GOODBYE SPORTS DIRECT: HELLO SELFRIDGES!

Retail positioning is an issue of significance which we discussed in chapter two of the text. It is a concept which is central in shaping the impression, perception and attitude of a shopper about a particular retailer and its brand essence and brand associations. We highlighted a definition of positioning which in the context of retailing was identified by Arnott (1992) as “the deliberate, proactive, interactive process of defining, modifying and monitoring consumer perceptions of a marketable product”

We also noted that differentiation is at the heart of positioning. On what point or points of differentiation do we as a retailer focus on in order to capture a piece of the shopper’s mind? More importantly will this be sufficient to encourage shoppers to come to our stores or online websites and even more critically form some degree of loyalty or attachment in the form of return visits on a regular basis?

Re-positioning refers to situations where the company wants to change its image and create a different perception in the minds of its shoppers. This task is challenging and make take some time to achieve, depending on how entrenched and fixed the perceptions and attitudes of shoppers have about its existing approach.

I was reminded of this issue when reading recently about the travails of Sports Direct, that well known (some might say infamous) UK sports retailer.

Founded in the early 1980’s by Mike Ashley it has grown to become one of the most successful retailers in the UK over the past fifteen years or so. It has built its success around the core proposition of offering shoppers a wide range of sports brands at heavily discounted prices – in many cases consistently beating competitors such as Allsports and JJD sports in the process.

In many ways it resembles brands like Ryanair: very successful and appealing to a wide range of people but suffering from a number of negative perceptions at the same time. This is most marked in the store layout and overall shop environment. A visit to one of its stores in the past few years would reveal an outlet that is crammed “to the gunnels” with merchandise, with little emphasis on appearance and presentation.

Some commentators have described it as a “market stall” experience. The outlets constantly refer to bargain prices, large discounts and “closing down” sales. When combined these initiatives create a strong impression that the shopper in in line for major benefits in the form of low prices that cannot be matched elsewhere. TV programmes have queried the validity of such claims, providing some evidence that the heavy discounts are not what they appear to be.

The overall impression is that of a retailer which has based its success on some dubious practices. This is reinforced when other media coverage has identified poor practices in the workplace, with some staff being paid below the national minimum wage and also evidence of draconian work practices.

In addition the company has been accused of poor governance and recently reneged on a promise to appoint an independent auditor to oversee the ways in which the company has been run. It had originally agreed not to use a company of which Sports Direct was a client, to carry out this exercise. It has since gone back to this company to carry out the review.

Let’s look more closely at its strategy.

Over the years Sports Direct has acquired a number of brand and added them to its portfolio. These include brands such as Donnay, Dunlop, Slazenger, Everlast, Lonsdale, Karrimor and Kangol. Almost without exceptions these brands were originally well-known and recognised on the high street but has become “tired” and somewhat outpaced by newer and more innovative brands – particularly in a market where consumers are always looking for new choices. Many of these brands were acquired for a low price and this helped when putting an overall strategy together of “piling them high and selling them cheap”.

Since 2014, Ashley has pursued a strategy of selling of some of these older brands. For instance towards the end of 2015 they sold the Dunlop brand to a Japanese company: Sumitomo Rubber Industries – at a good profit to Sports Direct.

It also carries a number of so-called “third-party” brands such as Nike and Adidas. They have encountered some issues with these branders on areas such as merchandising and the display of these brands.

Ashley feels that his company has to go more upmarket in an attempt to remain successful. Profits have slumped over the past couple of years – mainly due to the apparently unending stream of bad publicity and press coverage.

This this end, Sports Direct have introduced a number of initiatives.

It has invested more full in staff training.

It has focused on improving the layout and merchandising within its stores in order to get away from the “market stall” perception.

It has developed a new brand called “Flannels” – a more upmarket brand and has collaborated with sports celebrities such as the Olympic Rower, James Cracknell, to create designs.

In April 2016 it purchased a prime property in Oxford Street London. Rumours suggest that it wishes to establish a flagship “Flannels Store” there.

It has bought a small share in Debenhams (around. 5%). This is seen by many commentators as mechanism by which it can get concessions in its range of stores – thus addressing the need to create a more upmarket feel to its product offerings.

By divesting out of some of its acquired brands, Sports Direct hopes to invest more time with the third-party brands and develop its more upmarket ranges.

Mike Ashley want to position Sports Direct as the “Selfridges of Sports”.

Worryingly it records very poor image ratings among its customers and the general public. This is not surprising – given the welter of bad publicity.

For instance in a survey of thirty retailers it came twenty-fourth on metrics such as quality, reputation and impression.

What are we to make of these initiatives?

I would say that the challenge of moving the brand to a more upmarket position will be a challenging and arduous one. If people hold a very strong and entrenched view about something, it is difficult to change dramatically, certainly in the short-term. One has only got to look at brands such as Skoda to see how long it took to change perceptions and to achieve the desired position in the minds of potential customers.

The initiatives highlighted above will only succeed of senior management invest enough time and resources in such activities. Better relationships with third-party branders and higher end retailers are critical in this attempt. Currently there is a great deal of wariness and suspicion flowing around between these parties.

More importantly is in in danger of alienating its core customers? These shoppers look for and expect bargains, value for money and discounts. Will this re-positioning exercise attract the desired new customer?

What do you think?

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