In the wake of the pandemic and ongoing supply chain issues, team dealers are leaning on the vendors that are committed to the channel.
Over the past few years and lately accelerated by the pandemic, there has been a shifting dynamic in the relationship between team dealers and their vendor partners — and it’s not all for the better.
As consolidation across the sporting goods industry has increased, the major brands have gained power and leverage. In the interest of bolstering their bottom lines and mollifying investors, these publicly held juggernauts have opted to focus on serving their largest accounts and are quickly ramping up direct sales online, bypassing and often dropping many of their loyal, longtime team dealer partners and full-line sporting goods retailers in the process.
In fact, vendors such as Nike and Adidas are betting their futures on DTC, which doesn’t bode well for independent dealers. At the heart of the issue is a new business paradigm that pits the necessity of growth and profits against the need for a strong team dealer network.
No brand has been more active and intentional in reducing its distribution than Nike, which since 2017 has been drastically cutting its list of dealer and retail partners as part of its DTC strategy.
Similarly, Adidas recently announced its “Own the Game” four-year plan that calls for DTC to comprise 50 percent of net sales by 2025 — up from 30 percent DTC business in 2019, and 40 percent in 2020. The initiative calls for paring down wholesale partners to focus on strategic partnerships and the company expects DTC to drive more than 80 percent of its net sales growth over the next few years.
One more: None other than Under Armour, which built its brand by focusing on the team channel as an authentic performance product back at the beginning, is following suit and this past October announced plans to trim its North American retail distribution.
These and similar moves by other major suppliers, combined with a surge in online shopping, pandemic-related business shutdowns, delayed school openings and postponements and cancellations of sports seasons in many parts of the country – not to mention supply chain and delivery issues – have put team dealers in a tough position. They are now being forced to wrestle with market forces beyond their control while also trying to grapple over product pricing, availability and sales with their own vendors.
Some dealers reveal that a couple of the biggest vendors (no names mentioned here) are refusing to do business unless order sizes are increased, but then those vendors don’t have inventory to deliver, which leaves everybody feeling very frustrated.
On the bright side, many smaller team-focused suppliers have proven themselves to be very able – and more than happy – to step in and fill the void left by the big guys. These companies are quick, nimble, responsive and consistent and are not as hamstrung by the foreign supply chain and related shipping and delivery issues that continue to plague the major vendors.
And, most importantly, they are committed to the team dealer channel.
The Pandemic Effect
Over the past year, the pandemic has brought extra pressure to bear on all facets of the team business, resulting in a mix of outcomes. Some of the effects have actually been positive.
“I think during COVID, relationships between dealers and vendors have improved because everyone’s trying to work together,” says Jim Gregg, owner of Medford, OR-based Cascade Athletic Supply.
But Dan Carey, owner of Carey’s Sporting Goods in Fort Worth, TX, is a bit more circumspect. “There are a lot of good vendors, but others have taken advantage of the COVID situation,” he says. “Overall, I’m very pleased with our own vendors — they’re doing their best and I can’t say enough good things about many of them. The majority of our suppliers have been stellar.”
He adds, “Things won’t be perfect for a long time, but we stay after it and have gotten through it. We even had an increase this year in Q1, but this isn’t a normal year. We’re fortunate that we represent enough lines that we can still make it work with coaches. If we can’t get ‘Brand X’ then we can offer a replacement.”
Aaron Karsh, director of operations at California Pro Sports in Harbor City, CA, believes that the situation is continually changing, and not always for the best.
“We’re seeing more vendors choosing to compete with dealers. The pandemic has made certain suppliers stronger and has weakened others. We try to be transparent with our customers, but not all vendors are transparent with us,” he remarks.
“This year has been a nightmare in trying to get stock. Under Armour has been very good to us through all of this, but Nike and Adidas have been out of stock for the past six months. What did come in went out in two days and then was out of stock again. Local suppliers have been stepping up and will increase their business with us after the pandemic.”
At Meriden, CT-based Billings Sports, COO Mike Billings believes that dealer-vendor relationships across the team market are fairly good overall, but he’s also convinced that smaller suppliers are becoming more important than ever.
“Vendors are having trouble getting product from China, dealers are having trouble getting product from vendors and customers are having trouble getting product from dealers, so it’s a chain reaction,” he explains. “The pie is getting cut up even more and dealers are having to expand their supplier networks to get products.”
Meanwhile, Robert Fawley, owner of Oxford, OH-based Capitol Varsity Sports, concludes that a few vendors just don’t want to serve dealers.
“The relationships have gotten strained from the way they used to be. There are lots of DTC attempts from suppliers now,” he says. However, he is upbeat about the suppliers who remain committed to the dealer channel.
“I think they’re very important and there are some real niches for them. The situation has created opportunities for next-level suppliers.”
Bigger Isn’t Always Better
The simple truth is that the major vendors, by accident or design, have not always been able to come through for team dealers in a pinch. This has created a huge opportunity for more responsive vendors to step up and provide the requisite products and services to their dealer partners. With supply chains still in disarray, many dealers have come to rely more on their “second-tier” suppliers, and are delighted with the results that no longer make them second-tier.
“The smaller suppliers have become increasingly important to our business,” says Carey, of Carey’s Sporting Goods. “Some big vendors are greedy and they’re making a killing on the direct sales side and this is hurting relationships with dealers. The big vendors are disappointing a lot of their long-term supporters along the way and it’s sad and disheartening — we’ve tried to build strong relationships with suppliers and customers.”
As a result, Carey has given more business to suppliers such as Badger, A4 and Blazer because of their willingness to go out of their way to work with him.
Many team-focused suppliers have proven themselves to be very able – and more than happy – to step in and fill the void left by the big guys. These companies are quick, nimble, responsive and consistent.
Tony Carter, manager of Duke’s Sporting Goods, which operates one location each in Elizabethtown and Bowling Green, KY, concurs.
“The smaller suppliers have become more and more important. Alleson, Badger and Augusta are coming through for us when we need product,” he reports. “Our core vendors have had good inventory and that’s helped with the school business. But our bigger vendors have had more inventory issues.
“Custom uniforms are no problem — it’s really just the stock uniforms that cause trouble,” he adds. “We try to stock heavier in core products and basics to help prevent future problems.” While suppliers have been upfront in telling Duke’s about inventory issues, “that doesn’t really help when customers want something,” says Carter.
Gregg, too, is appreciative of the efforts of his core suppliers. “I think they’re very important. We use Champro and Founder Sport Group. They’ve been able to step in and work with us,” he says. “Our relationships are good — they were good before the pandemic and they’ve continued to improve. Our vendors have worked with us and are more understanding about working with terms and are willing to have some flexibility.”
“Our current relationships with our vendors are good,” echoes Karsh. “There’s always going to be a need for team dealers to have suppliers that can fill the gap quickly. It seems that the bigger the brand, the slower the responsiveness.”
He adds, “There are problems with every supplier, but the smaller, more nimble companies are able to service us better.”
Jerry Lavender, owner of Sports Specialty in Columbus, MS, is using his team-focused suppliers on a regular basis these days.
“Not every school, customer or team has to have a particular logo or label. SanMar, Badger and Alleson are filling the gap well and we’re using them a lot — we place an order with one of those companies every day,” he says. “We have a good rapport with our vendors and most of the time they do a good job. It’s easy to tell who wants to take care of their customers. Customer service is key.”
Fawley points out that as the U.S. emerges from the pandemic there is now pent-up demand, but the entire team market is facing supply channel issues.
“We have very good relationships with our suppliers, but we’ll gravitate toward those who actually help us. If the small guys want to compete with the big guys, they recognize that they have to be Johnny on the spot,” he remarks.
What Team Dealers Want
Certainly, the ability to provide adequate inventory and to ship on time are requisites for vendors of all sizes.
“We look to our suppliers for product and delivery — and delivery is more important in many cases than price. You have to have a reasonable price, but we’ll pay a little more to get product quicker or on time,” explains Lavender. “I’m trying to be patient and people are more patient now than they used to be, but I don’t know if that’ll last six months from now.”
Fawley, of Capitol Varsity Sports, makes no bones about the need for inventory and quick turns, which means all parties have to scramble these days. He is also concerned about suppliers who are fully embracing a DTC model.
“We’re going to do business with people we don’t compete against,” he says. “We’re taking a hard look at programs and inventory risk. We’re looking to take less inventory risks and we’re looking for suppliers who aren’t predatory and don’t put our cash flow in jeopardy.” He notes that during the pandemic, his business had a great deal of inventory, allowing him to sell a lot off the shelf.
“Certain companies have gone over the top to help us and others have sort of disappeared on us,” Fawley says. “Although the business is different now, people still want service and quality and there are real opportunities for that, but lots of big brands aren’t living up to those expectations. We sell quality first — not just a logo on a shirt.”
Another pain point for Fawley is lettering capability. “We’re getting lots of blanks that we have to letter ourselves and this puts a strain on us,” he comments.
For Billings Sports, stock inventory is the primary concern. “The availability of product and being able to deliver on time is the biggest thing we look for in our suppliers. We’ll only go to a company a few times for inventory and after that we need to go to other suppliers to get product,” says Billings.
“If we’re out of product a few times our customers will shop around a bit more, so it’s discouraging to not be able to get product from key vendors,” he adds, pointing out that inventory this spring is worse than last spring, with everything from hats to youth-size batting helmets is in short supply. (Some sweatshirts that were stuck in the Suez Canal finally got air freighted [in mid-April].)
“Being in the East, we’re the last to order in the country,” he explains. “This has always been very difficult for us, but it’s now really tough.”
At Cascade Athletic Supply, Gregg suggests that the ability to book programs – particularly freight programs – has become critical.
“Dependability, having inventory and shipping out in a timely manner are key,” he says. “The supply chain is still a mess and will be for a while — probably until late this year.” However, he says that lots of the sublimation team uniform business has been dependable.
“Stock availability is a big factor for us,” agrees Karsh. “Quick shipping times with same or next-day shipping are important — a delay of more than three days simply doesn’t work for us,” says Karsh. Financing terms are also key for him — the better the terms, the more likely he is to do business.
Karsh is also adamant that if vendors have supply problems, they need to communicate quickly. “Team schedules and dates don’t change and we need to provide dependable service,” he says. “If we know of issues ahead of time we can adjust, but if we don’t know until it’s too late we can’t provide our customers with the service that they need.”
The Personal Touch Lives On
Despite the fact that the Internet and virtual meetings have become indispensible components of the modern business environment, most in the team market still put a premium on personal connections and face-to-face conversations — particularly when it comes to interactions with vendors’ sales reps.
“With industry consolidation, fewer reps are handling more accounts,” laments Carter, of Duke’s Sporting Goods. “At the grassroots level, not as many reps come around like they used to.
“But once we have sales reps, they can go to bat for us,” he adds, also lamenting the inability to have an in-person Sports Inc. trade show for the past year that would allow him to speak directly with his reps.”
(Note: Both Sports Inc. and Nation’s Best Sports will be holding their Summer Markets in June this year, the first time for in-person meetings in more than a year.)
For Carey’s Sporting Goods, vendor relationships boil down to honesty and integrity.
“It all goes back to the reps,” he says. “Can we trust what they’re saying and do they keep us in the loop? You can always blame problems on COVID, but it’s how you respond that counts.”
He observes that suppliers who are heavily invested in the Chinese market have had difficulties and industry consolidation has also been detrimental.
“The big vendors are letting reps go, so fewer guys are responsible for more business. It seems that every month there’s a new situation to deal with, so we end up chasing our tail a lot.”
Karsh, of California Pro Sports, also believes that good reps are vital to doing business.
“They need to be responsive and trustworthy. There’s never a replacement for face-to-face interaction between vendors and dealers, and dealers and athletes. Trust is a big factor,” he says. “All of us see that things are changing in the industry, but service and dependability are still key.” He continues, “Local suppliers are more important now than ever and being able to deal face to face is important — it’s faster and easier than trying to do everything online or via email, which can take days to resolve issues. Suppliers that are responsive to dealers will stand the test of time.”
No Simple Solutions
Over the long haul, there are no simple solutions when it comes to the changing nature of many dealer-vendor relationships. Most dealers believe that the supply chain issues will not be completely resolved until late this year or the early part of 2022, meaning that the smaller suppliers will remain a critical part of the solution well into the future.
But for now, says Carey, “We all have to have a little patience. Some manufacturers need to do some soul searching and be more loyal to the dealers that have helped them grow their businesses.”