Competition Plays A Big Role

For a company that had such success at its highest points, the public has been wondering what went wrong. Sports Authority struggled to keep up with its competitors- big names like Dick’s Sporting Goods, REI, and the endless supply of sporting good options now found on the internet and elsewhere, including superstores like Target. But the sporting goods industry itself is booming: in 2014, the industry accounted for $63.7 billion in the United States, a 24% increase from 2009. Studies show that this rise has been fueled by fitness focused millennials.

Golfing, hunting, and fishing goods don’t cut it anymore- “athleisure” sales have skyrocketed. This can be defined as “a trend in fashion in which clothing designed for workouts and other athletic activities is worn in other settings, such as at the workplace, at school, or at other casual or social occasions.”

Lee Peterson, executive Vice President of WD Partners, pointed to lack of differentiation.  Over the years, Sports Authority didn’t identify themselves as anything special.

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With so much competition, nothing drew consumers to Sports Authority in particular. On the same day that Sports Authority announced it was declaring bankruptcy, the Denver Post published an interview with CEO Michael Foss, who candidly talked about their financial restructuring plans. The goal, at that point, was to get debt down to a manageable level. Foss knew that the other exit strategy may end up being the sale of part of or the entire company. He pointed out that the struggle was in part because “[…] the industry has changed a little bit and we haven’t changed enough.

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He also stated that the acquisition of 5 different companies led to a lot of different views of what the store should look like. Other sources agree with Foss. Sports Authority failed to adapt to trends: not just athleisure but also online shopping and the trend of “experience stores,” such as Lululemon and Nike. Brick and Mortar stores have been forced to re-invent themselves to compete with the convenience and ease of online shopping. Now, they must entice consumers by exaggerating the benefits of being in-store, delivering only the best service and expertise- the human experience that the internet can’t provide. According to CMO, this starts with employing people who are passionate and confident about the products or services they are dealing with. This appeals to the more thoughtful consumer.

Furthermore, stores must implement displays that encourage people to engage with their products- something they cannot do online. If done well, physical presence can become the differentiator, according to Jill Standish and Josh Jones, senior managing director and senior vice president of design strategy at Accenture. BizJournals.com polled readers to grade Sports Authority on different aspects of the shopping experience. Sports Authority received a “C” on price, service, convenience, and store appeal, with their highest grade a “B” in quality of merchandise.

Feedback detailed the unfriendliness of cashiers, the lack of employee expertise and/ or lack of care to find coworkers that did have the expertise, and high prices. On top of that, the store had a general outdated feel. According to retaildive.com, lack of adaptation to competition and trends stemmed from a lack of vision in leadership and lack of financial means to do so. So how did Sports Authority get into 1 billion in debt? While there isn’t much public information regarding their financials, several sources fault the company’s 2006 merge. It expanded the company, it also brought on a lot of debt that Sports Authority failed to repay. Jeremy Aguilar, chief financial officer, attributed “outdated information systems, frequent turnovers in leadership, and [again] a history of mergers.”