Marriage Vows

What, exactly, is the relationship between team dealers and their retail businesses? Inquiring minds ? and Sporting Goods Dealer ? wanted to know, so we went out and asked.

It turns out the relationship between a dealer's team and retail businesses is essentially symbiotic, with one feeding off of the other to make the sum larger than its individual parts. While there are a handful of dealers surveyed that are "team and nothing but team," the majority do complement their team strength with some sort of retail presence.

The reasons are all over the ballpark, from better inventory management to improved cash flow to a simple desire to be all things to all customers. All agree that team drives business to retail, and vice versa, but to a differing extent at each dealer depending on how much emphasis is put on each.

This survey is based on a more than 25% response from close to 200 surveys sent to team dealers on the Sporting Goods Dealer Editorial Advisory Board as well as other key dealers around the country. All were promised a snazzy SGD golf shirt for taking part.



Team Vs. Retail ...

What percentage of your business is team, retail?

? Most respondents place their "team" business at between 85-100%.

? Only 6% classified themselves as "pure team."

? Correspondingly, more than three-quarters of the dealers who responded do less than 25% of their annual sales at retail.



Follow-up question: Has this changed much in the past five years?

Follow-up answer: Definitely. Most report growth in their team business ? and a shrinking of their retail business ? in the past five years. This is in keeping with a trend by dealers to concentrate on what they do best in a market where the big boxes can't hope to compete.



Marginally Better ...

? Average margin on team sales was reported between 20-40%. The majority reported their average margin in the 21-30% range

? The average margin at retail was placed between 30-50%, with the majority in the 31-40% range.



Commentary: No dealers reported average margins in the 0-10% or even the 11-20% range, which is certainly good news. We wouldn't want a dealer working on less than 20% margins wearing a Sporting Goods Dealer golf shirt anyway.





One Or The Other ...

If you had to make a choice, would you prefer to be a strictly team dealer, or a 100% retail business?

By far (about 70%) dealers said that if forced to choose they would prefer to be a team dealer than do day-to-day battle in the retail trenches. Very few (less than 10%) wanted to be retailers exclusively. Even though it was not offered as a choice, about 20% would prefer to do both team and retail, which is what most actually do.



The reasons ...

Team

? Inventory is more manageable

? More stable customer base

? Easier to manage employees

? Too much leftover inventory at retail

? Area has too many big box retailers

? Don't have to deal with general public

? Stable and conservative

? Better cash flow, less expensive employees



Both Team and Retail

? Complement each other

? Need extra margin and volume

? Retail sales are driven by team business



How do your vendors help you integrate your team and retail business?

? Combine orders for quality and discounts

? Most of their retail items are team related

? Write bulk order for stock together and keep special team order separate

? Help with inventory control

? Vendors refer customers to us

? Allowing retail and team to count together toward program discounts



Typical Response: "We purchase most retail at best prices by qualifying with our team order."





Nice Complement ...

A big reason dealers play both the team and retail game is that the two distinct businesses complement each other. We asked those who do both ? which means most dealers ? where the benefits are and how they take advantage of this complementary relationship.

? "The athletes come in our store because of coaches and because of our relationships."

? "Retail can lead to team sales. Inventories for both are about the same."

? "Retail provides an outlet for carryover team footwear."

? "Some team accounts come into store to buy retail items because we do a good job with their team business."

? "What we sell on the road we stock on the retail floor."

? "We coupon to the team customers to redeem at our retail division. The coupons are credited to a team customer account and they develop a credit to be used toward purchases."

? "We get the league business on team side; then they send in parents to buy pants, socks, gloves, etc."

? "Retail gets rid of obsolete team inventory."

? "By doing both it makes us more of a one-stop shopping experience and it enables us to offer more immediate delivery to team sports."





Two-way Players ...

What percentage of your vendors do you sell at both team and retail?

? One-third said between 80-100% of their vendors sell both team and retail.

? One-third said between 60-80%

? One-third said between 0-25% ? SGD