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Does Dick’s Sporting Goods Face Challenging Outlook to Restore Brand Loyalty?

For Dick’s Sporting Goods CEO Ed Stack, the retail market is currently in flux.

Stack likes the company’s current position in the sporting goods marketplace, yet is it strong enough to restore brand loyalty amid fierce competition?

“And as this industry continues to consolidate, we believe we will become stronger,” Stack said during Tuesday’s second-quarter earnings call. “Although sales and earnings did not meet our original expectations, we still reported a significant increase in our bottom line from last year of approximately 17 percent increase over the same period last year.”

Given the current dynamic marketplace, Stack noted, vendor distribution strategies have changed and pricing in the marketplace has become unpredictable and, at times, “irrational. We will engage to protect and strengthen our leadership position. We are intentionally joining this battle and we will aggressively be promoting our business to drive market share to our stores and online.”

Stack said the company is targeting its marketing and pricing efforts in important regions of the country.

“We’ve conducted extensive consumer research and the customers have told us they feel our prices are not competitive in today’s environment,” he explained. “Consequently, we have become more promotional and competitive, and have launched our best price guarantee where we promised the customer they find a lower price than ours, we will match it.”

Dick’s continues to build its business on an omnichannel basis, Stack added.

“Our project to relaunch dicks.com on a proprietary web platform has been a great success,” he said. “Our digital channel is now more profitable for us on our new web platform, but we need to provide our e-commerce customers with a better experience that is competitive in today’s marketplace. Looking ahead, we are investing in the online experience through faster delivery, better pricing, more targeted marketing, and continued improvements in our digital channels. This is going to be a bit more expensive in the short term, but it is what we need to do for the long-term benefit of the company and our shareholders.”

Evan Magliocca, brand marketing manager for Baesman Insights & Marketing, told Loyalty360 that he’s not so sure Dick’s is in a favorable position.

“Athletic apparel and footwear are highly competitive industries,” Magliocca explained. “As more brands move to direct-to-consumer and also begin advancing relationships with Amazon, Dick’s Sporting Goods has a challenging outlook for the short to mid-term.”

Dick’s is investing in the right areas—faster delivery, price optimization and targeted marketing, Magliocca noted−but “they’re already behind their competition. Other sporting goods retailers are much more competitive on price and have a much better understanding of their customer—such as Hibbett Sporting Goods, which just launched a brand-new e-commerce platform and loyalty program. Where Dick’s was once the flagship sporting goods retailer, they’re going to have to evolve and overcome some major challenges to keep market share.”

Imagine Experience CEO Bill McCoy told Loyalty360 that Dick’s Sporting Goods is doing a good job of understanding the changing economy around big-box retail.

“Dick’s is investing the necessary capital into e-commerce platforms and listening to its customers,” McCoy explained. “The smaller overhead with online retail has made Dick’s, comparably, too expensive for its customers recently, but Dick’s is listening to its customers and servicing them with loyalty-building initiatives and price guarantees. If Dick’s continues to listen to its customers and maximize its online presence, the company will be rewarded with customers that are very loyal to the brand.”

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