Dick’s SG sees the benefits of an increasingly differentiated product line

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Speaking at Goldman Sachs’ annual global retail conference this week, Lauren Hobart, president and CEO of Dick’s Sporting Goods, said that beyond the pandemic, Dick’s had benefited from the changes structural changes it had in place in 2017, which helped elevate its assortment, including carrying more “high-temperature” clothing and footwear.

Dick’s has invested in in-store “experiences”, including full-service shoe platforms, the addition of HitTrax batting cages and golf simulators and
new investments in customer service.

Hobart said: ‘We’ve leaned in to try and develop a fantastic service model, and that’s allowed us to open up access to an assortment that frankly we weren’t able to offer before because we didn’t have a high enough service model. ”

Navdeep Gupta, Chief Financial Officer, noted that Dick’s managed 6% growth in the second half of 2019, showing that investments in in-store experience were paying off before the pandemic.

“Whether it’s HitTrax, whether it’s the full-service premium shoes, and then the deeper relationship we have with brands, it was all starting to show so much evidence before COVID. , and COVID has dramatically accelerated it,” Gupta said.

Gupta added that the retailer’s relationship with its key brand partners is at “an all-time high”, not just because the company has improved the in-store experience, but because brands have sought to gain more “control”. on the market in recent years. .

Gupta said, “You’re starting to hear more and more about the narrowing of distribution, the removal of the distribution channel that was once the price leader. And these actions have benefited us in addition to our own core investments. »

Asked about the current macro-economic environment, Hobart said Dick’s hasn’t noticed any signs that consumers are moving from the more expensive to the less expensive categories during the current inflationary pressures. “We found that despite the fact that all consumers face many challenges with grocery prices and gas prices, our consumer has held up very well,” she said.

Hobart said Dick’s serves a wide range of income demographics, offering items at opening prices right up to the “most enthusiastic player who wants $279 football boots.” The retailer said it failed to notice an income demographic significantly cut spending in the second quarter. “Overall, our consumption held up well. We were satisfied,” added Hobart.

Hobart also noted that Dick’s received help because demand for sporting goods across all categories increased two years after the pandemic. She said Dick’s is focusing on four main categories – team sports, apparel, footwear and golf – and all four have been rebased to “significantly higher” sales levels than in 2019.

“Golf, for example, was absolutely a category that exploded during the pandemic,” Hobart said. “We had people who had never played before, they were a bit younger and more women joined the game. Those trends are still significantly higher than they were in 2019. So there may -having had a little reset, and we’ve seen it, but even in our last quarter, golf improved sequentially from Q1 to Q2. That’s an example of something that we think , has resistance.

Team sports, she added, are “come back strong right now” as play has resumed after the leagues were suspended at the start of the pandemic.

“And then shoes and clothes have absolute endurance since consumers are outdoors. They walk. They run. And then there’s been a little more casualization of society, and we’re serving products in our stores that can be used from the gym, from work, and even in the office so you’re ready to jump into a workout when and where you can.

Asked about the promotions, Hobart said Dick expects “some normalization” as stock scarcity was one of the main reasons it has been minimal in recent years. She added: “Having said that, it’s a guarantee that it won’t be anywhere near what it was before. What you may have seen in 2019 or before is ‘X percent’ or ‘dollars off’ on the website for the day or a store-wide promotion or a promotion around a entire category. It’s not what we expect. Maybe around the holidays. But it’s going to be a lot more surgical, a lot more strategic in terms of who we want to give the discount to. And it will be based on what is good for us and what is good for the market. But we are nowhere going back to what 2019 was like.”

Gupta added that launching the Going, Going, Gone warehouse concept has also helped Dick become “a lot more surgical” when it comes to markdown cadence in handling clearances.

Photo courtesy of Dick’s SG

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Richard V. Johnson