Case Study: Dick’s Sporting Goods

The Evolution of Dick’s Sporting Goods

Dick’s Sporting Goods has come a long way from its founding in 1948 by Dick Stack as a bait and tackle outpost in upstate Binghamton, NY, as recently reported Retail Dive. There are now some 600 Dick’s stores nationwide, and counting. From the perspective of retail, it has actually come quite a ways in recent years and months, too, thanks to a concerted all-channels effort and a close watch on merchandising. 

Agility in retail means adjusting to shifting categories. Mid-century bait-and-tackle retailers had a limited, but focused, range of goods. Shoppers knew exactly what they wanted to purchase and where to purchase it. These days, sporting goods retailers like Dick’s have a wide range of products to offer, from guns to yoga pants. Even the biggest stores have to decide how to divvy up space, adds Daphne Howland, who serves as a contributing editor for Retail Dive.

Dick’s has mostly moved away from its outdoorsman roots, as gun, ammunition, and hunting gear sales have tapered off. Instead, it’s shifted many of those sales to Field and Stream specialty stores that first opened in 2013 and have since slowly expanded. The retailer acquired the naming rights from the iconic Field and Stream magazine, seeing it as a way to compete with stores like Cabela’s that are focused on hunting, fishing, and outdoor gear.

“Dick’s Sporting Goods originally began as a bait and tackle shop,” said president and COO Joe Schmidt. “The Field & Stream store will build upon both brands’ heritage to provide an excellent customer experience for outdoor enthusiasts.”

Warehousing and Distribution Modifications with Hytrol and Bastian

These changes required several warehousing and distribution modifications and the company worked in tandem with Bastian Solutions and Hytrol Conveyor Company to make these needed changes. According to Boyce Bonham, Director of Integrated Systems and Controls with Hytrol, “The distribution center in East Point, GA, back in 2007 was beginning to recognize these retail product shifts. Conveying systems needed to accommodate a new variety of package sizes, shapes, and products of varying weight. Moving golf clubs on a conveyor presents a totally different set of challenges than soccer balls.” Bonham has been with Hytrol Conveyor Co. for 27 years. In addition, he has served as Chair for the Conveyor Equipment Manufacturer’s Association’s Engineering Conference.

Bonham said that Dick’s had already selected another conveyor system, but had promised to come to the Jonesboro, AR Hytrol plant and innovation center. They kept their word and decided to change their purchase order to Hytrol, recognizing the value proposition of an innovative, lean manufacturing company.

Just a few years ago the company was growing so quickly that it established a new distribution center in Goodyear, AZ. The work with Bastian Solutions and Hytrol Conveyor is such a seamless partnership that the duo was called upon to take the Georgia Dick’s Sporting Goods proof-of-concept facility and create a best-in-class facility in Arizona. Bonham said that the relationship with integration partners is a hallmark of Hytrol. “The folks at Dick’s Sporting Goods often said that when speaking with Bastian Solutions and Hytrol they had total trust that we were working together on their behalf. We are proud of our relationship with Bastian Solutions and know their role in the new distribution center was extremely valuable.”

Dick’s continues to respond by making nimble adjustments to changing trends, such as the area of sports. The retailer caters to serious athletes, weekend warriors, and kids at all levels of play. Howland noted that it is a huge market, with a projected value of more than $63 billion in 2014, which does not even include bigger ticket equipment items like bicycles and kayaks. This new ath-leisure boom, driven largely by women with yoga gear and yoga-inspired clothing, includes a line by Carrie Underwood exclusive to Dick’s —worn daily, not merely for exercise.“

The strong performance across the remaining categories validates our merchandising and space allocation strategies that we put in place during this past year,” Stack told analysts earlier this month. “The fourth quarter was a more promotional environment, as expected.” Dick’s EVP, COO, and CFO André J. Hawaux also noted that kids and moms have a lot of power to change the retailer’s focus.

Stores and Concept Stores-Within-Stores

Right now, Stack and Hawaux say that new Dick’s stores are enjoying productivity of 94.7%. Dick’s has had success with its hit store-within-a-store concept, an approach recently emulated by Best Buy in electronics. Dick’s Sporting Goods stores feature “Nike Field House” and “Under Armour All-American” concept stores within them. Not only are those concept shops a draw, but the brands also help foot the bill for some of the interior design and fixtures, according to Christopher Svezi, an analyst at Susquehanna Financial Group. “Stores with these stores-within-stores have higher returns on investment and sales per square foot…and the margins are better as well,” Svezi told the Pittsburgh Tribune.

This dynamic also changes how product is shipped from DCs.

E-commerce and Omnichannel

That change is happily bleeding into its e-commerce performance: Hawaux says that 80% of the retailer’s e-commerce sales come from zip codes in or near areas with stores. The retailer sees online sales jump wherever a new Dick’s store opens; the retailer plans 45 new namesake stores in 2015. Dick’s saw 14.4% of its total Q4 sales come from online sales, up from 12.2% year over year.

Not surprisingly, Dick’s is all in when it comes to omnichannel. The retailer has embraced sales and fulfillment efforts like ship from store, buy online pick up in-store, in-store returns for online purchases, and “endless aisle” initiatives that, for example, allow staff to place customer orders for anything not in on the racks. All of that blurs the lines between brick-and-mortar and e-commerce, using stores as warehouses and showrooms and using e-commerce capabilities to meet the needs of customers in stores. It is the kind of approach that has led New York University Stern marketing professor Scott Galloway to warn of the end of pure-play retail of either stripe. Galloway, in fact, puts Dick’s at the top of his top-10 list of “retailers playing offense” when it comes to their e-commerce efforts. “We’ve found that these incredibly flexible robust warehouses are called ‘stores,’” Galloway told Bloomberg. “People want access to products everywhere. This is the cross-fit of industry, it’s a warehouse and a store.”

Hytrol is proud to be a champion of the growing omnichannel space for many of the top blended warehouse and retail operations.