Mike Ashley is winning the race to the bottom including reputation, offer, range, retail experience all the way through to the human rights of his own employees.
After a year of drama and forced press appearances – ironic for the usually media-shy business tycoon – Sports Direct has just posted a set of lacklustre annual results: while Sports Retail revenue increased by 0.6 per cent, underlying pre-tax profit decreased by 8.4 per cent to £257.2m for the 12-month period, which was, in the retailer’s own words, “disappointing”.
You might think I’m being a little heavy-handed in my analysis of Ashley, but I have my reasons.
Sports Direct’s pile ‘em high, sell ‘em cheap mentality is jaded. Competing in the low-end category doesn’t have to mean rubbish product and even less inspiring stores. Sports Direct’s stores and products are – quite simply – substandard and shoppers and the results are proof of this.
We can’t hide from the fact that the high street continues to have problems with footfall, which is why it’s down to stores like Sports Direct with a value proposition to provide a reason for shoppers to head in-store.
We previously surveyed shoppers on what they thought of sale activity; almost a third (28 per cent) said they don’t trust shops that have lots of sales, and 35 per cent said they think shops only put things on sale that they can’t normally sell. Sports Direct looks like it’s on sale 365 days of the year and shoppers, no matter how naive he thinks they are, are voting with their feet.
Cheap doesn’t have to mean naff. Sports Direct could learn a lot from looking at value retailers in other sectors such as Wilko and Aldi and Lidl. Granted, these retailers have a completely different product offering, but Wilko in particular has invested in a look and feel that, while basic, is crisp and clean.
Sports Direct has under-invested in both its offering to customers and its employees. Shadow leader of the House of Commons, Chris Bryant, got it spot on when he said Sports Direct was a “truly hideous company”. The points around the treatment of staff and the poor state of things at the Shirebrook warehouse simply take it to another level of horror. But what’s evident is that Ashley is out of touch with the needs of customers and staff or that he simply doesn’t care.
Mike Ashley needs to take a long hard look at those balance sheets and invest some of the profit into restoring faith in his hardworking employees and dreary shopping experience.
Nick Gray is managing director at Live & Breathe