Dick’s Has Game This Holiday Season. Here’s Why

A friend recently told me about her bargain-hunting trip to Dick’s Sporting Goods. Yes, she got the nice sweatshirt she was wearing there on discount. But other than that shirt and something her daughter had picked out, she couldn’t find anything marked down.

Still, she spent $1,900.

My friend likely has Dick’s quick-reflexed merchandising strategy to thank for that. Because even with an influx of unplanned returns in the fall, Dick’s Sporting Goods managed to get much of its pre-holiday surplus out the door by November. And that, at least at some stores, meant fewer store-wide, door-busting holiday sales.

And it meant busting some of the competition, which includes Macy’s and TargetTGT
as well as REI and Foot LockerFL
. The seller of athletic, leisure and sporting apparel posted a 7.7% sales increase in the third fiscal quarter ended Oct. 29, beating expectations and the industry average of 0.7%.

“That the company is driving growth on top of high gains from prior years, at a time when most in retail are seeing demand fade, makes them exceptional,” GlobalData Managing Director Neil Saunders told RetailDive on Nov. 23. “In our view, Dick’s remains a very bright spot in a darkening retail sky.”

Dick’s in-store stock is evidently brightening its trading position on Wall Street. Shares of Dick’s exceeded $122 a share on Black Friday (Nov. 25), a one-year high.

Dick’s Scores With A Five-Play Approach

A review of Dick’s third-quarter earnings call with analysts, on Nov. 22, reveals some of the well-thought strategies behind its ability to maintain sales growth. Below are five of the takeaways.

1. It’s gaming inventory management. When Dick’s began receiving an unexpectedly late glut of spring returns, it was already stocking its back-to-school inventory and holiday merch was not far behind. Retailers typically rely on one well-worn route for such overstocks – the express lane through the “out” door. But at Dick’s, the “out” door opens to its value concept chains, including Dick’s Warehouse. In a conference call transcribed by Seeking Alpha, Dick’s CEO Lauren Hobart said these stores are helping the company to better optimize its margin – significantly better than in 2019. Dick’s has not yet made its inventory totally clean, executives said, but these value chains are a “key structural driver” of its confidence to maintain margin in 2023.
2. It’s popping up in new places. In addition to its Warehouse stores, Dick’s is working out several new concepts, such as Public Lands, dedicated to outdoor gear, and its experiential House of Sport, which has entered its “roll-forward” strategy. Dick’s also is opening discount pop-up shops inside select Warehouse locations to gauge whether these markets would be good homes to its expanding discount chain Going, Going, Gone!, introduced in 2021. These concepts are effective instruments for helping Dick’s move excess inventory, such as returns. But perhaps more importantly, the range of nameplates enables Dick’s to capture a more economically and socially diverse market – the same way Dollar GeneralDG
   does with its trendy Popshelf stores, as reported in Forbes.
3. It has put away the sledge hammer. Dick’s CEO described the retailer’s promotional approach this holiday season as “much more surgical” than in the pandemic years. It no longer hosts site-wide sales, or what Hobart described as “the sledgehammer approach to promotion.” Rather, deals are item-focused and targeted. A visit to its website during Cyber Week revealed specials for specific products, such as Dr. Martens boots and fleece joggers. The site also features a 37-minute video, the “Holiday Gift Guide Event,” during which customers can shop featured items live. Models sport clothing and other items described by the host, and the same items pop alongside the video for easy purchase. (Bonus: The video closes with a pitch by an NBA legend.)
4. It’s keeping score of its members. Dick’s counts more than 25 million members of its ScoreCard rewards program and ScoreRewards credit cards. Spending by these members make up 70% of Dick’s business. In addition, Dick’s has secured information on more than 150 million athletes in its database, and its knowledge of these customers is “at an all-time high,” Hobart said. The company mines these data sets for insights that will improve its personalized marketing, which includes direct messaging. To this end, Dick’s in August partnered with artificial intelligence firm Metrical to advance its predictive data modeling. The goal, it said, is to broaden its personalized content across all customer interactions, so the online and in-store experiences play well together.
5. It has a “private” offense for maintaining demand. Dick’s selection of private labels, such as its competitively priced DSG brand, now account for 14% of total sales, the company said. To shoppers, these more affordable lines represent an opportunity to purchase the goods they want without feeling as if they’ve sacrificed quality. For example, its Calia women’s lifestyle brand and VRST men’s line are geared toward athletic men and women who value performance, but at lower price points. And each has a stand-alone website with a different feel than Dick’s. These brands, like Dick’s value chain stores, present options so Dick’s can retain a higher penetration of all sporting goods shoppers, from hard-core athletes to coffee-shop athleisure-ers.

Any Retailer Can Follow This Playbook

Combined, these strategies present Dick’s with a series of levers that it can pull to adjust to shopper behaviors while in play. Its range of price points, outlets and experiences, combined with its ongoing investment in data analytics, enable it to be a shape-shifter, a supplier of different needs for different shoppers. Because Dick’s apparently knows its shoppers very likely will shift as well – those who buy at discount now could turn into those who will make an unplanned $1,900 trip, and vice versa.

When they do change, Dick’s is ensuring they won’t have to change brands.