Challenging times for sports retailers

In Australia's two tier economy conventional retailing is a sector that is particularly hard pressed.
With online shopping in Australia predicted to grow at twice the speed of traditional retail in the next four years, many retailers in Australia's high streets and malls are struggling.
According to a recent report from PwC and Frost & Sullivan, almost half the $13.6 billion Australians will spend online this year will go offshore, up $2 billion to $6 billion, as consumers make a "structural shift" to online.
Explaining the report, PwC's global retail and consumer advisory leader Stuart Harker stated "large and small retailers alike are facing stronger than ever competition from digital channels, both here and overseas.
"Lower prices, convenience, greater product range and a growth in mobile devices are all factors fuelling online shopping."
Nowhere is this change being felt more than in sports retailing, where local retailers face the additional disadvantage of often being charged higher wholesale prices by local brands, manufacturers and distributors than overseas based online retailers.
Two recent examples highlight this challenge.
The first comes from across the Tasman Sea, where, earlier this month, the NZ$250 retail price of adidas' 2011 Rugby World Cup replica All Black jersey was contrasted with what US-based online retailers are charging - less than NZ$100 after currency conversion. (The full story can be read at http://www.ausleisure.com.au/default.asp?PageID=2&Display=True&ReleaseID=4412).
Closer to home, when driving my 12-year old son from football at the weekend I heard him and a friend discuss why your wouldn't buy an English Premier League replica jersey from Rebel Sport when you could order it online for less than half the cost.
In the case of the All Blacks jersey, when adidas was scrutinised by New Zealand's media, the company refused to change its pricing, even argueing that New Zealander's should loyalty to local retailers by buying locally while at the same time favouring its offshore retailers with significantly better wholesale pricing.
In this climate, the loss to Australian retailers, and the Australian economy, is considerable as, if offshore online sales were directed to Australian retailers, forecast retail sales growth in Australia for 2011 would be closer to 4.5% compared with the current forecast of 2%.
As Stuart Harker adds "the fact Australians can securely purchase a product from half way across the world, and have it delivered to their doorstep quickly and for a very competitive price, highlights the challenges that overseas online shopping presents to local retailers traditional and online alike."
PwC national digital leader John Riccio believes that the growth in online shopping demands that Australian retailers "embrace the fundamental shift in underlying business models caused by the digital revolution."
However, it may well be that even a major shift in business models will not be enough.National Retail Association (NRA) Executive Director Gary Black says Australian retailers have to compete on an "unlevel playing field" with tax and duty making local costs up to 23% higher in when compared to the same product offered by an overseas retailer.
The NRA is calling for consumers to pay a duty for goods bought overseas at delivery, a suggestion that it submitted to the Productivity Commission's recently released study into the Australian retail industry.
Black fears that without a level playing field, sales lost to overseas retailers could affect 80,000 jobs in the retail sector and cause some retailers to lose 20% of their market.
Nigel Benton, Publisher, Australasian Leisure Management.
www.ausleisure.com