The sporting goods category has had a powerful boost from the rise of athleisure, but is that enough to counter a decline in adult sports participation and an ecommerce landscape dominated by internationals?
It’s fair to say a big part of our national psyche is pegged on the pride we take in being such a small nation and seeing our top national teams perform well on the world stage.
And while that part of our national identity may still be somewhat in tatters following our premature exit from the Rugby World Cup in October, our sporting goods retailers continue to enjoy a healthy market, despite challenges to the industry in recent years.
Increased competition, manufacturers selling direct-to-consumer, mounting digital pressures all coupled with a decline in sporting participation has made for a tough trading environment for our sporting goods retailers.
The rise of the international online giants has made it more complicated still.
However, we Kiwis love a good challenge.
Large national chains and smaller family-owned businesses alike continue to refine and improve their operations, as they strive to reach New Zealand consumers and earn their business.
It’s a tough gig, but she’ll be right mate.
A 2019 Ibisworld report shows an increase in average industry growth of 2.7 percent between 2014-2019, with 1,137 businesses in the sporting and camping equipment industry employing over 5000 staff in New Zealand.
Revenue is predicted to grow at 0.3 percent annually over the next five years, according to the report.
In terms of actual sales data, the situation looks a little brighter. Stats NZ’s retail trade survey reveals a 14.8 percent increase in sporting and camping equipment sales between June 2016 to June 2019, with a 9.5 percent increase in the last year-on-year values alone.
Retail NZ chief executive Greg Harford agrees that the market has become more challenging over the last two decades.
“We’ve seen the arrival of big sporting goods stores… we’ve seen a greater range of sporting goods come into department stores, and at the same time we’ve seen the internet arrive in full force and pose some real challenges for Kiwi sporting goods retailers, particularly those independents who often lack the same buying power of some of their bigger competitors.”
The ease and simplicity of online shopping means retailers need to develop and maintain a strong online presence if they are going to be successful in the 21st century.
“It’s really hard, but you do really need to be everywhere your customers are.”
Harford says the sporting goods sector in New Zealand has been particularly affected by global ecommerce platforms, with many retailers struggling to compete on such an uneven playing field.
“Those big overseas websites have been exempted from both GST, up until December 1, and duties. Sporting goods typically carries a 10 percent duty charged at the border as well as 15 percent GST, so there’s quite a big price difference that is totally out of the control of the retailer.”
The health and wellbeing crusade
Another big shift affecting the sector, according to Harford, is the growing wellness movement.
“We’ve seen health and wellbeing come to be seen as part of sport [and] sports as a part of health and wellbeing. The two very much go hand in hand.”
Registered psychologist Sara Chatwin, who has a special interest in sports psychology and runs Mindworks, agrees that Kiwis are becoming more aware about our health and of the prevalence of disease related to inactivity.
“Over the past five to 10 years New Zealanders have become increasingly aware of the benefits fitness, activity and good nutrition have on our lives.”
“We’re a fairly savvy bunch. Certainly there are groups in society that need a little more of a nudge, or encouragement… but I would say there are a high percentage of New Zealanders who know that to steer clear of heart attacks, to steer clear of obesity, to have less pressure on the joints, keeping fit, keeping healthy is something we all need to do.”
Sports New Zealand’s ‘Active NZ Survey 2017’ confirms Chatwin’s belief, with 73 percent of regularly active adults citing physical wellbeing and health as a primary reason for exercising.
The survey also highlights that sport and recreational activities continue to play a key role in New Zealander’s lives with 95 percent of young children and teens, and 73 percent of adults engaging in physical activity each week.
Chief executive of Sport NZ Peter Miskimmin, acknowledges in the report that while these weekly averages may appear high, “participation is under pressure” with a 7.7 percent decline in adult participation recorded between 1998-2014.
That’s not to say our intentions aren’t good though.
Among both participants in physical activity and non-participants, there was a considerable desire to be more active, with 64 percent of young people and 74 percent of adults indicating they would like to increase their activity.
Chatwin points out that sporting retailers are essential players in encouraging this message of participation, and providing inspiration and equipment to get more people active.
And while there is always room for improvement, overall, she believes they do a great job.
“I think there is a lot of advertising out there that gives people knowledge and information, there’s a decent price range, there’s decent variety. I think they’re doing really well.”
The big players
In recent years, the New Zealand market has been led by a small group of domestic players, namely: Rebel Sport, owned by Briscoe Group; Torpedo 7, owned by The Warehouse Group and Christchurch headquartered Kathmandu.
Rebel Sport is the largest of these, with 38 stores nationwide, over 700 employees and $228 million in revenue in 2018.
CEO Rod Duke brought the concept to New Zealand in 1996 after identifying a gap in the market for a one-stop shop.
“I started playing tennis with my mates and I found very quickly that there was not a single shop in this country where I could buy shoes, socks, shorts, top, tennis racket, balls, hat – there wasn’t one … I had to make three visits to three separate shops to get outfitted.”
All fired up, Duke then travelled the globe looking for a concept to bring to New Zealand, and eventually modelled the Rebel Sport format after US chain, Sports Authority.
It was a success from the get go.
“To imagine a business to grow from a standing start a relatively short time ago to a damn near $300 million dollar business in a country with 4.5 million people and 50 million sheep is pretty damn good.”
This year the chain celebrated the opening of a brand-new format in the $790 million Westfield shopping development in Newmarket, which opened in August 2019.
Duke says in most Rebel Sport stores the range of products is usually a third apparel, a third footwear and a third hard goods. In the Newmarket location, they saw an opportunity to spice up the formula.
“We have deliberately skewed the mix significantly in our… seriously urban store.”
“We just think that the customer in a mall like is that going to be different.”
The new store boasts a “very high proportion of apparel, a very good selection of footwear, and a very modest representation of hard goods.”
Duke says the response has been positive and they have noticed a significant difference in sales already.
Being rapidly responsive to consumer demands and trends is crucial to success in the current climate.
And Rebel Sport is an industry leader in setting the tone in New Zealand, according to Duke.
“These trends don’t just pop up in Auckland one day, they are led from overseas. The major footwear and apparel brands of the world, we are their biggest customer in this country…so we don’t think we are that far off the trends as they come through.”
One such trend has been the growing dominance of consumers replacing casual wear with sportswear.
The casualisation of society coupled with the rise in activities like yoga and Pilates has driven the athleisure phenomenon that sees individuals happily go for coffee, do their shopping, or pick up children from school in a pair of workout leggings and a tank top.
“What you’re seeing now is athleisure times three, because now that trend is fixed. It’s in. And now the major international brands are refining it,” says Duke.
Over the years Duke has noticed another trend appearing: form over function.
“For the youngest purchasing generation, it’s about ‘how will I look in it?’ Not, ‘how I will perform in it?’”
He says in the early days consumers would look at sporting icons and purchase apparel and equipment with the hope of emulating a similar performance to their hero.
“Today it’s not ‘Michael Jordan wears these, I want to play like him.’ It’s more ‘I want to look like him.’”
Sustainability and transparent supply chains is another hot topic for retailers to navigate.
“Customers are increasingly wanting to know that the goods they are buying are sustainable from an environmental point of view, but also that workers are being well treated and paid fairly,” says Harford.
For Rebel Sport, the ethically-focused consumers have largely been interested in product packaging, as well as workplace conditions.
“There are a whole lot of ethical questions being asked of those [big brand] companies and as a consequence we ask for certification when we buy product.”
Looking ahead, Duke says it is business as usual for Rebel Sport, “new stores, refurbish stores, relocate stores.”
And although he will continue to ‘tinker’ with product range, lighting and adjacencies, the underlying philosophy with which he began the business is unchanged: he is still catering to consumer convenience.
“Today is not that much different to 1996, we are very, very time poor. We’ve always got stuff to do. And I think if you can cut the journey or the shopping time by a third, by having all the famous brands in the one location, at a real good price… then you’re going to have success.”
For the love of sport
While the larger chains dominate market share, there is still a healthy representation of smaller, independently owned sporting goods retailers around the country.
Sportsworld Levin owner Richard Loader says owning a small sporting goods store is all about connection with the local community. It’s “the interaction with customers, the success stories, the locals doing well.”
A keen sportsman, Loader bought the store in 2016 with a desire to invest in a business that matched his interests in fishing, hunting and running.
Sportsworld is run as a co-operative, where members pay a monthly fee and are shareholders in the company. Where once there were over 50 stores nationally, the numbers have been diminished to the eight still standing.
Loader says it was helpful buying into an existing structure with lots of experience when he was first starting out.
“There’s guys who’ve been in the game for their whole life as sports people or sport shop operators.”
One of the challenges Loader has faced since joining the sporting retail game has been navigating the online world.
The problem, he says, is there are so many options and it’s tricky getting the right guidance when you’re a small operator.
“Where do you jump? Which way do you jump?”
Loader would love to see a more uniformed approach from the Sportsworld group in terms of their social media and website, “but we haven’t got there yet.”
Instead he is working towards his own online offering, which will become a point of sale for his store in the future.
Competing against the international online platforms is also a challenge for New Zealand sporting goods retailers.
“We get skinned a lot by people that are buying externally - people buying from internet driven sites.”
“We can usually tell when someone comes in and wants to try on a size 43 shoe, we know that they are looking online overseas because we work in US sizes.”
It’s a matter of constantly adjusting your business and trying to stay relevant, he says.
“All the independents will say the same, we’re all looking to change.”
Backing the underdog
Christchurch’s The Sport Shop owner Nigel Lavender shares a similar sentiment.
“I’m always willing. I’ve never sat back and not thought ‘How can I improve my business?’ I’ve always been on my toes, pushing and pushing and pushing.”
Lavender bought his business in Rangiora 15 years ago, in what was a significant shift from his former career as a police detective and member of the Armed Defenders Squad.
He hasn’t looked back.
“Whenever anyone comes into my shop they’re looking to add to their life, so they’re coming in and they’re wanting to improve their experience with whatever their chosen sport or activity is. With the police when I dealt with people, it was often at the lowest point in their life so it’s nice the positive experience I have with my customers.”
The store has recently changed premises and now operates outside the city centre as part of an innovative new fitness hub.
“We’re trying to create a destination… a whole package for the customer.”
The building is split into separate spaces and shared with Rangiora Fitness Centre: North Canterbury’s largest gym, a physio, a podiatrist and The Sport Shop.
“More than just a pair of shoes, or more than just a t-shirt, or more than just a gym membership, it’s about trying to give customers the full experience.”
One area that makes giving customers the full experience a little tricky is navigating the impact of globalisation.
“Manufacturers are increasingly selling to consumers and that’s something that didn’t really happen much 15-20 years ago,” says Harford.
Independent retailers are hit the hardest as staying relevant relies on both getting access to the big global brands, which isn’t always easy, and being able to sell them at competitive prices.
“There’s some brands I’d like, but I can’t have. There’s other brands I can get, but they won’t sell their full range,” says Lavender.
“The pressure is really on in terms of getting the big corporates… People come in and if you don’t have Adidas, they won’t buy something else.”
Although this can make catering to consumer desire problematic at times, it also forces the independent stores to be more creative in terms of accessing a wider range of good quality brands that aren’t available in the larger stores.
“You can be quite nimble,” says Lavender.
Serving the community
In his time at the helm of The Sport Shop, the born and bred Cantabrian has also observed customers changing their approach to purchasing goods.
“Price has become higher up the chain in priorities. Whereas in the past, people might look at quality or service or durability, now it’s price, and the second thing on their list is also price.”
“My dad used to say ‘The quality lasts, long after the price has been forgotten.’ You buy decent, you buy once,” says Lavender.
Although that ethos is under pressure in the current retail climate, Lavender still prioritises quality goods, and service.
“We’ve always been about service. First, second, third and fourth, everything is about service,” he says.
It is this point of difference that makes many independent stores like Lavender’s stand out.
All of his employees are keen sportspeople who can offer practical advice to customers about apparel, footwear and equipment. Caryn is a passionate runner and triathlete, Lyn is into mountain biking, while Lavender himself has been an ardent footballer his whole life.
Operating a store in a smaller community means owners get to know their customers and go the extra mile for them.
Lavender will often drop off goods to customers on his way home, give out presents to children, or warranty products out of his own pocket. It’s all about supporting the local community and maintaining relationships.
“I see our customers in the supermarket, the service station, I sponsor their son or daughter’s netball team or rugby team or football team. Or they might have been in my boy’s class at school.”
Harford says it’s important not to underestimate the significance that these local stores have within their communities.
“Shopping locally is ultimately all about supporting local communities, if we can support our local independent sports store on the high street, they’ll still be jobs there, they’ll still be vibrancy in the local community. If we are not shopping locally, if we’re shopping 24/7 online, or if we’re driving off to the nearest big city to do our shopping, then ultimately our communities will be the poorer for that.”
This story originally appeared in NZ Retail issue 765 December 2019 / January 2020
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