Megastores battle discounters for lion's share of sports market

Discount Store News, July 17, 1995

CHICAGO - Category-killer megastore chains, such as The Sports Authority and Sports & Recreation, and conventional size full-line sporting goods chains, such as Herman's and Big 5, are in a fierce market-share battle with discount department stores. Meanwhile, specialty shops with limited product focus are coming on strong in the sporting goods market.

That's the conclusion of Tom Doyle, director of research for the National Sporting Goods Association, which is holding its annual show here July 16 to 18.

According to the NSGA, specialty shops in 1994 closed to within three percentage points in market share compared to their full-line brethren and pulled 2.4 points ahead of discount stores. In contrast, the gap between specialty stores, such as ski, golf, tennis and mountaineering shops, had been 7.2 points in 1,990, and they trailed discount stores by almost 2.0 points of market share.

An apparent decline in specialty store share between '93 and '94 and an apparent increase for full-line sporting goods stores and chains was actually a statistical aberration caused by the realignment of sporting goods categories, Doyle explained.

Doyle defines specialty stores as those that carry no more than four categories of goods, such as fishing, scuba, mountain climbing, golf, tennis and skiing.

Catalog showrooms, pro shops and department stores have been the losers over the past five years. Warehouse clubs have carved out 2.0% of the market since the NSGA began tracking their sales in '92.

For '95, channel of trade shares will remain relatively stable, Doyle predicted, with only small shifts up and down.

Megastore chains will have to go after discount stores for greater share, Doyle said, since they aren't gaining on specialty chains. "In advertising, price and service, they come closer to discount stores," he said.

Another trend that Doyle has picked up is the development of mini-mega stores for smaller markets. The Sports Authority is developing a 25,000-sq.-ft. prototype compared to its standard box of 42,500 sq. ft.

Moreover, specialty chains are starting to beat the megastores at their own game by developing big boxes of their own.

Bass Pro Shop, Atlanta, now is opening an 80,000-sq.-ft. specialty fishing shop in its home city, Doyle said.

REI (Recreation Equipment Inc.) is opening an 80,000-sq.-ft. store in Seattle devoted to its specialties - biking, paddle sports, skiing and mountaineering and wilderness. Its prototype now is 30,000 sq. ft., compared to its previous range of 15,000 sq. ft. to 18,000 sq. ft.

Just For Feet launched with 20,000-sq.-ft. stores devoted just to footwear, he added.

Despite the recent failure of undercapitalized SportsTown, sporting goods megastores remain a growing force, said Doyle.

The Big Four of megastore chains operated 247 stores in '94, Doyle said: The Sports Authority, 107; Sportmart, 55; SportsTown, 29 (of which The Sports Authority is buying 16); and Sports & Recreation, 56.

In addition, Dick's, Pittsburgh, operates 22 stores, some of which are as large as 80,000 sq. ft. Gart Brothers, Denver, also operates several big box units.

And Oshman's operates nine stores as large as 75,000 sq. ft. and has cast its future on losing small stores and opening megastores.

As for the size of the market, the NSGA redicts 3% growth in '95 to $32.1 billion from $31.2 billion last year.

Bikes will add $3.44 billion more. Bicycle sales will decline 1% in '95 from $3.47 million, Doyle predicted in the NSGA's annual survey of the sporting goods market. The decline stems from the drop-off in touring bike sales and the soaring popularity in inline skates.