Published on 01/04/2016 by Punchmedia

Sporting Superstores to Hit Melbourne and Sydney

Giant sporting goods chains Rebel and Amart are expected to open even more stores across Sydney and Melbourne in the coming months as dominant French sporting retailer Decathlon prepares to enter the Australian market. Decathlon, the world's largest sporting goods retailer, runs 1031 stores in Europe and Asia and plans to open an online store targeted at Australian customers this month before rolling out as many as 35 warehouse-style superstore outlets over the next 10 years. It is believed Decathlon Australia has already identified six locations for bricks-and-mortar stores in Sydney and Melbourne which will take the form of sporting goods superstores not dissimilar to major hardware and furniture players Bunnings and Ikea. The Fitness and Athletic Clothing Stores industry has remained in great shape over the past five years, despite tough retail conditions with Industry revenue estimated to grow by an annualised 8.8% over the five years through 2015-16, to $1.9 billion. The industry has benefited from changing attitudes towards activewear, as consumers have become more comfortable with wearing gym clothing outside of the exercise context and industry operators have capitalised on this trend by introducing a range of fashionable and functional sportswear. A research report last month by the Australian Sporting Goods Association, the overarching body for sporting goods retailers, found that sales of women's active wear had increased by 50 per cent between 2012 to 2014 and has showed no signs of slowing. Lorna Jane and Lululemon Athletica have been particularly successful in targeting a young female market with their high-quality, on-trend sporting apparel, which is often seen as a status symbol. Industry revenue is anticipated to grow by 5.9% in 2015-16 as demand for premium sportswear continues to rise.

Consumer Trends

Demand for sporting apparel has grown in line with the continued introduction of new products that promote benefits such as moisture wicking, breathability, improved recovery and comfort. Consumers have been willing to invest in more premium, high-quality sportswear, which usually attracts a higher price tag. Products such as compression clothing have become increasingly popular over the past five years. For example, brands such as 2XU target consumers that want to maximise their exercise or sporting performance, while minimising recovery times, have grown in popularity. The quality of material used by well-established brands in the industry has been paramount in maintaining the interest of consumers. This is also a key factor for sports footwear.

Competition

The industry is subject to external competition from general apparel retailers, foreign online operators and discount department stores. Department stores such as Big W and Kmart stock a wide range of fitness apparel, and these products offer consumers a cheaper alternative when it comes to activewear. Although the quality of this discounted merchandise is often perceived as inferior to the products sold by the industry, department stores offer price-conscious consumers value for money, and are particularly popular among parents purchasing children’s sportswear.

Profit

Industry profit margins have grown solidly over the past five years, rising to an estimated 7.7% of industry revenue in 2015-16. Profitability has been supported by strong demand for high-quality products sold by the industry, such as compression wear, which usually carry a higher price tag. While bargain hunting is a concern for general retailers, fitness and athletic clothing stores have been less prone to margin erosion due to the technological advantage of its range. Consumers are used to paying full price for high-quality, high-function gym clothing, and have been willing to invest in these products. Sports apparel retailers are less likely to resort to discounting strategies to move stock and this has boosted profit margins over the five-year period.

Industry Structure

In response to fierce competition from foreign online stores and other retailers, incumbent industry players have focused on consolidating and expanding their operations. Major players, such as Lorna Jane, The Athlete’s Foot and Lululemon Athletica have all gradually increased their market shares due to their ability to attract customers through strong brand awareness and large store networks.  

punchmedia

Curtis is a leading expert in the business-for-sale industry, serving as a senior content creator at anybusiness.com.au.

With a career spanning over fifteen years, Curtis has accumulated extensive knowledge in the domain of business sales, acquisitions, and valuations. His deep understanding of market dynamics and his ability to translate complex industry jargon into accessible insights make him a trusted resource for entrepreneurs and business owners looking to buy or sell businesses.

Author profile

Related articles

Confidentiality Agreement - What is it and why do i have to sign one....

09/07/2014 by Catherine

Confidentiality Agreements If you have spent any time in the investment or business world then chances are you have come across a Confidentiality Agreement, sometimes also referred to as an NDA or non-disclosure agreement. What is a Confidentiality Agreement? A Confidentiality Agreement is a written contract between two or more parties who are entering into a business relationship where confidential information will be shar...