Dick's New Strategy Starts With Trail Runners and Triathletes

(Bloomberg) -- Last month, the biggest sporting-goods retailer in the U.S. put apparel companies on notice: Dick’s Sporting Goods Inc. said it plans to cut the outside brands it carries by 20 percent and instead focus on making, selling and branding its own gear.

First up: Second Skin, a new line of high-performance gear designed for obsessive and spendy endurance athletes. “With the emergence of cross-training, obstacle-course racing, spin, running and triathlon, our customers are telling us there’s an opportunity to create a brand built specifically for the unique needs of those activities,” said Ryan Eckel, vice president of brand at Dick’s.

At $40 to $70, Dick’s line of compression tops and bottoms are meant to offer a lower-priced option to a growing and underserved group of consumers. While still niche, obstacle racing -- events like Tough Mudder and Spartan Race -- is the fastest-growing individual sport in the U.S., followed by triathlon and trail running, according to the Sports & Fitness Industry Association.

Those activities, plus high-intensity workouts like spinning and CrossFit, tend to generate strong commitments and consistent spending. They’re also expensive. "Athletes don’t really dabble in these activities," said SFIA Chief Executive Officer Tom Cove. "It is exactly these kind of ‘all in’ athletes that are most likely to spend increasing amounts of money to support that athletic pursuit."

The launch comes one month after Dick’s Chairman Edward Stack announced the shift to lean more heavily on private brands, like its Calia women’s wear and Field & Stream hunting apparel. The profit margins on its own lines are 6 to 8 percentage points higher than comparable vendor sales, Stack said.

Dick’s, which had $7.9 billion in sales last year, expects to bring in $1 billion from its private brands in 2017. Calia, a two-year-old collaboration with country singer Carrie Underwood, has become the company’s third-largest women’s brand.

It is a turbulent time for the retail industry, especially sporting goods. Several competitors of Dick’s filed for bankruptcy over the past year or so, a short-term advantage and a reminder of the longer-term pressures on the industry.

Those challenges include direct competition from brands themselves. As Dick’s cuts out vendors, suppliers including Nike Inc., Adidas AG and Under Armour Inc. are expanding their own retail operations. In Nike’s last fiscal year, revenue from its own stores and websites hit $7.9 billion, up 25 percent from the year previous and nearly double what it was three years ago.

To promote Second Skin, Dick’s is working with a number of celebrity athletes, including Christmas Abbott, a CrossFit Games competitor, and U.S. distance runner Ryan Hall, an Olympian in 2008 and 2012. Second Skin will initially be available online only, before being sold in stores nationwide later this year.