contact as the smaller stores do, but the face-to-face contact between a retail clerk and a customer is as important now as it's ever been."So, how can retailers and manufacturers fill this void and get customers the information they need when that face time isn't always available? By relying on well-placed and informative displays to provide more of a customer information role."We have very technical products," Holder says, "so it's a challenge to try and tell that technical story with a small sound bite or small piece of information that people can take away."Adidas Golf's response has been to integrate high-level product details into their existing branding displays, spoon-feeding customers the information they need without beating them over the head with it. "Our main focus over the last few years has really been on the fixturing, so now the focus is on merchandising and the visual presentation of the products. It's really been a big shift for us," he says.But there's more to buyer education than just putting the information out there. Vendors must now also take their audience into account when developing new displays."We like to think of our core consumer as a 12- to 17-year-old athlete," says Rawlings' Naber. "But at the same time, when we're speaking to them through our P-O-P and copy, we have to think of the mom who's out there doing the actual purchasing. We really have to consider both audiences in developing any communications, because they're very different. One's really savvy to the game of baseball, and the other one knows very little."At Rawlings, this has meant incorporating more learning features into its displays, using buyers' guides and interactive elements to grab customers' attention while teaching them about the products. A glove rack, for example, might feature an eye-catching graphic on one side and a product benefit guide on the other. "The question for us is, 'How can we meet your needs as a consumer?'" Naber says. "When we design displays, we look for ways to include pamphlets, guides and takeaways for the consumer."Still, shopper education can involve more than just signage. For some products, it can also be about organization. "Traditionally, sporting goods retailers with bikes have really tended to organize their bike departments by wheel size and by frame size," says Lori Heimerl, senior marketing manager with Pacific Cycle, Madison, WI. "But the problem is, that's not really the way bike consumers shop. They tend to think more about, 'How am I going to ride? What kind of bike is right for me?'"By reorganizing the racks in its retail outlets and color coding its products by lifestyle -- aggressive road bikes with blue signage over here, comfort bikes with red signage over there -- Heimerl has increased the shopability of the company's departments without dramatically changing its P-O-P. Pacific Cycle recently built a new rack for Wal-Mart's eco-concept store in Plano, TX.Time To Go Digital?Many agree that educating shoppers would be a lot easier with a digital or interactive display, but the price tags attached to those high-tech options are still out of reach for many sporting goods manufacturers, according to marketing consultant John Mazur, president of Flight Design Communications. His New York-based firm has designed a wide variety of high- and low-tech P-O-P for sporting goods clients, and he's convinced that both styles still have their place in the marketplace."The interactive digital P-O-P is still the cool stuff," he says. "Everybody wants it, but how are we going to afford it?" Of course, the sprawling new retail market has only exacerbated the problem, its scale exponentially raising the costs involved in new P-O-P rollouts.TREK Bicycles, Waterloo, WI, recently made the investment in digital P-O-P in a few of its stores. "We have a large touchscreen, a smart board, at one of our stores in Wisconsin," says Roger Bird, director of retail services and concept stores at TREK, "and we have some flash card-driven monitors installed throughout some of our other stores. They've been very, very helpful, because we can tell great product stories and use the Web and offer something that's interactive. They've been a real hit."Still, this kind of technology is expensive, and so far TREK has limited its installations to a few retailers. "A lot of our dealers don't have a lot of money to throw around," Bird says, "so it's still a limited program. We're not doing thousands of them yet."Despite the cost, some smaller manufacturers are getting into the game as well. "The larger sporting brands can afford to go interactive and roll it out to the bigger stores," Mazur says, "but the specialty brands are definitely starting to compete in that now, too. They have to if they want to keep pace, and they're starting to figure that out."Many manufacturers are also working hard to find low-tech solutions that will compete with digital displays in the marketplace. "One thing we have been doing is using alternative substrates and graphics that kind of break through the clutter," says adidas Golf's Holder of his company's latest rollouts. "By going with something beyond just 2-D graphics, maybe adding some motion, we're able to tell the story in a way that's a pretty cost-effective alternative to doing a full media presentation."Tony Ambroza, retail marketing director with Baltimore-based Under Armour, agrees. His company has been making the most of low-tech installations for years, using graphics, materials and information panels to get its message across without using excessive digital signage. And, since Under Armour works with many large-scale retailers, its unique brand of "teaching P-O-P" has proven a key part of the company's success, enabling it to sell technical products through large retail channels where face-to-face contact can be scarce."We pride ourselves on the customer education features we've developed for our displays," Ambroza says. "And we work hard to make it clear to the consumer what the purpose is behind the product and what performance is built into it."Parallel MarketsBut the addition of all these hands-off selling features doesn't mean that customer service in the sporting goods industry is dead. In fact, in some parts of this highly technical field, it's more important than ever.Just as the retail scene has shifted toward larger stores, a second, parallel market has grown up along with it to serve the needs of the more specialized, high-end buyer. Consisting mainly of independent retailers, these specialty shops offer consumers and vendors an alternative to the wide-open spaces of many modern markets, with a focus on hard-to-find products and in-depth, expert-level sport knowledge."We have a lot of tennis shops, golf shops and running stores," the NSGA's Weindruch says, "and that's where the successful independent retailers are right now. They realize that selling what you know is the way to survive and to prosper, not trying to compete in areas where you're over your head. The specialist knows his market. He knows his area. He knows the people, and because he's connected to the sport, he gets involved in the community." Rather than going head to head with the mass merchants -- which will always win on price -- local shops are now more often choosing a specialty and focusing their business on the sport they know best. It's an arrangement that works out not only for these retailers, but for their specialty vendors and customers as well.On the manufacturing side, in fact, it offers marketers new opportunities to reach out to a savvy, educated consumer base with tailored P-O-P and specialty marketing."We do business in several channels of trade," says Heimerl with Pacific Cycle, which sells its Schwinn, GT and Mongoose brand bicycles in mass merchant, general sporting goods and independent stores, "so we have to operate in two directions. We have a whole line of products for the enthusiast that incorporates different componentry, different specs and slightly different branding that's in the independent bicycle shop but not the mass."Products for the mass channel are "significantly different," she explains, downgraded in terms of specs and with a different marketing philosophy. "The Schwinn brand means Schwinn no matter where it's sold, but we treat each channel as separate but equal in terms of marketing, how we target consumers."As a result, these specialty shops call for different imagery, different copy and a different overall angle in terms of vendor P-O-P. "Our P-O-P doesn't need to teach the customer; it's just there to reinforce our brand," says Debbie Groshek, director of communications with Brunswick Billiards, Bristol, WI, which sells exclusively through a network of independent retailers. "Since we work mainly with experts, we rely on the salespeople to teach the customers and to get our message across."Mazur, for one, considers the growth of this specialty channel to be a good thing from a marketing perspective."Unless you know what you're going after, I think that a brand loses its personal touch at the mass level. It goes into the big box market and it's kind of lost, so I think that P-O-P at that level isn't as effective as it is at the smaller retailer, because the smaller retailer has the backup of the salespeople who have to push the product."Even as the retail landscape changes, as the manufacturing sector shifts and consolidates, and as P-O-P gets bigger and better, the industry's hands-on heritage and commitment to personal service remains. After all, there's only so much that a fit guide can teach you about sizing a pair of figure skates. Sometimes you just need the help of a salesperson."The successful sporting goods stores are really plugged into what's happening locally as opposed to what's going on all across the country," says Weindruch."They don't care if people aren't playing tennis nationally -- if they're playing tennis in our area, we've got to have tennis," he continues. "They have to keep their eyes open to what's happening on a local or regional basis, and that's what a lot of customers want in a sporting goods store."Scuba equipment manufacturer ScubaPro, for instance, sells its products only through the independent dive shops that meet its product knowledge criteria. This focus allows the vendor to offer the high-level training that sales staff need to sell its products, though that isn't to say that the average, cramped dive shop doesn't present some unique display challenges for the company's bulky products."Our primary concern is to get display space within the dealership," says Dave McMichael, marketing communications manager at ScubaPro, El Cajon, CA. "And in our business, as is the case with a lot of retail businesses, 20% of dealers are doing 80% of the business, so our challenge is finding fixtures and point-of-sale materials that work across the board."For ScubaPro and other small retail vendors, this also means creating P-O-P that complements the in-store sales staff, rather than overwhelming customers with information."One of the benefits of working with smaller stores is that they really pride themselves on service and staff knowledge," says Monica Warhola, retail marketing specialist with Nike Bauer Hockey, Portsmouth, NH. "And a lot of hockey consumers really trust and look for that information from the staff, so we don't want to get in the way with our P-O-P. We do try to provide information on our graphics, but we've actually found that it's most effective to communicate with the stores and let the staff communicate our messages directly to the customer."Teamwork between retailers and visual marketers? Hey, isn't that what sports are all about?

Category Report: Sporting Goods

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