Sports Direct International Plc (Sports Direct)

Introduction

Is the United Kingdom’s largest sporting retailer by revenue established in 1982 by Mike Ashley. The company retails and sells sports, fitness, and fashion and lifestyle products through its 826 physical stores and e-commerce portals in 20 countries with 26,500 employees. (Market Line, 2018, pp. 3-18,) “Sports Direct categorizes its business operations into five segments namely UK Sports retail, European Sports Retail, Premium Lifestyle, Rest of the World Retail and Wholesale and Licensing.” (Market Line, 2018, p. 5) It operates a diversified product portfolio under numerous brands such as Slazenger, Everlast, Lonsdale, Donnay, Lillywhites, and others as well as through other third-party brands like Nike, Adidas, and Under Armor. Sports Direct also operates and manages fitness and gym facilities as well as distribution centers in Austria and Belgium.

It has reported a total revenue of GBP3.395.5 million for the fiscal year 2018 with an operating margin of 6.5%. (Market Line, 2018, p. 3) According to the company’s corporate strategy, it intends to enhance its retail network through expansion of its sales channels (both physical and online) by improving store designs and its layouts, its online portals and by launching new generations of stores for some of their business segments like premium luxury. (Market Line, 2018, p. 6)

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The following report aims to identify and discuss the core competencies of Sports Direct. The objectives include to discuss how those core competencies have contributed to the company’s success, to suggest how they may be further developed, to comment on the appropriateness of the company’s current strategy and lastly to propose recommendations based on the assessment.

The business analysis on Sports Direct will be based on the case study provided solely, as well as from internet sources pertaining to the company and other relevant terms and examples mentioned.

This report will draw a conclusion based on the business analysis of the core competencies of Sports Direct and recommendations will be made to further improve the company’s strategies since its financial report has shown concerns regarding sales, performance ratios and shareholder value.

Analysis

This analysis will discuss the core competencies of Sports Direct, its contribution to the company’s success, current strategies and its appropriateness as well as strategies that can further be developed to boost finance and overall success of Sports Direct. According to C.K. Prahalad and Gary Hamel (2001), core competencies can be defined as “the collective knowledge that a company uses to coordinate diverse production skills and technology”.

The core competencies which Sports Direct utilizes to run their organization include the following:

Customer Experience

One of the core competencies of Sports Direct include customer experience. According to Blake Morgan (2017), customer experience is described as the perception the customer has of your brand. Sports Direct works toward presenting an unrivaled range, availability and quality of products —both Group Branded and third-party brands through their Sports Retail and Premium Lifestyle fascias. In addition, customer services such as free home delivery, e-retail through websites and mobile apps and gift cards enable Sports Direct to offer a convenient mode of shopping to their customers. Their regional flagship megastores, through the elevation strategy, offer to customers an exceptional shopping experience due to multiple segments in the same space, fitness gyms, and innovative use of technologies in the form of 'high-pixel video merchandizing displays, 360-degree gif facility on outfit fittings, kids' zone with selfie camera and a ‘Made by us’ customization zone”. (Sports Direct, 2018). Therefore, these services along with their diversified iconic products aim to offer customers a convenient and responsive shopping experience; which makes customer experience one of Sports Direct core competencies.

Currently Sports Direct manages a selling strategy of “pile ‘em high, sell ‘em cheap”. This strategy works for the company since they “offer a wide variety of products at heavily discounted prices while at the same time acquiring brands such as Lillywhites, Donnay, Slazenger and Dunlop that boost perceptions of value”. (Vizard S. 2014) In addition, their business model is designed to attract customers to shop premier brands (third-party brands such as Nike, Adidas, Under Armour) seen in their store fronts, but also have their cheaper group brands stocked within the store. Hence, “this mix of traditional third-party sale is the key to Sports Direct profits allowing the company to grow and prosper”. (Golding S. 2018).

The most recent flagship store for Sports Direct located in Thurrock, UK is a prime example whereby there was strong emphasis to create an appealing experience for customers. The store is “100,100 sq. feet in space which houses SportsDirect.com sports store, a USC fashion store, a Flannels luxury apparel store and a state-of-the-art Everlast gym”. (Sports Direct, 2018) This rollout of new generation stores in comparison to their store layouts and concepts in the past, generates a more appealing impression to their customers for in-store shopping. Not only does Sports Direct operate in stores but according to their web source, the company stated that “all of their websites are fully responsive and offer a unique online shopping experience with new features such as the boot finder and micro-sites”. (Sports Direct, 2018) Hence, this approach of customer experience contributes to the

success of the company in a positive manner by keeping up with e-commerce since technology and the internet is an evolving element in the lives of many nowadays, especially in developed regions such as the UK, Asia, and Europe. Also, Sports Direct continuously work towards providing improved customer service within the company from the retail stores, website and head office. They implemented a few measures to help with this improvement such as monitoring customer satisfaction, responding to queries, recording and analyzing written complaints and its nature in order for appropriate action to be taken, as well as staff training. Therefore, Sports Direct manages the perception they are selling to their customer in order to allow them a satisfying and good customer experience. These measures altogether contribute to the company’s success over the past years since they aim to provide

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