Sports retailing on a winning streak?

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Sports retailing

MOST retailers – including Cape Town-based stalwarts Pick n Pay, Shoprite, Woolworths, Truworths International and The Foschini Group – have emerged from the prolonged Covid-19 lockdown with new plans to engage a consumer whose shopping habits might have changed radically.

The enforced period of lockdown has forced many consumers to engage with a multitude of online retailing formats – which might have proved surprisingly convenient and efficient. The general ‘downcast mood’ during lockdown might also have seen consumers reflect on spending habits – many erring on the side of moderation.

One ‘traditional’ retail niche that might prosper in the so called ‘new normal’ post-Covid-19 environment is sportsware, sportswear and active lifestyle retailing.

In this regard investment company Long4Life – led by the redoubtable deal-maker Brian Joffe (who founded the Bidvest and Bidcorp empires) – has made some bold pronouncements about its specialised retail formats – Sportsmans Warehouse and Outdoor Warehouse.

In its latest annual report Long4Life indicated that the Sport and Recreation division maintained its strong presence in its chosen markets through its unique and credible offering to customers. “Sportsmans Warehouse remained resilient, and overall sales were higher.

Outdoor Warehouse’s performance was exceptionally strong with a significant increase in sales, and most categories performed well.”

Of course, both these chains were closed for the early part of the lockdown period. But Joffe told investors that both Sportmans and Outdoor were destination stores that should continue to thrive.

It’s not gross generalisation to argue that South Africans have a sports man psyche, and are avid hikers and campers. These should remain sweet spots even in a dour economy.

Significantly Joffe remarked that ‘gyms were yesterday’s news’ – intimating that home fitness (using weights, running platforms and cycling machines) as well as outdoor activities like running, walking and cycling would be preferred to crowded indoor training.

The well-being of these retail formats are critical to Long4Life – representing some 56% of the investment group’s revenue and 60% of trading profit.

In the year to end February, Sportmans total sales increased 9.4% through its 43 store chain in SA (and one store in Namibia). Long4Life noted a sophisticated and growing e-commerce offering.

Sportmans stores are located in a combination of standalone destinations, super-regional malls and value centres. But more recently, smaller footprint stores have been opened – which has enabled profitable expansion into malls and locations not previously represented.

Joffe noted in Long4Life’s recent annual report: “This concept has proven successful in both gaining market share and trading a relevant and authentic Sportsmans Warehouse in a smaller space.”

He added that the first mall-based format Sportsmans Warehouse had been opened in May last year.

One new small store in Middelburg was opened in March this year and another is planned for the Paarl Mall in March next year. “These are both markets where we are not currently represented.”

Joffe said progress had been made on Sportmans’ store renovation programme with eight major refurbishments undertaken in the past financial year. “We are rolling out our latest concepts across all stores in a phased manner.”

Outdoor Warehouse also had a strong performance for the year with sales increasing by 8.8% from its 27 stores.

Outdoor opened one new store during the financial year and a new store is planned to open adjacent to Paarl Mall in March 2021.

Joffe noted longer school holidays stimulated demand – but trading conditions became more challenging towards the end of the year with unseasonal heavy rainstorms in December. Continued load shedding also negatively impacting foot counts and sales.

There are challenges in the trading period ahead. Long4Life expects a lack of availability of certain product categories in Sportsmans and Outdoor, excess inventory and potentially “significant discounting” on a number of products in the foreseeable future. Other key risks would include supply-chain instability and delays in the receipt of inventory. The substantial depreciation of the Rand could also result in higher input costs and higher retail prices, challenging an already constrained consumer.

But Joffe stressed that marketing initiatives were continuing with a greater focus and an increased allocation of the spend to digital channels. “E-commerce and online trading capabilities have and will be significantly enhanced.”

Long4Life observed that since the Sportmans and Outdoor stores had been partially open, trading had been strong both online and in stores. The company argued: “The division is extremely well placed to cater to the health and fitness conscious consumer, now more than ever, a growing segment of the market. Our product offering is ideally suited to all forms of exercise including satisfying the demand for home-based fitness equipment.”