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As we end our biggest ever summer of sport from the Euros to Wimbledon, the Tour de France, the Open, Murray winning the US Open and not to mention that event in Stratford that captured the hearts and minds of the nation - we now see JJB Sports (one of the biggest sports retail brands) calling in the administrators. A white flag raised despite successive management regimes with heavyweight retail experience, injections of cash from investors and a supportive supplier base.
Many questions arise as a result. How has the brand lost its relevance on the high street and how could this happen given the size of the sportswear market in the UK? JJB sports was a business worth more than £500m two years ago!
JJB's problems are a result of their own strategy and this has firmly positioned them in the middle of the market. Not a discounter, but not a specialist. In the end, the middle of the market led to no man's land. The company could no longer afford to service its debts. Too many underperforming stores, trapped with a legacy of expensive leases negotiated when times were good.
Basically fewer shoppers have been walking through JJB’s doors and those who have, haven’t been spending enough. Why? Well essentially JJB got caught in the middle between the relentlessly price focused Sports Direct and the upmarket sports-fashion focused JD Sports.
It’s not a new issue and we’ve seen it happen in other categories since the financial crisis hit. Consumers who are still spending are going one of two ways; they either focus completely on value or head for the premium, more expensive end of the market. In the car market it’s hit the previous volume powerhouses of Ford and Vauxhall, who are now struggling between the newer, cheaper brands from the Far East and the premium brands of Mercedes, BMW and Audi.
So, why are consumers looking at opposite ends of the spectrum? In our opinion they’re looking for that stalwart of marketing speak – differentiation.
Both Sports Direct and JD Sports give consumers a clear reason to visit their store or website and offer them choice at each end of the spectrum. Sports Direct has clearly claimed the value territory in the category and achieved recognition for this. In addition, Mike Ashley's acquisition of brands such as Dunlop and Lonsdale provides consumer choice versus the power brands of Adidas and Nike. JJB never succeeded in developing credible own brand alternatives.
JD Sports on the other hand embraced the fusion of sport and fashion typified by Adidas Originals, and differentiated itself on this basis. It knows its consumer inside out. It also offers enhanced product choice and provides a strong service/advice proposition – a weak spot where JJB were concerned.
Sports Direct meanwhile waits in the wings to scoop up the best performing stores – the OFT's reaction will be interesting. It is also worth noting the reaction of established sports brands like Adidas and Nike - JJB is an important channel for them and without it they will need to seek alternative channels of distribution.
Brands are increasingly finding that it’s easy to get caught in the middle - JJB's mistake was that it had nothing compelling to say or offer consumers.
Chris Bennett is head of sport at Savvy Marketing
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