Marking two important steps toward its goal of becoming a truly global retail brand, Intersport International Corporation (IIC) has signed a master franchising agreement for the Korean market with LG Fashion. It has also licensed its shareholder and Canadian licensee, Forzani Group, to market IIC’s own collection of private-label items in the U.S.
LG Fashion is described as an ideal partner of Intersport for its penetration of the Korean market, which is still dominated by single-brand stores even though it has reached a higher level of development than the Chinese market. Established in 1953, LG Fashion is today a stock-listed company that operates 1,042 stores, mostly in the fashion sector, and made a turnover of 7,906 million won (€571m-$717m) last year. In November 2006 LG Fashion became a dedicated retail company after a spin-off of the LG International Corporation, the third-largest Korean conglomerate after Samsung and Hyundai.
The first two Korean Intersport stores are scheduled to be opened in the first quarter of 2010 on a combined surface of approximately 5,000 square meters. It will be an adapted version for the Asian market of a new updated Intersport store concept that is set to be inaugurated on April 16 through a pilot store in Gothenburg, Sweden – the first new international format for the banner since 2003.
Intersport officials would not disclose their goals in Korea, a very dynamic market whose stage of development lies more or less between those of Japan and China, but said LG Fashion has an aggressive business plan for its own stores and will additionally consider sub-franchising the Intersport banner to further accelerate its expansion in the country. Intersport officials see big opportunities in Korea for the group’s private-label products in the outdoor, ski and teamsport categories, among others.
The Korean deal is Intersport’s first concrete foray into the Far East at the retail level, but IIC is determined to go further. As Franz Julen, chief executive of IIC, put it, it will be “the kick-off for a long-term expansion strategy to the whole Asian market.” IIC is now planning to enter the vast Chinese market once the current economic turmoil is over, and the experience in Korea will help to fine-tune Intersport’s concept and apparatus, including its own private-label program, in preparation for this big step.
While continuing its negotiations with various potential franchise partners, which started before the 2008 Olympic Games in Beijing, IIC has set up an office in Shanghai, Intersport Asia-Pacific, to steer its retail development in the region. The new entity is headed up by Winston Wong, a highly experienced Chinese retail expert who has been working for Intersport since last July. He worked with Makro in China, handling purchases of non-food items. He then acted as operational and merchandising director of Quest Sport, one of the few multi-sport retailers operating in China, mainly in the Shanghai and Beijing areas . He was subsequently vice president of C&A in China. .
IIC has been running a separate subsidiary in Hong Kong and China, Intersport Far East, for the development of its own private label collections. Run by Hans Barkell-Schmitz, it is located in Shenzen and has a staff of 120 people, some of whom are intent on creating specific products for specific markets such as Canada.
In another important move, Intersport’s long-time partner in Canada, the Forzani Group, announced today the completion of an agreement that allows it to sell Intersport’s private brands to select U.S. retailers through its own wholesale division, called Intersport North America. Forzani is a shareholder of IIC and, with 337 corporate and 227 franchise stores and a market share of 20 percent, it is Canada’s largest sporting goods retailing group. Forzani had been contemplating such an activity south of the border for many years, but it could not bring itself to do so due to other priorities and because its managers felt that the product was not quite right for the market.
Forzani has already approached some big U.S. accounts and the first deliveries are planned for next autumn, but the operation is geared to go into full swing for spring/summer 2010, responding to a strong demand for good low-priced products in these economically difficult times. Intersport sees good opportunities for items that have already performed well on the Canadian market such as ski, snowboard and hiking outerwear, alpine skis and bindings, snowboards, and inline skates. These products will be sold under Intersport private brand names such as Firefly, McKinley and Technopro.
Meanwhile, Intersport continues to expand in the Middle East through its licensee in Dubai, Al Futtaim, which is moving into Kuwait with a 1,300-square-meter Intersport store due to open in the local 360 Mall next June. In spite of the economic crisis, which has affected the United Arab Emirates as well, Al Futtaim is said to have reached the budgeted results with its two existing Intersport stores in Dubai, which are located in the Times Square and Festival City malls. Its cooperation program with IIC calls for the opening of additional stores of 900 to 1,400 square meters in Bahrain, Qatar, Oman and Egypt over the next two to three years.
