Major Chains Sports Authority, Sport Chalet Close Hundreds Of Stores
ROBERT SIEGEL, HOST:
Sports are competitive. The sporting goods industry is competitive, too. So much so that two major chains are closing up shop. Sports Authority and the West Coast retailer Sports Chalet have more than 500 stores between them, and nearly 200 are already shutting down.
Jim Peltz has been writing about this for the LA Times and joins us now. And tell us first what's going on with these two chains? Why are they struggling?
JIM PELTZ: Well, there's a lot of reasons, Robert. The problem with Sport Chalet and Sports Authority is that they sort of had all of these competitive pressures hitting them from all different sorts of directions. They were up against much more prosperous and larger rivals such as Dick's Sporting Goods. They were up against the mass merchandisers such as Target and Wal-Mart. They were up against the enormous power of Amazon.com and the online sector, and then they had a few of their own problems. Mainly, they were heavily in debt.
SIEGEL: You mentioned Dick's Sporting Goods. They're doing all right, so is REI. What are those stores doing differently than Sports Authority and Sport Chalet?
PELTZ: Well, let's take each one of them. Dick's Sporting Goods is sort of considered the leader in the sporting goods business now. It's up to about 650 stores. They have tremendous selection. They have competitive prices. Its size, its scale, as they like to say in business circles, is really important with regard to suppliers. If you're a large, prosperous chain, you're going to cut better deals with your suppliers, which means in turn that you'll have competitive pricing compared to a much smaller, less prosperous company. So that's one of the key reasons.
SIEGEL: And REI?
PELTZ: REI, which is Recreational Equipment Inc., is well-known for its hiking and its mountain climbing and things like that. They bring a very well-versed staff. When you go into one of their stores, not only do you have help that really knows what they're talking about, they also have all of those cool indoor rock climbing things where you can try out some of their equipment, try out their apparel and so forth. And they've clearly created a special niche there and they're well-known for it.
SIEGEL: Has the sporting goods business generally - apart from the competitive pressures from Amazon or Target or other mass merchants - has the actual business changed a lot over the past few years?
PELTZ: It's changed tremendously, Robert. And it used to be - if you think back in the day - if you just needed your basic sporting goods - say, a little leaguer needed a new glove or you wanted the new tennis racket or a set of golf clubs, you just went into a basic sporting goods store and that was that.
Nowadays when people think of, like, going into a sporting goods store, they may very well be thinking of real particular new products such as an activity tracker that comes from Fitbit or maybe they want to buy yoga pants or something like that that come from an outfit like Lululemon. So really the scope and the breadth of what a sporting goods retailer is all about has widened tremendously in the last 10 years.
SIEGEL: Sports Authority is headquartered in a suburb of Denver. It's actually - Sports Authority's name is on the stadium where the Denver Broncos play.
SIEGEL: What's going to happen there, chapter 11 stadium?
PELTZ: Well, it may be chapter seven because they're actually going to liquidate.
SIEGEL: I see.
PELTZ: But all kidding aside, the speculation is pretty widespread that that name won't be on Mile High Stadium, as it used to be known. When the start of the NFL season comes in September, the Denver Post is among those that have reported that they expect the naming rights to go elsewhere.
SIEGEL: Jim Peltz, thanks for talking with us.
PELTZ: My pleasure. Thank you, Robert.
SIEGEL: Jim Peltz, business reporter for the Los Angeles Times.
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