??Implementation plan for a business. See attached for instructions.?
Implementation Plan: Part 2
In Unit IV, you started to create an implementation plan. You selected a company and analyzed their strategy and mission. In Unit VI, we will continue your work with this company and develop a SWOT analysis.
Remember that a SWOT analysis identifies strengths, weaknesses, opportunities, and threats of an organization. This is an important analysis for any organization as it can be used for strategic planning. Your SWOT analysis must be a minimum of two pages in length. Once you have completed your SWOT analysis, write a minimum of one page, explaining how this information could be used by the company.
Please use the linked template below to complete the SWOT analysis and explanation. The information you need to complete this analysis can be found in the case study attached to this question. You will need to reference your textbook and at least one outside source for this assignment.
Company Name: _____________________________
How the above information will be used:
Dick?s Sporting Goods?2018
Headquartered in Pittsburgh, Pennsylvania, Dick?s Sporting Goods (Dick?s) is a large chain of brick-and-mortar retail stores that offers a wide selection of sporting equipment, footwear, apparel, and accessories such as tennis rackets, weights, outdoor cooking equipment, bicycles, sports clothing and much more. By some accounts, Dick?s is the largest sporting goods store in the United States based on 2017 revenues, larger than Bass Pro Shops, Academy Sports, and Big 5 Sporting Goods. Dick?s also operates Golf Galaxy, Field & Stream, and Dick?s Team Sports HQ. Dick?s Team Sports HQ is targeted at youth sports and provides league management services free of charge including scorekeeping, scheduling, and custom uniform designs.
Competition is intense in the retail business, especially in the brick-and-mortar sporting goods retail business. In 2017, for example, Gander Mountain filed for bankruptcy and closed most of their stores. Dick?s is counting on its 1) updated website, 2) store-in-a-store concept, 3) talented sales people, 4)?in-store demonstrations, and 5) a wide range of products at different price points. However, brick-and-mortar retailers are struggling so Dick?s faces a precarious future and needs a clear strategic plan.
In May 2018, Dick?s Sporting Goods hired three lobbyists to push Congress for gun control measures, irritating many of its gun enthusiasts? customers. Specifically, Dick?s hired two Democrats and one Republican from the Washington-based public affairs firm Glover Park Group, with the only specific lobbying issue listed for their work is ?lobbying related to gun control.?
In 1948, an 18-year-old named Richard ?Dick? Stack was working for an army surplus store in Binghamton, New York, and was assigned to research and develop several tactics for adding fishing and camping product lines to the business. Upon presenting his research and suggestions, the owner rudely called Dick a ?dumb kid,? rejecting his work and ideas.
Distraught, but convinced he was right about the fishing market in Binghamton, Dick consulted with his grandmother. She asked: ?Dick, how much would it cost you to build the store yourself.? Dick responded, ?It will cost me $300.? His grandmother then went to the cookie jar where she kept her life savings and gave Dick $300 and told him ?Do it yourself.? Dick used that money to rent a storefront and purchase inventory for a new bait-and-tackle shop in Binghamton.
Dick was determined to succeed despite the first few years of mediocre sales. By the 1960s however, Dick had two stores and formally named the company Dick?s Sporting Goods. Dick Stack served as CEO of his company until his retirement in 1984, passing the torch to his son Edward (Ed) who is currently the Chairman and CEO of Dick?s Sporting Goods. However, when Ed took the reins from his father, there were still only two Dick?s stores in operation. Young and energetic and having worked his way up the chain since 1977, Ed quickly put the business on an expansion route, opening multiple stores in the early 1990s, and ultimately moving the headquarters to Pittsburgh in 1994.
Dick?s Sporting Goods went public on the New York Stock Exchange on October 15, 2002, under the ticker symbol DKS. As of February 3, 2018, the company operates 716 Dick?s Sporting Goods stores in the United States.
Dick?s has the following mission statement on the corporate website (paraphrased):
We strive to be the #1 sports and fitness specialty omnichannel retailer that serves and inspires athletes and outdoor enthusiasts to achieve their personal best. Basically, Dick?s is on a mission to exceed the expectations of athletes and outdoorsmen around the world by providing quality name brand products, an excellent selection, fair prices, and a knowledgeable and helpful staff of employees.
Dick?s does not have a formal vision statement, but the company strives to serve customers in a manner that they will recognize Dick?s as the number-one sports and fitness retailer that serves a wide array of athletes and outdoor enthusiasts.
Code of Business Ethics
Dick?s Sporting Goods provides separate codes of conduct for associates, vendors, and directors. As CEO Ed Stack mentions in a letter to teammates, he is on a mission to ensure Dick?s plays the game fairly while continuing to offer shareholders value, rewarding loyal customers, and treating associates fairly. Mr. Stack suggests all associates, vendors, and directors read their respective codes and the codes of the others as an athlete would read a playbook or game plan for an athletic event. All team members are expected to prevent unfair play and report any occurrences to their HR representative or anonymously on Dick?s Ethics Hotline. Dick?s ensures protection for whistle blowers promising there will be no retaliation on your employment.
Dick Stack?s (founder) son, Ed Stack has served as chairman and CEO of Dick?s Sporting Goods since 1984, having started with the company full-time in 1977. Based on the executive titles illustrated in Exhibit 1, it appears that Dick?s operates from a divisional-by-product type structure composed of three segments: softlines, hardlines, and team sports. Hardlines are basically anything except footwear and apparel. However, since an official organizational chart is not made public, likely only insiders know exactly who reports to who in the company.
Dick?s operates in a highly competitive market where customers can purchase from traditional retailers or simply purchase from online merchants including Amazon and eBay where virtually anybody can be a merchant and barriers to entry are slim. However, Dick?s has done well with net income up over 12 percent in the year ending February 2018. The company offers a wide selection of brands ranging in prices (according to Dick?s) from good to excellent, providing customers of all income levels and athletic skill levels attractive products. Dick?s is committed to hiring expert personal in the various departments of the store. For example, if you are in the market for a bicycle, Dick?s has bicycle mechanics on staff who often have the same level of knowledge you would find in a bicycle specialty shop.
Want to hit golf balls? No problem?go to Dick?s golf hitting bay and work with coaches to help select the right clubs for you. Want to shoot a bow or test out new running shoes? Simply shoot a few arrows in the archery lane or hop on a treadmill in the store, all supported by knowledgeable employees. This level of service is one way Dick?s competes with online merchants as customers are not as likely to ?showroom? (browse the store then go buy online for a cheaper source) if they received such personal and dedicated attention. It is also a great way to build customer loyalty and attract people into the store.
In 2017, Dick?s transitioned from outsourcing its e-commerce platforms to performing these tasks in-house in what Dicks hopes will provide increased control and allow the firm to target and interact with customers more effectively. Dick?s is aggressively adding Field & Stream stores inside existing Dick?s Sporting Goods stores in hopes of cross selling fishing gear with other sporting goods products. In addition, Dick?s offers Golf Galaxy stores inside select Dick?s stores. Dick?s markets itself as offering multiple specialty shops inside each store; footwear, team sports, outdoor lodge, fitness, and others are all considered specialty stores by some measures. Adding similar store-in-a-store concepts is a viable strategy many firms are starting to employ in hopes of increasing foot traffic.
Dick?s offers many popular brands including Asics, Adidas, Nike, Columbia, Callaway Golf, TaylorMade, Under Armour, and Yeti. Offering famous brands aids in attracting customers into Dick?s stores. Dick?s also offers several private label brands which tend to have higher profit margins than brand names. Several private label brands include Field & Stream, Fitness Gear, Lady Hagen, CALIA of women?s athletic apparel, Top-Flite, Quest, and others. Private label brands account for about 10 percent of company wide sales, but Dick?s is planning to aggressively expand private brands, in particular its CALIA line. Dick?s also has agreements from several brand name firms to be an exclusive provider, including Slazenger, Umbro, Reebok, and others.
Dick?s is somewhat dependent on Nike and Under Armour for its products as the two account for 20 and 12 percent, respectively, of Dick?s sales. No other firm accounts for more than 10 percent out of the remaining 1,400 vendors.
The income statements reveal that Dick?s had a successful year ending in February 3, 2018, with sales up over 8 percent and net income up 12.5 percent. Unlike many firms, Dick?s does not appear to have received a substantial tax break in the latest calendar year stemming from the new corporate tax laws in the United States. Being 100 percent U.S.-based, the new tax laws should benefit Dick?s significantly as all their revenue is from the United States.
The balance sheets reveal that Dick?s remains in the midst of a stock buyback program that is expected to last until at least 2020. The firm?s stock price declined over 50 percent from late 2016 to late 2017 so purchasing stock at low prices and betting on yourself may be a positive move for Dick?s if the firm is able to regain its equity price footing. Signs are positive based on the company?s revenue and net income increases, but most brick-and-mortar retailers are having difficulty competing with Amazon and other online competitors.
Dick?s revenues by product type. Hardlines comprise 45 percent of revenues. Hardlines include fishing rods, basketballs, cookware, bicycles, and any other products that is not considered apparel or footwear. Despite hardlines accounting for a larger portion of revenue, softlines (footwear and apparel) account for a combined 55 percent of revenue. This comes as little surprise if you recall that Nike and Under Armour account for 32 percent of Dick?s sales and both predominantly supply Dick?s with softgoods.
Exhibit 5 reveals Dick?s store locations by region. Both Dick?s Sporting Goods and Specialty Concept Stores are included in Exhibit 5. Specialty Concept Stores account for 15 percent of stores and include Golf Galaxy and Field & Stream with some free-standing and some combined with Dick?s Sporting Goods stores. Dick?s added a net of 55 stores in fiscal 2016. Dick?s home market of the Northeast trails the Southeast in total number of stores by a wide margin.
Exhibit 5 Dicks Store Locations by Region
In the world of sports retailing, Dick?s Sporting Goods, Academy Sports + Outdoors, Bass Pro Shops, Big 5 Sporting Goods, and Hibbett Sports, are five of the more recognizable names. Dick?s is leader of the group in terms of market capitalization $3.6 billion and sales about $8.6 billion annually, while Academy Sports + Outdoors, Bass Pro Shops, Big 5 Sporting Group, and Hibbett rank second, third, fourth, and fifth respectively in sales. Bass Pro Shops and Academy Sports are privately held firms.
Dick?s is the largest specialty sporting goods company in the U.S. with an impressive market share of 17 percent in 2017. Dick?s market share includes sales from Golf Galaxy and Field & Stream. Academy Sports + Outdoors is similar to Dick?s but includes significantly more fishing and hunting aspects. Bass Pro Shops is also mostly fishing and hunting in nature.
Academy Sports + Outdoors
Headquartered in Katy, Texas, Academy Sports + Outdoors is a privately held company owned by KKR & Company. Founded in 1938, Academy is a sport, outdoor, and lifestyle retailer with a broad assortment of high-quality hunting, fishing, and camping equipment and gear along with sports and leisure products, footwear, apparel, and much more. Academy operates more than 200 stores throughout Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, Missouri, Oklahoma, South Carolina, Tennessee, and Texas. Academy revenues have been flat for the last 3 years but are up 60 percent from 2012 to 2017.
Bass Pro Shops (BPS Direct, LLC)
Headquartered in Springfield, Missouri, BPS Direct, LLC is a privately held brick-and-mortar retailer of hunting, fishing, camping, and related outdoor merchandise. BPS Direct owns Cabela?s, White River Marine Group, and Tracker Marine Group. Founded in 1972, Bass Pro Shops recently opened up its new Angler?s Inn in Springfield, Missouri. BPS Direct is similar to Dick?s except BPS offers a full line of boats and boat motors.
Big 5 Sporting Goods (BGFV)
Headquartered in El Segundo, California, and founded in 1955, Big 5 Sporting Goods operates about 425 stores in the western United States only. The company has an e-commerce platform at the www.big5sportinggoods.com website. Big 5?s product mix is almost exactly like Dick?s, including athletic shoes, apparel and accessories, a range of outdoor and athletic equipment for team sports, fitness, camping, hunting, tennis, golf, winter and summer recreation, and roller sports.
Like Dick?s, Big 5 stores carry products from brand name manufacturers, such as Adidas, Coleman, Columbia, Everlast, New Balance, Nike, Rawlings, Skechers, Spalding, Under Armour, and Wilson. Additionally, Big 5 offers private label items including shoes, apparel, camping equipment, fishing supplies, and winter sports equipment. Big 5 sells private label merchandise under its own trademarks (Golden Bear, Harsh, Pacifica, and Rugged Exposure) and offers licensed trademarks brands (Beach Feet, Bearpaw, Body Glove, Morrow, and The Realm).
Hibbett Sports, Inc. (HIBB)
Headquartered in Birmingham, Alabama, Hibbett Sports is engaged in operating athletic specialty stores in small- and mid-sized markets primarily in the South, Southwest, Mid-Atlantic, and the Midwest U.S. Founded in 1945 and very similar to Dick?s except considerably smaller, Hibbett provides sportswear apparel, footwear, equipment, and accessories. Hibbett?s Sports Additions stores provides fashion-based merchandise assortment of athletic footwear, caps, and apparel. The Hibbett Team Sales, Inc. is a supplier of customized athletic apparel, equipment, and footwear primarily to school athletic programs. As of Fall 2018, Hibbett operates about 1,000 stores consisting of about 990 Hibbett Sports stores and 10 smaller-format Sports Additions athletic shoe stores in 35 states.
Sporting goods stores have outperformed many other retail stores in recent years as there is a growing number of health-conscious people. Participation in sports and exercise activities has slowly risen over the last 5 years and is expected to rise about 2 percent annually through 2023. A key group for the industry is children and young adults under 21 years of age. This group has experienced robust demand, likely creating a strong market of customers well into the future. In fact, about 50 percent of the market is customers 45 and under in age. However, even older people are significantly more active than their predecessors in years past.
Consolidation through acquisitions or bankruptcies within the industry has helped firms, like Dick?s, by eliminating competition. A reduction in the number of wholesalers who used to supply firms like Dick?s with many of their products are fewer in number, now allowing all firms in the industry to cut out this middleman and do business directly with the manufacturers. Overall, the industry is valued at over $50 billion annually.
The United States has a whopping 40,000 sporting goods businesses, including Dick?s and Bass Pro Shops, but also thousands of mom-and-pop bait and tackle stores located on small creeks, rivers, lakes, and coastal areas across the United States. The Internet is also a major player now, as many people purchase sporting goods and fishing equipment directly from China on eBay and other websites, often at bottom line prices.
The main drivers of revenue in the industry are not footwear or athletic apparel but rather sporting equipment such as exercise stuff, golf, team sport items such as football and baseball gear, hunting, fishing, and camping gear. In total, about 64 percent of industry revenues are derived from sporting equipment, while 17 percent is derived from athletic apparel. and 12 percent from athletic footwear. The remaining revenues are derived from various items including furniture and other items not directly used in sports or physical activity.
Dick?s mission statement mentions its omnichannel strategy discussed. The term is simply a fancy way of stating the company sells its products through its website and through brick-and-mortar stores and has exposure to social media. Omnichannel strategies require that firms ensure they have excellent inventory tracking systems in place, ensure products are well described online rather than simply having a picture, use advanced data analytics to predict customer habits and desires, and finally ensure an efficient supply chain.
Online sporting goods sales are increasing rapidly, up 15 percent in 2017 by some accounts to over $400 billion in the U.S. alone. A recent study reported that 33 percent of men and 25?percent of women indicated they are considering purchasing their sporting goods and apparel exclusively online. In total, online purchases of sporting related goods is expected to increase 7?percent per year through 2021. Customers are increasingly using the internet to research products as well, not always purchasing online.
Dick?s partly relies on customers researching products on their website then coming into their stores to talk to sales staff and hopefully purchase the item. Firms like Amazon, who are still predominantly online, have the distinct advantage over firms with brick-and-mortar locations in being able to operate at higher margins and charge lower prices. Retail stores such as Dick?s, though, have the buffer in that many of their products customers want to try on before they buy including shoes, apparel, baseball gloves, bats, golf clubs, and even test out exercise equipment and bicycles, so maintaining an omnichannel strategy is vital for such retailers.
Shift to Markets Outside the United States
Although Dick?s is located 100 percent within the United States, many retailers are pushing their products and markets overseas as a growing middle class is developing in many emerging markets. Amazon for example earns over one-third of its revenues from outside the United States, and even legacy firms such as Staples, earn about 20 percent of its revenues from outside the U.S. However, despite robust sales from overseas markets, profit margins are generally significantly higher in the United States, and many firms struggle to turn a profit in their overseas operations.
Inventory Management Strategies
As discussed, is the need to operate under an omnichannel strategy, inventory management is a key element to being successful in retail. Why do people enter a Dick?s Sporting Goods store, a Bass Pro Shops, or an antique shop? Why not simply buy online? The answer is rather simple people simply enjoy seeing, holding, sitting in, and playing with the inventory. Some analysts even consider displaying the appropriate inventory at the right time is the Holy Grail for any?retail business?more important than buildings, equipment, and even location. Being able to lure customers into the store to see new, exciting inventory first-hand is becoming increasingly important to compete with the Amazons and eBays of the world, where customers simply purchase with the click of a button or a tap on their smart phone screen.
To ensure the proper inventory is available, many firms are adopting so called quick response (QR) systems that order a replacement item as soon as one is purchased. Stores like Dick?s must be cognizant, however, of the risk of simply becoming a showroom for inventory with customers leaving to purchase the very products they played with online at a cheaper price. Having the correct inventory may be the most important factor for attracting customers into your store, but how do you increase the odds for a sale? See the next section.
Store-in-a-Store and Employees? Strategies
A way to increase the odds of customers actually making a purchase while in the store is through having a highly trained staff. Staffing the store with knowledgeable personnel is a key element to closing a sale. Dick?s, for example, has extremely knowledgeable employees working throughout the store. Similarly, ULTA, formally known as ULTA Beauty, also has knowledgeable personnel selling its products and even has a beauty parlor store-in-a-store concept which forces customers coming to have their hair done to walk through the store. Bass Pro Shops employees, in fishing, hunting, or hiking sections, for example, can talk educationally about the products. In essence, some retail stores are not even selling inventory, rather selling information?as opposed to Walmart who simply competes on bottom of the line price. There are not many Walmart?s in the country where you can receive detailed fishing tips and information from the personnel working sporting goods or what type of wax is best for your vehicle from the people working in the automobile section. Walmart is not in the information business; they compete on cost.
Customer Loyalty Strategies
Much of the above discussion is around building customer loyalty, but a few additional considerations are included in this section. Unlike a giant department store that sells everything under the sun, specialty retailers have a narrower range of customers. In many ways, they operate under what Porter would call a focused strategy. As a result, specialty retailers must keep their core customers happy and returning because this core group is predominantly the only customers the firm has, as opposed to Walmart, who has many customers buying anything from food to socks?the penalty on faltering on one product category is not as severe. Tactics used to foster customer loyalty include increased marketing, reward cards, private label credit cards, and creating your own private label brands, which often are sold at higher margins for the firm and cheaper prices for the customer. Another advantage of private label brands is customers are not able to compare prices as easily because the store is the only source for that particular product. Dick?s peer and foe, Bass Pro Shops, has done a phenomenal job with its Johnny Morris (the?firm?s founder) brand of fishing rods and reels and other items using Morris? namesake. The only place to purchase is at Bass Pro shops, not Amazon, not eBay, only Bass Pro. To the degree a firm can market effectively and hire the proper personnel to endorse store branded items combined with possibly offering double rewards when purchasing store branded items, significant brand loyalty can be built.
The United States has an extremely high rate of diabetes and hypertension, and by some estimates, the highest rate of obesity among developed countries?34 percent of men and 37?percent of women classified as obese. The U.S. government has introduced several programs aimed at increasing physical activity of its citizens and even promoted them through key figures, including former first lady Michelle Obama. Nike, and other firms, are also encouraging and marketing in a manner to get people more active.
With a growing health-minded segment of the population, increased pressure is being placed on others to conform, which should bode well for Dick?s Sporting Goods. However, smartphones and laptop video games and the like have overall curtailed the prevalence of outdoor activities. Too many young people are hooked on online games and social media communications?to the detriment of firms like Dick?s that want to get you out in the field, in the woods, on the court, or on the water.
Dick?s needs a clear strategic plan going forward to obtain and nurture a loyal customer base.