Can Sports Direct be the new Selfridges?
Can Sports Direct be the new Selfridges? Mike Ashley certainly thinks so.
I laughed when I read that; what possible comparison can be made between cheap sportswear and a luxury department store?
But I take care not to fall into the trap others do – misusing their dislike of Ashley, and thus unable to acknowledge that he is a smart retailer. I didn’t really like Philip Green, but I had to admit that, in his heyday, he knew what he was doing, walking the stores and making sure everything was in order.
Ashley is the new ‘old generation’ of retailer; a man obsessed by product and price. Customers can probably go to hell as far as he’s concerned – as long as they are offered the brands and the low prices, they will buy.
Critics were no doubt expecting the recent profit fall to be attributed to reputational issues over dubious sourcing ethics, and what have been described as “Dickensian” UK warehouse conditions.
But no – it’s all down to currency fluctuations, which are now out in the open, and the real reason for an 8% rise in the share price.
Critics will also have trouble with the Selfridges claim, but look at the evidence. While the ‘house of brands’ concept may not be working so well for Debenhams right now, Sports Direct is ploughing ahead with further acquisitions and deals with brands like Japan’s ASICS.
By controlling key consumer sports brands, either through ownership or multichannel distribution, Ashley keeps control of pricing and availability in a way no other discounter can match.
JD Sports may be pleased with its claim that it’s taking market share away from Sports Direct, but, in truth, it looks like they are growing the market together.
I’m still not comfortable with the Selfridges comparison, and I bet Selfridges isn’t either, but both businesses do have something in common – neither knows much about its customers. And if you don’t believe me, take a closer look.
Selfridges is like a brand – it knows its big picture, its customer profile and its demographics – but it makes almost no direct connection to individual customers. And in that sense, Sports Direct is no different.
And it is working well for both businesses.
My worry is, at some point, Ashley will have to start thinking about his customers. Once the business becomes defined by multiple brands, and price cutting becomes less sustainable, he will need to understand his audience in greater depth and detail, and that will not be an easy transition unless he can recruit a decent marketer.
It will happen, but I’m prepared to bet there will be a few false starts along the way.
But at least the language that is coming out of the business now is more corporate, and less Ashley – fair play to him, I say.