Sport 100 International, the largest chain of sports department stores in China, has signed an exclusive license for the Airwalk brand, which it plans to distribute to other retailers in the country in addition to a presence in its own stores. Alan Cheung, chief executive of the company, said he was looking for similar deals with other brands.
For this purpose and others, the company has agreed to join STAG, the British buying group, whose top managers visited the country last month. They have introduced some of the brands with which they work to Sport 100, such as Hi-Tec and Trespass, and they will provide market information to help the chain move eventually toward a more Western multi-sport business model, like the one being proposed by Gome Sport.
Managed by China's biggest retailer of home appliances, Gome Sport is a new retail format that was launched in the last few weeks with a first series of three pilot stores in Beijing. Company officials have been approaching brands to feature them in their stores, outlining plans to open between 30 and 50 stores in the Beijing region over the next few years, but their project has been greeted by local industry officials with some skepticism.
Cheung feels that the multi-sport retail concept may be applicable in China to smaller and more focused lifestyle-oriented sports stores, similar in a way to those of Foot Locker.
For this purpose, Cheung is considering the option of bringing in a strategic partner as an alternative to a possible stock market flotation two years from now or later. Chung sold a minority stake to an American financial partner five years ago but he retains control.
Like many other Chinese retailers, Sport 100 basically rents space in its large superstores to a number of brands that have their own shop-in-shops there on a concession basis. However, it buys and resells products by some brands such as Puma, Columbia Sportswear and The North Face. Nike has the highest sales in its stores, followed by Adidas. Puma, Kappa and Li-Ning are among the other major brands in its stores.
Sport 100 currently runs 43 stores, mostly in shopping centers, with an average surface of 2,300 m². The company suffered from the consolidation of the market that took place after the Beijing Olympic Games, when the number of its stores reached a record level of 56 units. The company closed many unprofitable stores that were located in shopping malls that were half-empty or charging high rents.
It recovered last year, however, posting a double-digit rate last year to more than 1 million renmimbi (€105m-$150m), with a rise of more than 10 percent on a comparable store basis and generating a good profit.
