industrypaulsherratt However the secondary or more


‘specialist’ brands are slower to address the issue. There is undoubtedly an


underlying concern from these brands that by selling direct, they will undermine their existing distribution channels and retail partners and subsequently risk losing that business. The decision is dependent on a


number of factors relating directly to the brand such as the strength of the brand in their relevant sport/niche and the brand positioning; whether the approach is via retail and/or ecommerce, and whether the approach is for long term commercial gain or a short term sales and marketing strategy such as a pop-up shop. We are already very familiar with


the approach that many have taken in recent years within the outlet centres where the channel provides additional brand exposure but allows protection of clearance/closeout activity and for the company to still satisfy margin requirements by selling direct.


This is a relatively ‘clean’ approach


as oſten the products have been previously offered to retail partners before they end up in the outlet store. Another interesting development is opening stores close to or within sporting events to further enhance the brand’s links with that sport. Flagship stores have in many cases also been around for a period of time and allow the brands to maximise their marketing messages alongside the retail upside. This strategy is oſten the precursor to a more aggressive store opening plan. Nike’s global strategy, for example, outlined in 2010 at the company’s investor meeting held in New York, detailed plans to open approximately 250-300 new Nike-branded stores (mix of branded stores and factory outlet stores) worldwide over the next five years. Another interesting factor in the


evolution of brands selling direct is the growth of the Chinese market place and the Chinese brands. The ‘Western World’ approach has historically been built on a wholesale basis with only in recent times the retail element becoming more relevant. The Chinese brand model however has been historically built on the reverse. The result is the evolution of brands with over 4000 stores either directly owned or franchised which has created a critical mass allowing them to expand into the global sporting goods market.


THE DRIVING FORCES


FOR CHANGE Whatever the approach, there are some key fundamentals that are driving these changes and key factors that need to be addressed if you are a sports brand looking to roll out a ‘direct sell’ strategy:


Margin – Direct selling allows the brand to realise manufacturer to retailer margin.


Build brand equity –The brand can broadcast the key marketing messages without fear of dilution or competitor intrusion.


Showcase the entire product range - Inevitably retailers cannot carry the entire brand product range. A branded store selling direct can.


Retail pressure -As retailers further drive their own brand strategy, brands must react by driving their own retail strategy.


The growth of ecommerce – Ecommerce allows the brand to have a global platform combining the latest key marketing messages with the opportunity to purchase the latest products and perhaps alternative, exclusive products.


The challenging economic climate - With some aspects of the global sporting goods market suffering, brands are looking to mitigate their risk and be less beholden to retail partners who are looking to further dictate terms and erode brand equity and prices.


The need to get closer to the end user – The closer the brand is to the end user the more the consumer feels engaged with the brand and the easier it is to communicate in both directions.


The Conclusion The developments we are seeing in the marketplace look set to be with us for a while and any brand must consider the implications of these changes. Our leading retailers look set to continue to grow and brands must review where they currently sit, and where they are likely to sit in the future marketplace and review their direct sell strategy accordingly. There is no ‘one size fits all’ strategy.


However many believe that, in future, brands with a 100% wholesale strategy may become vulnerable -so perhaps it is time that those brands do indeed become retailers.


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