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Title: HIBBETT SPORTING GOODS INC.


1
HIBBETT SPORTING GOODS INC.
Rahul Bhardwaj Gaby Farkas Siva Sivappiragasam
2
Introduction
  • American (Alabama-based) sporting goods retail
    company operating stores in small to mid-sized
    markets in 22 South-East, Mid-Atlantic, and
    Mid-West states.

3
Introduction
  • Founded In 1945 as Dixie Supply in Florence,
    Alabama.
  • Selling athletic, marine, and aircraft equipment.
  • In mid 1950s started targeting school athletic
    programs, store focus shifted to team sports
    sales.
  • In the mid 1960s, the store changed its name to
    Hibbett Sporting Goods

4
Introduction
  • By the end of 1980, the company had stores
    operating in 12 locations Alabama.
  • Company bought-out by another family in 1981,
    Michael Newsome promoted to company president.
    (The current long-time President, Chief Executive
    Officer and Chairman of the Board).
  • Taken public in 1996, incorporated as
  • Hibbett Sporting Goods Inc.
  • Its corporate headquarters is located in
    Birmingham, Alabama.

5
Introduction
  • Highest concentration of stores found in
    South-East
  • Alabama (66), Georgia (60), Tennesse (43),
    Mississippi (38) and North Carolina (37) whose
    combined total (244) account for over half of
    their stores
  • Company targets (smaller markets) county
    populations ranging from 30,000 to 100,000
  • As at Jan 29, 2005, Most Recent 10K
  • 482 stores (Having had added 200 stores since Feb
    2001)
  • 377.5 Million Sales
  • 4100 Employees (1,700 FT, 2400 PT)
  • Vigorous Growth 549 stores, 440 million sales
    (as at Jan 28,2006)

6
Technological Environment
  • Radio Frequency Identification (RFID)
  • Wal-Mart invested 3 Billion
  • E-commerce
  • Performance Textiles Equipment
  • Electronic Gift Card

7
Economic Environment
Real GDP USA (Chained 2000 Dollars) 10.8
trillion (2004) vs. 9.8 trillion (2000) growth
4.2 (2004) vs. 2.6 avg. growth between
2000-2004
Real GSP (All Industries)
Vs. Real GSP (Retail Industry)
8
Economic Environment
  • Real Disposable Income
  • Good measure for determining market potential.
  • Approximate 1000 increase in disposable income
    as compared with the beginning of 2003.

Consumption Non-Durable goods outperforming
over-all consumption levels
9

Economic Environment
Business Inventories
  • Increasing inventory holdings among businesses
    in the US
  • Yet Inventory-to-Sales ratio falling
  • Conclude
  • Increasing Sales levels have risen at an higher
    rate than the corresponding increases in
    inventory holdings.
  • And that businesses have also become more
    accurate in forecasting demand levels, thereby
    holding inventories more in line with sales.

10
Economic Environment
  • Retail Sales
  • According to the US Census Bureau, there are
    approximately 530,000 US corporations involved in
    the retail industry. They generate 3.8 trillion
    in retail sales annually, approximately 11,690
    per capita, making the US retail sector one of
    the largest worldwide.

11
Economic Environment
  • Energy Costs
  • Increasing consumer energy prices (gasoline,
    home heating fuel, natural gas rates and
    electricity rates) considered a threat to the
    retailing industry, as disposable income is
    increasingly being consumed by such expenditures.
  • Annual energy expenditures as a percentage of GDP
    has risen sharply since 2002 from approx. 6.5 to
    8.5. (Although forecasted to fall).

12
Economic Environment
  • Debt Levels
  • Gains in disposable income levels being
    counter-balanced by the substantial increases in
    the consumer debt-service levels over the past 10
    years.
  • Minimum debt service burdens as a percentage of
    disposable income has risen
  • American consumers are not truly seeing much of
    the added disposable income increases shown
    earlier.
  • Service burdens constant at around 13 past
    5-years, yet Threat exists.

13
Economic Environment
  • Economic Forecast Selected Metrics
  • Forecasted Real GDP growth quite strong at
  • 3.4 (2006), 3.2 (2007-11)
  • (Avg. growth between 2000 and 2004 was 2.6
    comparatively)
  • Total Real Disposable Income rising steadily
    (some what exponentially trend-line)
  • 7 trillion (2000)
  • 8 trillion (2005)
  • Trend-Line Forecast
  • 9.5-10 trillion (2010)

14
Economic Environment
  • Economic Forecast (Contd)
  • Disposable income should rise at increasing rates
  • If debt service-burdens continue to smooth out at
    the 13 range (as percentage of disposable
    income)
  • And pending the forecasted fall in energy
    expenditures
  • Then the American population will truly have
    higher levels of disposable income in the coming
    years. (Poses significant opportunities and for
    American businesses, and retailers specifically).

15
Socio-Cultural Environment
  • Population Growth
  • 2 Factors Higher Fertility Rate More
    immigrants
  • Aging Population

16
Socio-Cultural Environment
  • Ethnicity (USA)
  • Income
  • Increased Income Level 41990 in 2000 to 44389
    in 2004
  • Increased Disposable Income

17
Socio-Cultural Environment
  • Education (Post-secondary)
  • Sporting Activities as relaxation, stress
    relieve, and stay healthy

18
Political/Legal Environment
  • Safety Regulations and corresponding Legal
    Liability to Manufacturers and Retailers
  • Government Policies and Responses to Obesity
    levels, and promotion of healthier lifestyles
  • WTO governance (Re Textiles, Shoes) and Tarrifs
  • Industry-Related Associations
  • National Sporting Goods Association (NSGA)
  • Sporting Goods Manufacturing Association (SGMA)
  • World Federation of Sporting Goods Industry
    (WFSGI)

19
INDUSTRY OVERVIEW
  • Sales of sporting goods were recorded at 52.1
    billion in 2004 and 53.93 billion in 2005
  • The industry currently employs close to 211,543
    U.S. citizens working in more than 30,000
    operating firms.
  • The export of sporting goods also increased by
    5.6 in 2004 to 2.10 Billion in 2005


20
Price
FootLocker (1.7, 3.5) Sports Authority (2.4,
4.9)
Big 5 (0.77, 4.9) AthletesFoot (0.40, 0.8)
Finish Line (0.51, 0.35)
Walmart (8.88, 17.5) Target (2.6, 5.3)
Quality
21
INDUSTRY ENVIRONMENT Direct Competition
  • Sales of sporting goods were recorded at 52.1
    billion in 2004 and 53.93 billion in 2005
  • Domination of Mass Distributors
  • Stores such as WALMART and TARGET report that
    approximately 7 of its revenues are derived from
    the sale of sporting goods.
  • Emergence of specialty retailers - segregate from
    the rest and create a niche for themselves

22
Where the Sales are..
23
INDUSTRY ENVIRONMENT Direct Competition
  • Sales of 17.1 billion in 2005, making it 1 U.S.
  • Wal-Mart currently has close to 1350 stores and
    1750 superstores across U.S
  • There are approximately 1.3 million employees
    working for Wal-Mart
  • Revenue per employee - 152,165.29

24
INDUSTRY ENVIRONMENT Direct Competition
  • Merge between The Sports Authority Inc. and Gart
    Sports Company in 2003
  • The net sales increased by 23 in 2004 and 38.35
    in 2005
  • The company generated, on average, 117,363.33
    revenues per employee for the fiscal year ended
    January 31, 2005


25
INDUSTRY ENVIRONMENT Direct Competition
  • The company currently operates 1448 stores across
    the U.S. and generated sales of 5.3 billion in
    2004
  • Foot Locker, Inc. employed 44,109 people in 2004
    generating revenues of 108,345.24 per employee
  • Full year net income increased 15 percent, to
    1.88 per share in year 2004 and by 9.8 with
    1.39 per share in the year 2003

26
INDUSTRY ENVIRONMENT Threat of Entry
  • The high profitability and growth prospects of
    the industry have attracted new competitors
  • Since the beginning of 1997, the consumption of
    equipment, footwear and clothing has been on a
    constant rise
  • Upcoming online retail stores

Caution High failure rate - 2001- 46, and in
2002 - 45
27
INDUSTRY ENVIRONMENT Threat of Entry
StartUp Resources
  • Start-up capital for any sports retail chain, in
    order to compete effectively, would range from
    30 - 35 million dollars per store
  • Lack experience and broad vision
  • New startups do not have the technology or the
    systems infrastructure to compete
  • Capital drifted away from marketing towards
    operations such as inventory, HR and overall cost
    containment.
  • Obstacle as customer or investor confidence can
    only be assured when the store/chain performs to
    satisfaction and sales yield profitable results.

28
INDUSTRY ENVIRONMENT Threat of Entry
Customer Loyalty
  • For start-Ups revenue generated through
    first-time customers
  • Mass retailers influence consumer confidence
    through low prices, developed is tremendous
    customer confidence and brand loyalty.
  • Ensuring customer satisfaction, reward programs
    and paying attention to competition
  • In response to price reductions, the new startups
    would then have to alter sales goals, decrease in
    advertising and promotional spending.
  • This decrease in price would lower companys
    gross margins and negatively affect its operating
    margins.

29
INDUSTRY ENVIRONMENT Threat of Entry
Relations with Suppliers
  • Incongruent Goals
  • Biased prices of goods sold
  • Fluctuate prices in accordance to the risk
    associated - economic crisis, international
    disputes
  • in prices directly on the retailer through
    increasing the cost of goods supplied.

30
INDUSTRY ENVIRONMENT Threat of Entry
Government Legal Regulations
  • Government Intervention to discourage startups of
    new business
  • Subsidies to local corporations
  • Quotas and tariffs on imports
  • Patent and trademark infringment
  • Ruling on opening new stores - Walmart

31
INDUSTRY ENVIRONMENT Threat of Substitutes
Other Medium Factor
  • Television Favorite pastime for children aged 2
    to 18. 61 denied having any limitation
  • High End Video Games video games towards the
    late 90s had a tremendous impact on the outdoor
    life of an average person as it deprived them of
    outdoor physical activity
  • Internet Spend available time either surfing or
    conversing

32
INDUSTRY ENVIRONMENT Threat of Substitutes
Money Factor
  • The U.S. economy thrives at employing part-time
    or full-time teenagers
  • Over recent years many surveys were conducted in
    order to trace the amount of money spent on
    sporting goods by this age group
  • Out of a possible 62 billion, only 5 billion
    was spent on sporting goods and other hobbies
  • The teens spent 153 million of their own money
    in 2000 and influenced the parents or other
    family members to spend an additional 300
    million

33
INDUSTRY ENVIRONMENT Threat of Substitutes
General Mentality
  • Unhealthy lifestyle amongst children and adults
    is becoming increasingly overweight
  • Inactivity, lack of motivation and lack of
    encouragement has resulted in the increase of 61
    of over-weight Americans over 18 between 1991 and
    1998
  • The proof of such high consumption is an increase
    in the amount of fast food joints in recent
    years, which have grown by an average margin of
    50 over the past two decades

34
Power of Suppliers - Magnitude Rating 5
  • Sporting goods retail is a brand-name driven
    business (retailers deal with some large powerful
    vendors)
  • Price Makers - Premiums on the pricing of their
    products based on brand recognition ? Vendor
    relationships important for retailers to maintain
    competitive prices.
  • Nike (Incl Bauer, Cole Haan, Converse, Exeter,
    Hurley)
  • US Sales (6.3B) 46 of total revenues, but drop
    from previous years
  • 22,000 retail accounts in the US alone
  • Controls over 20 of the U.S. athletic shoe
    market
  • Adidas/Reebok (Adidas announced purchase of
    reebok Aug 2005)
  • Incl Rockport, CCM, JOFA, KOHO, Greg Norman,
    Ralph Lauren, Polo, TaylorMade, Maxfli, Salomon
  • Purchase expected to double Adidas North
    American sales to roughly 3.9 billion US (for
    fiscal Yr-ended 2006).

35
Power of Suppliers - Magnitude Rating 5
  • Power of Suppliers (Contd)
  • But many smaller private label brands/vendors
    (Lowering overall power of Suppliers
  • Examples Easton, Schutt, Fossil, Under Armour,
    K-Swiss, Mizuno, H B and Rawlings
  • Price Takers - supplier market becomes
    fragmented - 1000s of suppliers
  • Retailers strengthening their own private brands,
    (which as of 2004) account for 35 of all sports
    apparel spending.
  • Has a substitute effect ( retailers competing
    with their own suppliers) effectively increasing
    the competition and weakening the power of
    suppliers.

36
Power of Buyers-MAGNITUDE RATING 7
  • New Technology
  • E-commerce
  • Location
  • Demography sex

37
Driving Forces
  • Globalization Suppliers and Buyers amidst a
    battle of supremacy to fulfill their own best
    interests.
  • Education and Awareness
  • - Increase in 45 55 age group
  • - Demanding work conditions requiring physical
    fitness
  • Information Technology
  • - E-Commerce
  • - Supply Chain Systems
  • - RFID

38
Introduction to VC
  • As on recent 10K report, Hibbett explicity
    attributes much their success to
  • Close geographic locations (smaller operating
    area easier to manage)
  • State of the art computer system (IS technology)
  • Progressive store design
  • Localized marketing strategies
  • Innovative employee training programs
  • Strength of merchandise mix from major sports
    vendors (Including Nike, Reebok/Adidas, New
    Balance, Easton, Schutt, Fossil, Under Armour,
    K-Swiss, Mizuno, H B and Rawlings).

39
Introduction to VC
  • Competitors (3) chosen comparison purposes are
  • Walmart
  • Footlocker
  • Sports Authority.
  • Competitors will represent the industry
    standards/trends in order to better evaluate
    Hibbetts relative performance.

40
Supply Chain Management
  • Operates 469 stores across 22 states in the U.S
  • 1 distribution Center in Birmingham, Alabama
  • Challenges in cross-docking capabilities, lack of
    inventory visibility and inefficient use of
    space.
  • Introduction of Manhattans SCM, symbolizing
    cutting edge technology
  • Streamline company operations, efficient use of
    space
  • Best Innovator award for achieving the highest
    efficiency rate

41
SCM - Benefits
  • The number of cross-docked goods from suppliers
    increased from 42 to 86
  • Reducing vendor-to-store turnaround time by 13
    days, or 57
  • RF technology has increased throughput by 17.34
    and reduced vendor-to-store pilferage
  • Effective labor management - decrease labor as
    percentage of sales from 1.38 in 2001 to 0.82
    in 2004

42
SCM - Benefits
Inventory Turnover Ratio
43
SCM - Benefits
Average Days of Inventory
Inventory as part of Asset
44
Operations
  • Hibbett Operates under three store concepts
  • Hibbett Sports stores flagship store, 447
    across U.S., 5,000 square feet and are
  • Sports Additions - mall-based stores, focuses on
    footwear and caps, 17 stores, averaging 2,500
    square feet
  • Sports Co. large store concept, averaging
    25,000 square feet, 4 stores.

45
Operations
Store Growth

46
Operations
Sales Growth
  • Operates 469 stores , aim to add 450 stores in
    coming years
  • Statistics reveal market 24 billion in 2006 to
    25 billion in 2008

47
Operations
Store to Sales Growth
48
Operations
Same Store Sales
Sales per Sq. Ft.
Sales per Employee
49
DISTRIBUTION
  • 220,000 sq. ft. located in central Alabama
  • Carrying 1500 skus
  • Employs 3000 employees
  • Hibbett implements a cluster approach
  • Truck, main mode of transportation
  • Carrying 2000 3000 products
  • Time frames are closely monitored

All transfer and transport information monitored
through a centralized database.
50
Distribution Process
  • On departure, supplier informed
  • Collaborate and become increasingly attentive and
    responsive to customer demand
  • Invoice generation
  • SCM initiates a tracking signal
  • Trucks carrying close to 2000 products serve
    specific area
  • Advance orders from customers
  • Warehouse and store connected through web portal

51
Marketing Sales
  • Product
  • Broad assortment of quality athletic equipment,
    footwear and apparel
  • brand name merchandise emphasizing team sports
    designed to appeal to a wide range of customers
    within each market.
  • Hibbett believes their stores are among the
    primary retail distribution avenues for brand
    name vendors that seek to penetrate their target
    markets.
  • Nike - largest vendor at 38.9 of their purchases
    (for Jan 2005 yr-end) - New Balance and Reebok
    each _at_ approx.10 of inventory purchases. (Others
    incl Easton, Rawlings, Louisville and Mizuno).  
  • Price
  • Considers that their merchandise are being
    offerred at competitivie prices complimented by
    a high level of customer service
  • Operates in a cluster that includes Sports
    Authority. (Price/Quality point of group is mid
    range.) Pricing is typically lower than the more
    specialty (footwear-oriented) FootLocker stores.

52
Marketing Sales
  • Place
  • Cost efficiencies and benefits in low population
    areas less rent, lower advertising costs, valued
    by community as being an employer and relatively
    limited competitive environment than generally
    faced in larger markets
  • 5 major Alabama,Georgia, Tennesse, Mississippi,
    and North Carolina, combine whose combined 244
    stores as at Jan 2005 Year-Ended (over half of
    stores the 482 stores at that time)
  • 461 Hibbett Sports stores (flagship chain)
    located primarily in malls and strip centers
    anchored by a Wal-Mart store. (primary component
    of growth, added 200 stores since 2001 - while
    the other two store formats have remained
    unchanged).
  • 17 smaller-format Sports Additions
    athletic-shoe-oriented stores (commonly located
    in malls that also have Hibbett Sports stores)
  • 4 larger format Sports Co. superstores offering
    broader assortment than flagship chain, but
    designed to project same store atmosphere 

53
Marketing Sales
  • Promotion
  • Prefer advertising in local media as a way to
    further differentiate Hibbett from national
    chain competitors.
  • Print advertising, including direct mail to
    customers and newspaper inserts the foundation
    of our promotional program (and accounted for the
    majority of our total advertising costs in fiscal
    2005)
  • Highly effective use of cooperative advertising
    For year-ended Jan 29, 2005 Hibbett was
    reimbursed approximately 62.3 of its gross
    advertising costs 4.47 million (effectively
    reducing its advertising costs to 1.68 million).
  • By comparison, Foot Lockers cooperative
    advertising helped reimburse 29 in 2004).

54
Marketing Sales
  • Market Share
  • Revenue for 377.5 million (for yr-ended Jan 29,
    2005)
  • which acounts for only 0.7 of total retail
    sporting goods sales in the US during 2004 (48.9
    Billion)
  • By contrast
  • Wal-Marts Sporting Goods dept _at_ 8.56 Billion
    (sales 2004) 17.5
  • Foot Locker _at_ 1.7 billion US-only (sales 2004)
    3.5
  • Sports Authority 4.9 (2.4 billion 2004 sales)

55
Marketing Sales
Revenues and Sales Trends Chart
Above Reinforces Market Share Gap relative to
Competitors!
Sales Growth Hibbett 17.6 (2004) and 15
(2003) Footlocker 12 (2004) and 6
(2003) Wal-Mart 11 (2004) and 12 (2003)
Profit margins Hibbett from 5.3 (2002) to 6.7
(2004) Footlocker 3.4 (2004) to 5.5
(2003) Wal-Mart 3.5 consistly Sports
Authority fallen from 2.2 (2002) to 1.4
(2004)
56
Customer Service
  • Customer Service and its critical role
  • Retailers know that consumers spend more time
    and money in a store when they have a pleasant
    shopping experience
  • 3 Store formats to serve customers
  • Hibbett Sporting Goods, Sports Co., Sports
    Auditions
  • Hibbett official website
  • www.hibbett.com
  • Payment Methods
  • Refund Policy

57
Human Resource Management
  • Employee Growth
  • Increasing every year
  • Executive Compensation
  • In terms of salaries as of net sales Sports
    Authority Foot Locker pay high compensation.

58
Human Resource Management
  • Training
  • Hibbett University provides various training.
  • Sale/Employee
  • Relatively weak
  • Consistent growth pattern for Hibbett Sporting
    Goods Inc.

59
R D/ New Product Development
  • Heavy reliance on product mix
  • Hibbett carries brands from some of the largest
    and best known companies.
  • Nike, Reebok, Adidas, New Balance, and other
    brands such as Easton, Schutt, Fossil, Under
    Armour, K-Swiss, Mizuno, H B and Rawlings.
  • Suppliers actively make large investments for RD
  • Since Hibbett is a Retailer, does not make large
    investment in RD
  • Investing in significant research to identify
    potential markets for expansion.

60
Corporate Leadership
  • One absolutely key executive Michael J. Newsome
  • President since 1981, CEO since September 1999,
    and Chairman of Board since March 2004. Having
    worked for Hibbett since 1968, Mr. Newsome has
    held numerous positions.
  • ROA efficient / effective use of assets to
    generate earnings

61
Corporate Leadership

62
Corporate Leadership

Share Price
  • Small Arrows indicate stock splits
  • Share Price up 553 In past 4 years, Consistently
    Rising
  • Competitors trends comparatively flat or
    declining

63
Corporate Leadership
  • Market Capitalization
  • Reflected by increases in share-price valuation

64
Summary Of VC Analysis

Summary
All VC functional areas assessed as either
Average or Above Average Returns
65
  • Corporate and Business Strategies

66
Corporate Strategy
Horizontal Diversification
  • Operates under 3 store concepts
  • Sports Co, Sports Additions,
  • Hibbett Sports
  • Low Level of Diversification
  • Dominant Level of Corporate Strategy, 95 sales
    from Hibbett Sports


67
Corporate Strategy
  • Hibbett Sports Accounts for 95 of the company
    revenues.
  • Malls with high traffic, close to Wal-Mart
  • In the short term, it plans to increase its store
    base by a net of 65 new Hibbett Sports stores
    during FY 2005
  • Problem
  • Lack of commonality, unable to reach out to mass
    customers as a chain store. Hindering store
    growth and hampering sales
  • Solution
  • Projection as a large organization
  • One flagship
  • Standardization of procedures
  • Congruence amongst stores.

68
Corporate Strategy
  • Benefits of Uniformity of Store Concepts
  • Increased initial sales
  • Repeat Purchases
  • Leverage of sales loss
  • Higher Prices
  • Increased new product sale acceptance

69
Corporate Strategy
Vertical Integration
  • Self Monitored Distribution and Logistics Unit
  • Effective labor management has enabled Hibbett to
    decrease labor as a percentage of sales from 1.38
    percent in 2001 to 0.82 percent in 2004.
  • Problem
  • Lack of experience, cost beneficial or not.
  • Solution
  • Tighter relationships with suppliers
  • Target small towns and cities

70
Corporate Strategy
Future Expansion
  • Hibbett has also identified 200-300 opportunities
    for expansion in other potential target markets
    in Southwest U.S
  • The development of a potential second
    distribution center

71
Corporate Strategy
  • Analysis by Population

72
Corporate Strategy
  • Analysis by Income

73
(No Transcript)
74
Business Functional Strategy
  • Pursuing Focused Differentiation Strategy
  • Target only small to mid-sized markets
  • Major focus on specialty category like athletic
    footwear
  • Most heavily concentrated in Southeast, and
    lesser extent in Mid-Atlantic and Midwest states.

75
Business Functional Strategies
  • Supply Chain Management
  • Inventory Controls
  • Newly implemented JDA portfolio applications
  • Vendor Relationships
  • Distribution
  • Only one distribution center
  • Marketing and Sales
  • Increased investments in advertising
  • Determined to provide vast array of products,
    fighting hard to fulfill needs of customers.

76
Business Functional Strategy
  • Human Resource Management
  • Hiring sports enthusiastic sales personnel with
    an interest in sports
  • RD/New Product Development
  • Brand name products
  • Technical innovated products
  • Customer Service
  • 3 Store formats save customers time
  • Superior in-store services

77
Business Strategy Issues/Recommendations
  • Issue
  • Critical to sustain differentiation from
    competition
  • Critical to improve market share and sustain
    growth
  • Recommendation
  • Cooperative Advertising
  • Implementation of company slogan
  • Expansion Focus and expansion of Sports and
    Co. Store formats

78
Business Strategy Issues/Recommendations
  • Issue
  • Distribution only one Distribution Center
  • - Although 850 store-servicing capacity
  • expansion not slowing
  • Recommendation
  • Current DC will operate at maximum within 4-6
    years
  • -To alleviate operating pressures, and risk of
    down-time open a second DC in Texas nearing the
    end of fiscal 2007 (ended Jan-2007) or fiscal
    2008 (ended Jan-2008) to service expansion areas.
  • As at that time Hibbett will be operating,
    630-660 stores (projected)
  • Dual-DC system will allow more flexibility for
    expansion strategies

79
Business Strategy Issues/Recommendations
  • Issue
  • Customer Service
  • Well-organized in-store service, yet no generic
    1-800 number on website, no generic email address
    made available (unacceptable for company of this
    size)
  • Recommendation
  • Enhance Customer Service
  • Website overhaul to appear more professional, and
    to achieve
  • E-commerce presence not recommended as
    distribution may not be cost effective
  • Focus s/b placed on current bricks-and-mortar
    store growth
  • Implement e-commerce presence only upon
    completion of expansion strategy (to potentially
    maximize profit margins).

80
Business Strategy Issues/Recommendations
  • Issue
  • Sales/Marketing
  • ?Accurately tailoring sales/marketing strategies
    (in light of changing consumer tastes,
    demographics and behavior)
  • ? Low Sales per Employee (Weakness)
  • Recommendation
  • 55 fitness enthusiasts 379 (2000) increase
    since 1987 (population with typically higher
    levels of disposable income)
  • Product mix and promotional activities aimed at
    this market
  • (may have adverse effect - younger customers)
  • Possibility to create specialty area within
    stores catering to older consumers.
  • Capture minorities (aim increased marketing )
  • Particularly Hispanic population which has higher
    concentrations in the southern (forecasted 17 to
    25 of US pop by 2050)
  • Generally spend less on sporting goods, but
    growth is opportunity!
  • Attention to boxing, soccer, baseball

81
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