Game on for sports retailers as Ashley arrives in town

Caveat: Megastore is more than an acre of fresh competition

Sports Direct now occupies the former Boyers building on Talbot Street, Dublin. Photograph: Aidan Crawley

Sports Direct now occupies the former Boyers building on Talbot Street, Dublin. Photograph: Aidan Crawley

 

UK billionaire Mike Ashley’s cavernous new SportsDirect.com megastore in Dublin is open barely a week and already its indigenous competitors must be feeling the heat. The new store, in the building that once housed Boyers department store, is a monster addition to the sports retailing scene in Dublin city. A planning document reveals its floorspace is more than 4,400sq m. That is more than an acre of fresh competition for Lifestyle Sports and Elverys, with more stores to come.

Premier League football jerseys are a staple of Irish and British sports outlets. On Wednesday Ashley’s store was selling the new Manchester United 17/18 season black away kit for €70 in adult size. The design was launched by Paul Pogba. Teenage fans up and down the land will plague their parents to buy it.

A five-minute stroll from Sports Direct, at the Lifestyle Sports store on Mary Street, the new United kit was also for sale. It was originally priced at €80 in Lifestyle. On Wednesday the price had been manually marked down to €69. Elverys has also reduced the price from €80 to €69 on its website.

It is unusual for Irish sports retailers to contemplate discounting a Premier League jersey before the new season has even begun. Sports Direct’s lower pricing has clearly brought some pressure to bear.

The United jersey is a neat microcosm of the competitive challenge facing Lifestyle and Elverys. Sports Direct, in thrusting, competitive mode, drives down prices through rigid cost control, although it is often criticised for how it treats its workers.

Lower prices mean lower margins for existing operators. While it drives down their margins, Sports Direct also eats up its competitors’ revenues in surrounding areas. Ashley likes to take aim at both the top and bottom lines of the competition in a perfect pricing pincer.

Sports Direct has promised that 2017 will be a year of “expansion” in Ireland. The new Dublin site – one of the highest profile retail locations in the State – is Ashley’s beachhead.

There are already small Sports Direct counters inside some Heatons department stores, which Ashley also controls. But he will never get a better launchpad than the Boyers building to embark on the full-scale attack on the Irish market which he has been planning for more than a decade.

The new store is laid out over six floors, including mezzanines, although one is given over to USC, the Sports Direct group’s youth fashion brand. The rest is purely sportswear and equipment.

Aspects of the new store’s operating model are reminiscent of the grocers Lidl and Aldi, which turned their sector upside down when they arrived more than 15 years ago. Above the tills at Sports Direct signs urge customers to contact it via a web form with the time it took them to reach the top of the queue. The grocery discounters’ model is similarly focused on driving customers at speed through the tills.

Sports footwear is the single biggest offering at the new retailer, taking up most of the huge ground floor.

Sports retailers generally keep shoeboxes containing pairs off the shop floor, with just samples on display. At Sports Direct the shoeboxes are not out the back, but are stacked all over the store, reducing the amount of space that has to be given over to storage, maximising retail space. Each one I opened, however, appeared to contain only the left shoe, so all the right shoes must be kept out the back somewhere. My Left Foot redux.

The arrival of the new store has not gone down well with some local retailers. Sports Direct recently applied for permission for new signage and flags on the Boyers building. One objector said the garish SportsDirect.com logo was not of high enough quality for the area, while a local shoe shop also objected. Permission was refused by Dublin City Council, which cited the “visual clutter” of the display.

Clearly the arch competitor Ashley has found a legitimate way around this planning obstacle as new signage and flags were on display on the new store this week. There is no record of an appeal to An Bórd Pleanála, and no record of a fresh application to Dublin planners.

Next Thursday Ireland football manager Martin O’Neill will cut the ribbon for the new store’s official opening. Sports Direct has a commercial relationship with the FAI via its sponsorship of the association’s summer schools.

Following that it will be game on between the Ashley’s store and his local competitors. Elverys, which was bought out of examinership by its management in 2014, and Lifestyle, owned by the wealthy Stafford family, have combined revenues approaching €200 million. That’s a big target for Sports Direct to aim at.

Footnotes.......

There was a spirited debate on Tuesday at an event – hosted for members by the Public Relations Institute of Ireland – which delved into the sometimes fraught relations between journalists and PR advisers for corporate clients.

To the occasional chagrin of journalists, we often must deal extensively with highly-trained, effective PR professionals that businesses and brands employ to protect their reputations. The best PR work is unseen by the public.

The debate soon turned to the thorny issue of PR advisers insisting on accompanying their clients to interviews with journalists, “sitting in” on proceedings.

The public and others who consume business media are usually unaware of this practice when they read published interviews with chief executives and other company leaders. But the practice is endemic, especially in CEO and top level interviews, and it is a pet hate of many journalists.

Why should a high-achieving, highly-educated CEO need to be babysat during an interview?

PR professionals argue it gives their clients a sense of comfort, and some claim an entitlement to sit in. Many journalists would retort that it changes the dynamic of the meeting, it influences what the CEO says, and ultimately it pollutes the conversation taking place for pubic consumption

Ultimately, if it’s a deal breaker, either side can choose to scrap the whole thing if the interviewee won’t sit without their PR adviser. The image that that portrays of the senior business leader concerned is another matter entirely.

********

Given the delicious boardroom battle currently raging in the company, the Independent News & Media annual general meeting in August should be a cracker. It’s like waiting for the release of a summer blockbuster.

Almost all of the directors, including chairman Leslie Buckley but excluding his counterpart, the chief executive Robert Pitt, are understood to be up for re-election.

It is interesting to note the ongoing share dealing around INM by UBS, which is the third largest shareholder with a stake of almost 6 per cent, which could be a material bloc in the context of the upcoming agm votes. On whose behalf is the Swiss bank holding stock?

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