Sporting Goods Industry Poised For Shake-Out Oversaturation, Fierce Competition Set Stage For Further Consolidation
If you had to sum up the sporting goods industry in a word, it would be “consolidation.”
That’s what John Riddle, president of the Sporting Goods Manufacturers Association, talked about a lot last week in his “state of the industry report” at the opening of the Super Show.
“Consolidation is a key word for both manufacturers and retailers,” Riddle said in an interview. “That’s the name of the game. … There’s not one big Hula-Hoop out there right now for the industry.”
Overall, Riddle predicted industry sales will rise 5.3 percent this year - about the same as last year. This year, the wholesale value of industry sales is expected to total $46.5 billion. That includes sports apparel ($19.6 billion in wholesale sales), sporting goods equipment ($17 billion) and athletic footwear ($9.9 billion).
On the manufacturing front, there were several powerful combinations last year, and more are likely this year, Riddle said. As an example, he cited the $1.3 billion purchase of Salomon by Adidas, making Adidas the world’s second-largest sporting goods company, with sales of $5.2 billion. Nike is tops with $9.2 billion in annual sales.
Another important merger was Brunswick Corp.’s purchase of Life Fitness and DBA Products, which gives the company a presence in six of the 10 largest participant sports.
Riddle said manufacturers also are trying to consolidate operations within their own companies to achieve better efficiency.
“On the retail side of the business, even more dramatic changes are occurring in the industry’s infrastructure,” he said. “The major problem facing retailing is the oversaturation of retail space.”
This oversaturation is producing many casualties, with some companies forced into mergers. “The trend appears to be headed in the direction of fewer but larger sporting goods operators running even more outlets,” Riddle said. The Sports Authority, for example, has a long-term goal of 500 stores - about 300 more than it now has.
Also, retailers are looking for opportunities to showcase their stores using entertainment - a trend called “shoppertainment.”
In 1996, Riddle said, Herman’s opened a store in Manhattan that offered a variety of activities, including a golf driving range, batting cages, basketball courts, a fitness center and facilities for in-line skating and ice skating.
Next year, Foot Locker plans to open a 40,000-square-foot superstore at Disney’s Wide World of Sports Complex in Orlando. Beyond selling shoes and clothes, Foot Locker will sponsor a track-and-field complex and host competitions at the site.
Both retailers and manufacturers are concentrating more on products designed for women, who are becoming more active, Riddle said. Spalding, for example, is creating golf clubs and softball gloves specifically for women.
Women are largely responsible for fueling the growth in the sales of fitness equipment, which have jumped 78 percent during the past six years, he said. In 1996, Riddle said, 6 million more women than men participated frequently in at least one activity using fitness equipment.