Intersport International Corporation has signed a non-exclusive licensing deal for the Egyptian market with the Azzam family, marking its first foray into Africa. The family’s 12 small stores in Cairo and Alexandria, which currently trade under different names, will be converted into Intersport stores. About 10 other bigger stores, measuring between 500 and 1,000 square meters, will be added in Egypt in the next years.
This is the first non-exclusive contract signed by IIC in any single country. It is regarded by IIC’s management as a test for penetration into an emerging market, allowing one other retailer to adopt the banner. A strong candidate is Al-Futtaim, Intersport’s big partner in Middle East, which has just opened the first two stores in Saudi Arabia
Meanwhile, LG Fashion, the Korean master franchisee of the international retail organization, opened its flagship Intersport store on Sept. 3 in the modern GuRo district of western Seoul, close to the head offices of many important corporations. In the last months, LG Fashion already opened two multi-brand Intersport stores with little fanfare, mainly to study the Korean sporting goods market, which is still dominated by single-brand stores and by department stores, like other parts of Asia.
With a total surface of nearly 6,000 m² and a net selling area of 4,079 m², the new Seoul store is one of the 10 biggest Intersport stores in the world, comparable in size to those of Intersport Eybl in Austria. It is also the largest multi-brand sporting goods store in the country – and probably in all of Asia with the possible exception of those of Décathlon, which carry mostly private-label items.
The store carries more than 200 brands in 25 categories including baseball, football, fishing, outdoor and running, spread over two floors. It features trial areas where customers can try out the products, including zones for yoga, table tennis, baseball and climbing, as well as a running track and a Nintendo Wii game. All the major brands, even those that operate lots of mono-brand stores in Korea, have agreed to have a presence in the store, where the merchandise is displayed by categories. The outdoor section alone measures about 1,000 m².
Intersport’s private-label merchandise current makes up a minimal portion of the product range offered in Korea. As colors and sizes are different in Korea, as in the rest of Asia, IIC will gradually develop specific products for the market , starting with the fall/winter 2011-12 season and planning to reach a ratio of 25 percent of sales in due time.
LG Fashion is expected to raise the number of Intersport stores in Korea to eight or nine by the end of 2011. It is also believed to be a candidate for Intersport’s future entry into the big Chinese market at a future stage, although IIC is not excluding other options.
Franz Julen, the company’s chief executive, said IIC chose South Korea to be its entry point into the Asia-Pacific market because of its similarities to the European market. IIC is now considering striking similar franchising deals for other performance-driven sports markets such as Taiwan, Singapore and Hong Kong before moving into more leisure-driven Asian markets such as China. India, Australia and New Zealand may come in a third stage.
Julen said the Asia-Pacific business plan foresees a total of between 500 and 600 stores in 10 Asian countries within 10 years. They should add annual retail revenues of $1 billion. The goal is to add a new country on average every year.
The Seoul store is also one of the first whose layout is based on the new category approach and other guidelines set by IIC one year ago, when it launched its new “Sport to the People” brand concept. Pilot stores based on this concept have been opened in Germany, Greece, Italy, the Netherlands, Slovenia and Sweden.
The results have been very good in terms of sales, margins and average consumer spending per basket. Other stores with a similar layout are due to be opened in Abu Dhabi, Austria, Finland, Norway and Russia in the next few months.
Meeting in the Dutch city of Maastricht last week without any change in its composition, the supervisory board of IIC said it was very pleased with the rather smooth and rapid implementation of this and other aspects of Intersport’s new “Sport to the People” strategy.
