NEW YORK -- Who ever said perseverance does not pay off?
After six long years of being pursued, the Greek goddess of victory has finally said 'I do' to The Sports Authority, a Ft. Lauderdale, Fla.-based operator of 81 superstores.
Starting this September, Nike Inc. begins shipping its product to the sporting-goods megaretailer, which has an additional 19 units on the drawing board for this year. And while the Beaverton, Ore.-based company will not yet specify what product classifications or price points will appear on the retailer's shelves, most merchants said they expect or, more appropriately, hope their chief resource will only sell a limited selection -- no visible Air and no high-end, performance shoes.
Indeed, specifics of Nike's reversal of its distribution policy regarding Sports Authority, a subsidiary of Kmart Corp., remain vague to many independent athletic specialty shoe retailers and medium-sized regional chains who have not yet heard even an official 'yea' or 'nay' from the Northwest about the existence of such a deal.
A Nike spokesman said Gary De Stefano, vice president of sales at the company, has personally contacted large athletic specialty stores and sporting-goods retailers to inform them of Nike's recent decision. According to Nike, sales representatives have also been 'encouraged' to spread the word to smaller accounts.
Industry sources and analysts largely agreed simple arithmetic reveals the key catalyst behind the firm's about-face. Nike was missing out on big business -- maybe as much as $40 million, according to Alice Ruth, an analyst at Montgomery Securities, San Francisco. Nike officials could not be reached for comment on this speculation.
'For the last couple of years, I've been surprised (Nike) hasn't sold (Sports Authority,') added Ruth. 'That's where the distribution of athletic footwear is going, so that's where they should be.'
A Nike spokesman singled out Sports Authority's successful cleated and organized-teamsports business the retailer's main draw, noting it offered Nike 'great national opportunity.'
Most retailers contacted by FN said they considered Nike's decision to sell Sports Authority a disappointment rather than a surprise. Many forecasted the development will most severely affect small, independent retailers as well as tertiary athletic-footwear vendors who have been capitalizing on Nike's conspicuous absence from Sports Authority's merchandise mix.
'(Nike) is going to alienate existing dealers,' warned a buyer for a major West Coast chain of athletic specialty stores. In fact, some smaller retailer said they believe Nike now has a 'responsibility' to segment its distribution to protect longtime accounts. Mike Shea, an analyst at Charter Investment Group, Portland, Ore., acknowledged Nike will be 'walking a narrower tightrope with retailers.'
Sports Authority may also have to confront disgruntled accounts. When informed Nike confirmed reports it would start shipping the megastore this fall and asked how this will affect the store's other footwear brands, Jack Smith ceo at Sports Authority, said: 'If Nike sells us, we would increase the size of shoe departments, maybe by consolidating adjacent golf and tennis categories.' Smith said he would reserve further comment until after 'the orange boxes arrive on the store's shelves.'
Executives at Modell's, Herman's and Oshman's dismissed speculation that the addition of Nike to Sports Authority's product offering would gnaw at their business, claiming superior customer service and a more convenient store layout.
'Manufacturers have more to lose (than retailers). Reebok has a lot to lose,' asserted Mitchell Modell, president of Modell's Sporting Goods, New York.
Yet Dick Franklin, senior vice president and general manager at Reebok International Ltd., Stoughton, Mass., said he expects his company's brand to maintain its shelf space and its number-one position in the store's shoe department. 'We're kind of positive about it -- as crazy as that sounds. Nike will bring in more traffic, and that's good for us.'
