The future of digital retail for sporting goods brands


From the WFSGI magazine 2015, Keith Anderson shares his thoughts on the developments in digital retail and what we can expect for the future in such a fast developing market place. 

Remember when technology was simply a ‘sector" — one of many discrete industries? Today technology is pervasive, embedding itself in all areas of commerce including sports and fitness.

Sensor-enabled wearable devices have health and fitness at their core, promising better athletic performance and fewer injuries. Action-cam-equipped drones capture events from new angles, enriching the spectator experience. The merging of the physical and digital will undoubtedly change sport in profound, unexpected ways.

Technology is also transforming retailing, and perhaps at a greater pace In many developed markets (like the US and the UK), total retail sales are growing 1 to 5% year-over- year; digital retail is outpacing this growth by three times at a run-rate of approximately 15% year-over-year. In some regions, breakout players like Amazon are outpacing total online sales growth by an additional 1.5 to 2 times, capturing unprecedented share and disrupting established channels with seemingly endless selection, dynamic pricing, and an economic model that thrives on paltry profits.

And according to data from Deloitte, the stakes are even higher: in the US. greater than 50% of all retail sales are estimated to be "digitally-influenced.“ with decisions about where to shop and what to buy being researched digitally before or during a trip to a store.

No one can predict everything on the horizon but candid, frequently calibrated assumptions and new ways of working can help leaders develop the agility to manage accelerating change. Here are several ‘working assumptions'" to consider:

  • Digital will account for as much as 20% of retail sales in 2020. Precise forecasts vary by market, and their accuracy is often questionable but consider that Millennial—digital natives who already make a disproportionate share of their annual purchases online — are just entering their peak earning, peak consumption life-stage. And that brick-and-mortar retailers are shifting capital from net store growth to enabling flexible online fulfilment options like click and collect and ship from store. Through this lens, digital commerce may still be in its adolescence.
  • Stores will be re-imagined. Stores may never match the "endless aisle" of selection that pure-play online retailers boast. But they do benefit from proximity to where people live, work, and play; trained staff who can advise on purchase decisions; and physical product displays—enabling shoppers to actually see and feel a product before buying. Still, the rapid growth of e-commerce will force repositioning. In many segments of the market, store networks will be "right-sized," leading to fewer, smaller locations with tighter inventories and these future stores will be re-engineered to leverage their strengths efficiently.
  • Transparency will increase. The threat of ‘showrooming" was overstated, but shoppers unquestionably have more information and power than ever before. While shoppers research products’ prices, reviews, and other key information occasionally, retailers and brands are beginning to systematically monitor the online retail environment to put themselves on more even footing with both shoppers and competitors like Amazon, which pioneered the use of competitive online price intelligence to optimize prices dynamically. In September 2014. Profitero monitored 100 sporting goods products' prices at Amazon and several US online competitors like Dick's Sporting Goods, Sports Authority, and Academy Sports Amazon and its third-party market place changed prices much more dynamically than competitors, with 100% of the products on Amazon and 88% of the products on the third party Amazon marketplace changing price over the 2-week period, versus 13% for Academy. 6% for Sports Authority, and 3% for Dick's Sporting Goods

Learn more about the rapidly developing digital retail market and how you can effectively navigate this period of accelerating change by clicking here

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