advanced theory and practice in sport marketing - Marshalls University

The Wheel of Sport Retailing
In the wheel of sport retailing, the sport retail landscape is viewed as an everevolving
system. Most sport retailers start as low-price options for the sport
consumer. The sport retailer is strictly concerned with establishing themselves
in the market – they are less concerned with low profit, and make every effort
to keep their costs down. As the sport retail outlet becomes more established in
the marketplace, the sport retailer will upgrade the quality of the products
offered; improve the facilities housing the sport retail operation; and offer additional
services. All of this should work to increase sales, and if costs have been
controlled, increase profit margin.
Since the wheel of sport retailing is based on the availability of discretionary
income by the public, consumer who only care about price will not be loyal to
the sport retail outlet. This provides an opportunity for competition to enter
the market and fill in the void left in the market.
The wheel of sport retailing has three levels: low end/discount; middle of the
road/general; and high end/luxury. Sport retailers must be careful when moving
from one level to another, as the move will affect sales, the target market, and the
image of the organization. The goal is to obviously improve on all levels. However,
the sport retail firm must have a solid strategy to accomplish their goals.
STORE-BASED SPORT RETAIL STRATEGY MIX
As we enter the 21st century, sport retail firms have needed to modify their
store-based strategies to as more convenient purchase options have become
available. These include the Internet, direct marketing efforts, and satellite outlets
(video kiosks, mall kiosks, airports). These store-based strategies are
focused on increasing profit margin by more adequately controlling internal
costs, promoting higher margin goods and services, and doing away with items
that yield little or no profit.
There are two methods that are being utilized by sport retailers to sustain
sales growth in the ever increasing competitive marketplace: mergers and diversification.
Mergers involve the union of two or more separately owned business
entities. Examples of this would be when the Gart Sports Company merged
with Sports Authority in 2003, and when Galyan’s Trading Company merged
with Dick’s Sporting Goods in 2004. The goal of mergers is to maximize the
resources available through both companies, increase customer base, improve
on productivity and bargaining power, and control weaknesses by increasing
competitive advantage.
Diversification involves spreading out business activities and investments.
While diversification creates a larger number of competitors with which to contend,
it does allow for increased leverage whereas if one market segment shows
a decrease in sales, other market segments can pick up the slack. In the sport
retail business, an example of a company who has been engaged in significant
diversification is Reebok. In the early years, Reebok was strictly dependent on
290 ADVANCED THEORY AND PRACTICE IN SPORT MARKETING