Retail: 74
Brands: 87

‘Boot Shaking’

By Bob Mcgee – March 13, 2017

Peripheral vendors of Dick’s Sporting Goods, which account for an estimated 20 percent of its current assortment but not 20 percent of revenues or square footage, are being let go. And the business move, carefully considered by DKS senior executives for months and coming at the cost of a $46 million write-down, may rattle more corporate nerves than the recent wave of industry retail bankruptcies.  

“…We decided we’ve got to pull the trigger and we’ve got to do this,” Dick’s CEO Ed Stack told analysts last week. “And it’s difficult to do. It’s difficult to tell people you’ve done business with for a long time that we’re not going to do business going forward.”  

The beneficiaries of the 794-door retailer’s decision to implement a new merchandising and vendor matrix through a consolidation will be large “strategic” vendor partners, presumably including the likes of Nike and Adidas, and the banner’s private label brands, including the surging CALIA label and Field & Stream, projected to approach $1 billion in sales this year.

Stack was blunt with analysts about the retailer’s strategy shift without singling out any brands being eliminated or top brands that will get a bigger billing in stores and online. Segment A vendors will be the chain’s strategic partners and “invest significantly” in DKS online and in-store businesses. They will gain additional store square footage and presentation and more inclusion in marketing efforts in return. Segment B vendors will remain in the fold as merely “transactional” partners. Segment C vendors will be shown the door.  

All of Dick’s newly dubbed strategic partners will be asked to bring some added value to their ongoing business relationship with the retailer.  

“…This is not a one-size-fits all and every category and every vendor will be different,” suggests Stack.   Dick’s intends to split the business, currently generated by the 20 percent of vendors being eliminated, between others it currently does business with and its private brands.  

“We don’t expect to give up any sales or any margin rate,” commented Stack on the change. “It’s going to be a broad range of products.”  

Elsewhere, look for Dick’s to focus brick-and-mortar expansion on new and underpenetrated markets previously served by Sports Authority or Sport Chalet; continue investing in its margin-expanding e-commerce business that approached $1 billion in FY16 revenues and further expand its full-service footwear decks (184 at year-end) by another 50 locations in 2017 with a bigger Adidas presence and changes to Nike’s presentation on the shoe wall.

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