Sporting goods chains target Southern California consumers

Discount Store News, Feb 23, 1998 by Mike Troy

LOS ANGELES -- A major battle for the disposable income of Southern California sporting goods consumers is shaping up among the region's retailers thanks to several recent developments.

Two are particularly important. Denver-based Gart Sports has chosen southern California as the market where it will begin remodeling and remerchandising its recently acquired Sportmart stores. And The Sports Authority plans to expand its seven-store presence in the region by opening 12 new stores in the Los Angeles area during 1998.

The arrival of TSA and Sportmart's fresh look and new ownership means both chains will be investing heavily in advertising to gain market share from chains such as Big 5 and Sports Chalet, both of which have operated in the area for several decades. It will also be a test for various competing retail strategies: TSA's warehouse-style stores; Big 5's smaller-format predominantly strip center-based stores; and what Gart promises will be an upscale Sportmart environment.

Based on sheer numbers, Big 5 has to be considered the region's market leader. Eighty of the retailer's 210 stores are located in Southern California. The company's own research also shows that its 11,000-sq.-ft. format is preferred by consumers. A 1996 survey showed that the company has name recognition with 90% of respondents, 73% of whom said they had shopped at a Big 5 store in the past two years.

Another popular chain in the area is Sport Chalet. Its 18 upscale stores average about 36,000 sq. ft. and feature specialty shops within the store. All are located in Southern California.

However, the presence of several strong sporting goods chains along with specialty retailers such as REI and Just For Feet, and nearly 200 discount stores, hasn't deterred TSA from pursuing its growth plans for the area.

"Our big push for this year will be Los Angeles," TSA chairman and ceo Jack Smith told a gathering of investment analysts at the recently concluded Super Show in Atlanta. Twelve stores are planned for the market, with seven or eight to open in time for the Back-to-School season. The rest are scheduled to open in November.

Those 12 stores are among 70 to 100 units that TSA will open during the next two years. In addition, TSA plans to operate its ski departments in-house. In the past, a lessee operated the ski business. However, Smith said the company will have no problem taking on the ski business and that it will have "a very positive impact on 1998." By improving its ski operations, TSA is looking to bolster its competitive position with Gart/Sportmart. Forty-five of Gart's stores are based in Colorado and Utah. The chain has become adept at selling ski equipment and providing ski-related services.

Gart/Sportmart chairman and ceo Doug Morton has less aggressive expansion plans than TSA and only plans five new stores this year. However, it has chosen Southern California as the first market to give Sportmart stores the Gart treatment. Beginning in the fall, the 18 Los Angeles-area Sportmart stores will get new carpets, a paint job fixtures and a new merchandising scheme that incorporates a Gart hard lines department with Sportmart's shoe department. The company also plans increased advertising.

"We a re going to invest a lot of money in advertising, primarily print," Morton said. The use of circulars promoting Sportmart stores will increase from 27 to 44 times annually. During key selling seasons, the print message will be supplemented with a broadcast message. TSA uses 19 circulars annually, Smith said.

Although smaller in store count and annual sales, Sports Chalet has successfully competed with Sportmart and Big 5 for years. Even though TSA is a newer entrant, Sports Chalet's president and coo Craig Levra has an intimate understanding of why TSA has been successful. He spent five years with TSA ultimately serving as vice president of operations until last fall when he was hired by Sports Chalet. Sports Chalet stores, while slightly smaller than TSA's prototypical 42,500-sq.-ft. store, are decidedly more upscale but do slightly less volume on a per store basis. The average per store volume for Sports Chalet is $7.6 million vs. $8.4 million for TSA.

TSA clearly has the most aggressive expansion plans for the area, whereas Sports Chalet is a very conservative company and may open one new store during 1998. Gart/Sportmart has indicated it will open five stores throughout its trading area, and Big 5's expansion plans for the next five years call for between 15 and 20 new units annually.