Retail experts are predicting that the arrival of a Frasers and Accent Group-backed Sports Direct will shake up the market share of Australia’s sporting goods retailers. Before Sports Direct announced it would be heading south, IBISWorld research predicted that, by 2028, homegrown retailer Rebel would dominate Australia’s sporting goods market with 35 per cent market share, followed by Accent Group, the parent company of Platypus, The Athlete’s Foot and Hype DC, with 25 per cent, JD
JD Sports with 20 per cent and Decathlon with 10 per cent.
However, Frasers’ partnership with Accent Group to bring the British retail chain Sports Direct to Australia is set to upend that.
In the UK alone, Sports Direct operates roughly 500 stores and has a further 170 stores in Europe and 35 in Malaysia.
The same field with new players
Frasers acquired a 14.65 per cent stake in Accent Group from Australian retail billionaire Brett Blundy last August, increasing its stake to 19.99 per cent in March, the Australian Financial Review reported.
The deal will allow Frasers to establish a physical presence for Sports Direct in Australia, where it has been available online only up to now.
Brian Walker, founder of the Retail Doctor Group, is expecting this to cause significant disruption to the sector’s established players. He believes the Australian market isn’t big enough to support another major sporting goods retailer.
“It’s not going to be big enough to accommodate all this work from the ‘big four’, all the independent sports retailers and all the retailers that carry support of some equipment, like Big W or Kmart,” Walker told Inside Retail.
Walker defines the ‘big four’ in Australia as Rebel, Accent Group, JD Sports and Decathlon.
He predicts that the retailers that will be hurt most in the fight for greater market share are the independent stores that don’t have the backing of a Super Retail Group, like Rebel, or Frasers.
“The challenge will be for Accent, Rebel, JD Sports and Decathlon to grow and expand replicable stores, and to get premium sites,” Walker stated.
Accent Group plans to roll out 50 Sports Direct stores across the country in the next six years with the ultimate goal of building a national network of 100 stores.
“I think that’s a conservative estimate based on where I think the market’s going and you should applaud them for being conservative – you wouldn’t expect them to be too bullish,” said Walker.
Walker suspects that the actual number of stores Sports Direct hopes to open in Australia is far more ambitious than what has been disclosed.
With Accent Group already the second-biggest player in the Australian retail landscape, before the addition of Sports Direct, Rebel, the market leader, is going to have to lift its game to maintain its position, let alone grow it.
“They’re going to have to build their brand partnerships, exclusive ranges with particular brands, really dominate the omnichannel experience and build out online mobile store environments,” Walker suggested.
But there is an underserviced portion of the population that Australian sporting goods retailers could capitalise on if they want to stay competitive.
Bringing in customers from the bench
There are a lot of attributes about the Australian population that make it an exciting market for sporting retailers, including having one of the highest participation rates per capita.
The sporting goods sector has ridden many trends to profitability, including the rise of street style, athleisure and wellness, but the latest trend around recreational movement may be the most profitable as it applies to the broadest demographic.
One in six Australians will be aged 65 and over by 2028, a demographic shift that has already subtly reshaped the sports retail mix. Walker expects this to only become more overt over time.
In years past, 65 “was the retirement age, and it was presumed largely that Australians didn’t want to participate so much – that sports activity was largely for the younger generations,” Walker explained.
“But that’s changed and there’s a real move amongst people globally to keep active and defy their years in terms of activity,” he continued.
With a rapidly ageing population, sports retailers are looking to appeal to a more mature consumer as they produce and stock goods for low-impact activities like walking, golfing and yoga.
“The lines will blur as to what is true sports performance retail and what is athleisure and wellness – and who has the invitation to carry all of those categories and these offers,” concluded Walker.
“It’ll come down to the big two or three that can do it.”