Dick's is testing 5 store concepts. Here's why
Store revamps are also in progress, and the sporting goods specialist is expanding its private label reach as it looks to maintain a winning position.
announced the launch timeframe for a fifth, set up a new men's private label, signed brand ambassadors for two owned brands, all while in the midst of store revamps.
It's a lot for any retailer, especially when two of the concepts are quite involved. Dick's first House of Sport location opened in April, with experiential features like a turf field, a rock climbing wall and a batting cage. The company's planned Public Lands concept, which is expected to debut in the second half of the year, is an entirely new banner focused on the outdoors space
While the announcements seem from the outside to be coming in rapid succession, some have been planned for years behind the scenes. According to Warren Cheng, a consumer softlines analyst with Evercore ISI, House of Sport and Public Lands have been in the works long before the pandemic. The multiple off-price concepts Dick's has launched in recent months — two, Overtime by Dick's Sporting Goods and Dick's Sporting Goods Warehouse, debuted in June last year and one, Going, Going, Gone, debuted in May — are likely products of the pandemic.
"All three of those I think were ways for them to deal with the pandemic and the extra clearance that they were going to have," Cheng said. "And they've done remarkably well, so I would expect at least one of those to stay as a clearance vehicle."
Opening experiential flagship stores like House of Sport, revamping current locations to include upgraded soccer shops and adding more experiential features at Golf Galaxy stores are bigger investments, but they might be necessary ones.
Adrienne Yih, senior analyst of U.S. retail and e-commerce at Barclays, pointed to the need for retailers to create emotional connections with consumers in their physical stores and provide them with a reason to come in rather than buying online.
"The proven concept of the business has never been stronger, and has never had a stronger tie to Nike." Adrienne Yih Senior Analyst of U.S. Retail and E-commerce at Barclays
The amount of money these investments will take is not a concern at the moment, according to Yih. That's thanks to Dick's strong performance of late, and its deep relationship with some of the top national brands, including Nike, which during its most recent earnings call named Dick's among three "large strategic partners" that it works closely with in wholesale.
"Dick's has such an incredibly strong balance sheet that you can take some of these cash risks, and at the end of the day, the percentage of sales and EBIT that's going to be coming from these tests is insignificant to the strength of what we're currently seeing at 99% of the core business," Yih said. "The proven concept of the business has never been stronger, and has never had a stronger tie to Nike."
That's not to say that there are no risks involved. Only that Dick's is capable of withstanding the blow from any of these investments that don't pan out.