Does JJB Sports have a future?
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Last week’s news that Dick’s Sporting Goods, the US sports chain, has written off the £20m investment it made in JJB Sports just four months ago is the latest in a line of challenges for the beleaguered retailer.
It’s hard to believe now that JJB was once the dominant force in UK sports retailing, still profitable and with over 400 stores as recently as four years ago. Today, two CVAs later, it has fewer than 200 shops.
JJB’s decline, however, began in the early 2000s, at around the time of its short-lived purchase of TJ Hughes: a transaction that always seemed an odd fit for the group, failed to deliver much in the way of synergies, and meant that management took their eyes off the core business.
Meanwhile, the rise from nowhere of a strong and aggressive competitor in Sports Direct, and further upheavals for JJB – including the departure of its founder, Dave Whelan, in 2007, and an ill-fated foray into footwear retailing with the purchase of The Original Shoe Company and Qube – has left the company looking increasingly fragile.
At the same time as JJB has been closing stores, getting through one chief executive after another, and being generally distracted by its struggle to survive, its big competitors – namely Sports Direct and JD – have continued to thrive, generally having more success with their own diversifications (such as Sports Direct’s Field & Trek and USC, and JD’s Bank), and growing their market share. All this has left JJB searching for a new and distinctive role.
That’s why Dick’s Sporting Goods’ investment in April was important not just in keeping JJB afloat, but also in giving the business a sense of direction. As I told the Bdaily last week, Dick’s has real credibility as a sports equipment retailer in the US, and JJB has been trying to adopt a similar market positioning, aiming to build a point of difference between it and its more fashion-focused rivals.
I suspect that’s still the right way forward, and there’s no reason why a proper sports equipment specialist cannot thrive on the high street if it gets its proposition right, provides superb service and knowledge, and is alert to opportunities for multichannel selling.
While stores transformed along those lines have gained plaudits, the scale of the task still facing JJB – in turning around unmodernised stores, stemming declining sales and rebuilding its battered brand – is huge, and the continued support of key suppliers, and customers, will be crucial.
This latest development by Dick’s will continue to raise questions, however, over whether JJB can stick around for long enough to implement all the necessary changes.
My retail consultancy business, CannyInsights.com, provides bespoke place- and sector-specific market intelligence, including coverage of sports retailing. It also works with retailers nationwide to improve their stores, customer communications and market knowledge. For more information, visit www.cannyinsights.com, drop me an email, or give me a call on (0191) 461 0361.