Brand Audit: Sports Direct

Sports Direct has succeeded despite its reputation for a poor shopping experience, relying on perceptions of value and consumers’ appetite for a good deal but it will need to find new ways to market its range if it wants to attract new customers and continue its recent growth.

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Sports Direct has seen soaring sales growth despite its reputation for a poor shopping experience.

Sports Direct’s stores are nothing if not distinctive. Cramming sporting kit next to jeans, cheap merchandise and even handbags, the retailer has made a brand out of its “pile ‘em high, sell ‘em cheap” strategy.

The stores might not look pretty but it’s a mix that works. Sales were up 23.5 per cent year on year in the 26 weeks to 27 October to £1.35bn.

Kelly Williams, director of consulting at sports marketing agency Sports Revolution, says: “Customers of Sports Direct accept the market stall environment as part of getting a good deal.”

This is also a retailer that isn’t afraid of bad publicity. It has fallen out with two of its biggest suppliers, most recently Adidas which is refusing to sell Chelsea and the Spanish national team’s kit in its stores and employs huge swathes of staff on zero-hour contracts.

‘Basic Retailing At Its Best’

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Sports Direct’s in-store experience

Sports Direct’s success comes not from an innovative approach to shopping but an old fashioned one. It has beaten more established competitors such as Allsports and JJB Sports by offering a wide variety of products at heavily discounted prices, while at the same time acquiring brands such as Lillywhites, Donnay and Dunlop Slazenger that boost perceptions of value.

Phil Dorrell, director at retail consultancy Retail Remedy, says the strategy works because the poor in-store experience is not at odds with its pricing and discounting message.

“Sports Direct’s proposition is basic retailing at its best. It keeps things simple, is very aggressive and very driven. The acquisition of brands along the way, brands that had heritage and value in their own right, has meant that the discounts are on products that customers recognise. In this way they are unique and therefore unmatchable,” he adds.

That’s doesn’t mean customers have a good perception of the brand, however. In a list of 30 high street retailers on YouGov’s BrandIndex, Sports Direct sits in the bottom five for metrics including quality, reputation and impression.

Its Index rating is 3.8, putting it in 24th place, while its buzz rating, a measure of the positive and negative things said about the brand, is 0.1, again placing it just six places from the bottom.

Signs Of Change

So far Sports Direct appears to have succeeded despite its bad reputation but while thousands of shoppers are lured in for the low prices, thousands more are put off by the budget experience and it will need to appeal to these people to drive growth over the next few years.

The management knows that and changes are already coming in. Sports Direct is improving the look and feel of stores by introducing “worlds” – areas dedicated to specific pursuits – and updating its merchandising execution to offer “good”, “better”, “best” propositions.

It has also invested in staff training and introduced a generous share scheme for full-time staff. Oriel Securities analyst Jonathan Pritchard says this has helped reduce staff turnover from 35 per cent to 17 per cent.

“Staff’s product knowledge is crucial. As Sports Direct tries to gain increasing share at the ‘best’ end of the range it is crucial that experienced sportspeople and walkers/hikers/climbers are available to offer advice,” he adds.

Expanding Distribution

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Sports Direct is investing in its online business.

Widening distribution is also seen as a key way to maintaining sales growth. Sports Direct is investing in ecommerce, recently introducing click and collect services and with plans to double its online range to around 360,000, as well as investing in international growth, opening stores across Europe.

The retailer is also thought to be looking at ways to deliver some of its brands into more high-end stores. Sports Directly recently bought a 4.6 per cent stake in Debenhams that many analysts saw as a way of brokering talks with the department store chain and getting its brand into Debenhams stores.

It has now sold that stake as part of an unusual derivative arrangement but discussions between the two companies still went ahead last week. Reports suggest Sports Direct is keen to launch more celebrity-sponsored sportswear ranges into Debenhams after the success of its collaboration with Olympic rower James Cracknell that will help add gravitas to its ranges.

Despite the changes, don’t expect the marketing message to change. Sports Direct wants to expand its audience, but it doesn’t want to do so at the expense of its core customer by making the brand feel like its more expensive.

“There is a concern that by trying to take the stores a shade upmarket it will alienate the core customer. Management will continue to use advertising, aggressive sales and the web to ensure this perception does not gain traction,” says Pritchard.

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