Challenging Road Ahead for Dick’s Sporting Goods As It Seeks to Heighten Store Customer Experience

Dick’s Sporting Goods CEO Edward Stack is saying all the right things, the company is making (it appears) all the right investments, yet the venerable retailer faces various challenges ahead.

During the company’s recent third-quarter earnings call, Stack talked about continued growth across key businesses, such as golf, its private brands, and athletic footwear, while other categories, including hunting and electronics, remain under pressure.

“Merchandise margins were under pressure in this highly-promotional environment and directionally in line with our expectations,” Stack said. “We feel we continue to gain market share from our traditional competitors and will continue our current strategy and tactics to protect market share through the fourth quarter and throughout 2018. In the fourth quarter, we expect the retail landscape to be fiercely competitive.

With excess inventory still in the supply chain, broadened distribution strategies from some key vendors, and a lack of newness and innovation, the fourth quarter and 2018 will continue to be promotional and pressure margins from last-year levels.”

Stack sees “tremendous opportunity” in the industry as it continues to evolve.

“Because of the confidence we have in our business long term, we plan to make significant investments in our business in Q4 and into next year,” he said. “This will have a short-term negative impact on our earnings. However, we expect these investments will pay meaningful dividends in the future.”

Dick’s plans to increase investments in its e-commerce business, the technology in its stores, and in-store payroll to enhance the customer experience.

“At the core of our omnichannel business are our stores, the role of the stores is changing,” Stack added. “We are going to continue to make investments that provide the consumer with an enhanced shopping experience. We are increasing our spend in store for training, faster checkout, more payroll, enhanced ship-from-store capabilities, and more opportunities for our customers to buy online and pick up in the store. We are putting the consumer at the center of everything we do.”

The company continues to develop and enhance Dick’s Sports HQ, a multi-year initiative and growth driver, which provides officials with a tremendous amount of data and an opportunity to establish new revenue streams.

“We love the position we occupy in the industry,” Stack said. “The disruption in this space is a great opportunity for Dick’s Sporting Goods. We make these investments from a position of strength.”

Company investments span across technology, innovation, the store experience, store associates, fulfillment strategies from an e-commerce perspective, private brands, and Dick’s Team Sports HQ.

Evan Magliocca, brand marketing manager for Baseman Insights & Marketing, told Loyalty360 that Dick’s is in an industry that is very challenging.

“Dick’s Sporting Goods has a challenging road ahead, even compared to many other retailers,” Magliocca explained. “They’re facing competition increases and they’re also losing market share to their own product suppliers. While Amazon is pushing heavily into sporting goods, brands such as Adidas and Nike are making concerted efforts in direct-to-consumer strategies to avoid the middleman. Dick’s will need to seriously consider what value they can add for customers through store experiences and digital offerings that give them uniqueness in the space.  It looks like the executive team understands those tenets and they’re investing accordingly.”  

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