Industry: Analysis
Merchandise: ‘A no-brainer’
The market for sports merchandise extends beyond avid supporters, giving retailers the opportunity to rack up healthy sales through ‘franchise fans’, so the supply chain delivering everything from nodding dogs to garden gnomes tells David Pittman.
T
he market for sports merchandise is a bustling one, at least if the companies SGB Sports spoke to are anything to
go by.
Take Homewin for instance, the self-proclaimed home of football merchandise, where managing director Paul Hodgson says 6.3 million units were sold in 2010. “In a country of 63 million people, that means a big percentage of people bought something that can be tracked back to us last year. “There is ever-growing demand for football- related products as people want them as gifts and spontaneous purchases.”
Harry Rai, managing director of football merchandise distributor Spot On Gifts, says this is as the UK is a football-mad nation, with the sport having year-round appeal. Spot On Gifts carries products from some 25 clubs covering the Premier League, Scottish Premier League and top European leagues, such as AC Milan and Juventus from Italy and Barcelona from Spain. It holds stock of some 3,500 products, with shipments made across the UK, as well as to European markets like Sweden and France.
“We are lucky to operate in this country and to support the Premier League as the popularity of football in the UK means the branding and marketing is done for us,” Rai says. “Football teams are global brands and the UK is football mad. “This makes the decision by sports retailers to stock football merchandise a no-brainer for me. It’s still a largely untapped market for them, but there is massive potential for strong sales.” Rai says Spot On Gifts offers a low minimum order value, while products can be bought as single items meaning there is no requirement for sports retailers to buy stock in bulk. Moreover, he says 90 per cent of the items it stocks come with a retail price of under £10 and offer 50 per cent margins. “Selling big brands at a low price is a big benefit.” Hodgson says novelty items, like nodding dogs and garden gnomes, offer even better margins as there is no history behind them so no-one is completely sure what the RRP should be. This creates a window of opportunity for retailers to
6
www.sgb-sports.com
achieve a strong margin from them and capitalise on market demand for themed products. Novelty items are a big focus for Homewin, with new lines being developed by its in-house research and development team, as is growing beyond football through sports such as golf and rugby union, as well as American football.
Both Hodgson and Rai note that American sports are proving to be increasingly popular with UK consumers. “TV coverage is helping to increase interest in football in the US, and likewise American sports in the UK,” says Rai. Hodgson says: “NFL was a phenomenon in the 1990s and is coming back, which provides retailers with a tremendous opportunity.”
But for all involved in the merchandise market there remains the question of making retailers see the value in stocking these products, particularly official licensed merchandise.
Tom Roe, commercial manager at sports licensing firm CPLG, says: “Being a supplier of official merchandise has a knock-on effect as it looks like you’re being endorsed and endorsing the clubs and teams, even if there’s no official agreement in place.
“And independents can push the coup of having official merchandise much better than multiples, which resonates well with their customers.” Andy Ward, head of retail at the Rugby Football Union, says retailers will also benefit from the fact that consumers are increasingly looking to buy quality items, especially when it comes to gift and spontaneous purchases.
This is particularly true for what CPLG calls ‘franchise fans’; family members and friends looking to purchase official products without travelling to the actual club shop.
Gary Jacobson, fellow commercial manager at CPLG, says: “This is a big area that multiples have cottoned onto and are working to supply.” As well as sports retailers such as Sports Direct and JD Sports, greeting cards retailer Clintons has started to move into the merchandise arena more and more, highlighting its value in conjunction with core lines according to the supply chain.
Hodgson says: “There’s a perception that multiples own the market for merchandise, which isn’t true. They just know the value of multiple sales and work to make sure revenues grow accordingly.”
Roe says there is even a movement amongst some quarters, particularly national teams and associations, to prefer independents in a bid to support local retailers, halt the growth of homogenised shopping environments and generate interest and revenue at a grassroots level. Rai adds that multiples, while stocking big names, will only have a limited range available, meaning independents can stamp their authority by offering a selection of products. Neither he nor Hodgson advocate merchandise becoming an independent sports retailer’s main focus though, instead saying it is a valuable commodity that the market is missing out on.
Rai says: “Independents can supply and react to the needs and wants of their market, while the clubs and teams have made access to official products much easier as they realise the downstream value of retailers.”
“Independent retailers should be doing more in this space,” says Hodgson. “They know their market and their customers so should be able to minimise their exposure to risk. And offering these kinds of product will help them keep their shops fresh and exciting.
“We are happy to work with the sports trade, right down to developing bespoke lines for the market to help it differentiate itself from others on the high street. But retailers need to act on the demand soon or risk losing the market to other retailers and multiples, and they’ll never get it back.”
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36