Marketing 18th Edition by William Pride,Ferrell

Exercise 2

Dick's Sporting Goods Scores with Stores within Stores
Dick's Sporting Goods is scoring big points with customers by setting up stores within stores that each feature an extensive selection of goods from a particular brand. The Pennsylvania-based retailer was founded in 1948 as a bait and tackle shop. Today, the founder's son is CEO, heading up a management team responsible for 558 large-scale Dick's Sporting Goods stores selling sports equipment, clothing, and shoes for team and individual use. Despite competition from other sporting-goods retailers, including Bass Pro Shops and REI, Dick's continues to grow beyond $6 billion in annual sales by putting brand-name merchandise at the core of its strategy for in-store, online, and mobile retailing.
For example, inside some of the larger Dick's stores is a special shop where only Nike-brand products are displayed. Part of the Nike inventory is exclusive to Dick's, which adds to the attraction for customers who prefer that brand. Selected Dick's stores contain a dedicated Under Armour shop or a dedicated North Face shop, again featuring a mix of merchandise available nationwide and some items available only at Dick's. These stores-within-a store not only differentiate Dick's from its rivals, but they also generate higher sales and profits per square foot than other areas of the store.
Not long ago, the retailer teamed up with the National Hockey League to test the sale of league- and team-branded merchandise at Dick's. The NHL operates three flagship specialty stores, and each of the 30 professional hockey teams also sells its own branded merchandise. However, the NHL decided it needed an experienced retail partner with a national presence to expand the NHL shop concept and reach more hockey fans. Now Dick's is working with the NHL to test dedicated shops within three Dick's stores. Averaging 400 square feet, each NHL store-within-a-store offers team merchandise geared to the interests and wallets of a wider range of fans. If the dedicated NHL shops do well, Dick's will open dozens more in the coming years.
Dick's also operates 82 Golf Galaxy specialty stores, catering to golf enthusiasts who appreciate the vast selection of golf-related merchandise, including clothing, shoes, and new or used equipment. Customers can take lessons from golf professionals, test clubs in an indoor driving area and a putting green, and use the interactive golf-course simulator to "play" at some of the world's best-known courses. The full-service retailer offers trade-ins, custom fitting, equipment repair, teetime reservations, and travel arrangements for golf vacations.
In addition, Dick's is opening a series of smaller specialty stores with narrow but deep assortments for specific target markets. For instance, it operates three True Runner specialty stores stocked with footwear, apparel, and accessories for serious runners. These stores use special technology to analyze each runner's arch and gait so salespeople can make personalized suggestions for appropriate shoes. To encourage runners to drop by, True Runner stores serve as a community hub for running information and provide lockers where customers can leave their belongings while running in the area.
Dick's recently acquired the Field Stream brand, which has been in existence for more than 140 years. Now the company has begun opening specialty stores under that name to sell equipment and accessories for fishing, camping, and hunting. By 2017, the company expects to have at least 55 Field Stream specialty stores, coast to coast. Field Stream stores, like True Runner stores, are smaller than Dick's Sporting Goods and-like all of Dick's stores-are staffed by employees who are knowledgeable and can help customers make informed choices.
Recognizing the potential of e-commerce and growing customer interest in mobile access to retail sites, Dick's has upgraded its website retailing technology and streamlined the process of browsing and buying via smartphone. The idea is to give customer more buying options and achieve the retailer's goal of ringing up $1 billion in online sales by 2017. Nonetheless, store retailing remains the firm's main focus, because most customers like to see sports equipment in person, seek expert advice, and try products before making a purchase. With that in mind, Dick's has invested in a fourth distribution center to be able to receive, sort, and ship merchandise for up to 750 stores. Looking even further ahead, the retailer's research indicates sufficient long-term demand and profit potential for more than 1,000 Dick's Sporting Goods stores nationwide.
Questions for Discussion
What effect do you think the opening of NHL storeswithin- stores will have on the retail positioning of Dick's Sporting Goods?