Intersport U.K. will be teaming up with the Allied Group, another British buying group with 28 members and 39 stores, from the start of April. Disclosed at Ispo, the deal between the two buying groups will create a retail force with joint U.K. sales of about £125 million (€143.6m-$195.1m) in 2009, consisting of £90 million (€103.4m-$141.7m) for Intersport stores and £35 million (€40.2m-$55.1m) for Allied stores.
Sales of all the retailers affiliated to Intersport U.K. reached about £130 million (€149.4m-$204.6m) last year, with 66 retail members and 177 stores, but this includes some stores in the Republic of Ireland. Intersport U.K.’s largest member is Elverys, one of the biggest Irish retailers, which had estimated sales equivalent to about £40 million (€46.0m-$63.0m) last year.
The Allied Group has had a working agreement with the Independent Sports Retailers Alliance (Isra), a dynamic group of 38 independent Irish retailers with a joint turnover estimated at about €35 million in 2009. While Isra is excluded from the deal with Intersport, partly because of competition from Elverys, its joint projects with Allied members will remain in place, such as an electronic purchasing platform.
The partnership with Allied Group comes about 14 months after Barry Mellis, a former New Balance executive, assumed the helm of Intersport U.K., at a time when the number of its retail members was at a long-time low of just 58. The figure started growing again last April and Intersport U.K. has since added about one member per month. The deal with the Allied Group strongly accelerates this expansion. Intersport U.K. has set itself a target of reaching 100 members and 250 stores by the end of 2010.
Another objective is to raise the profile of Intersport’s private labels, which make up only about 1 percent of its U.K. members’ sales. Some Intersport U.K.’s members have their own private labels, which sometimes make up a much larger share of their sales, as in the case of the Rival apparel brand at Elverys.
Allied members will have access to Intersport’s private labels, without any specific obligation to carry them. In fact, the Allied Group will retain its own private labels for cricket, Pro Cricket, and for table tennis tables, Velocity.
Apart from obvious synergies around buying days and other purchasing-related functions, Intersport U.K. will benefit from Allied’s expertise in specific sports categories and its loyalty card scheme. The two organizations fit neatly together since they are both non-profit operations, run by volunteer members for Allied and by the AIS buying group for Intersport. Allied’s members are independent retailers that chiefly offer functional products for a raft of sports, many of them situated in the southern part of the country.
The tie-up was approved unanimously by Allied members, at least in principle. It gives them the obligation to display the Intersport logo in their banner, although they will have the right to retain their own store’s name. This and other changes should be implemented within six months. These conditions are stricter than those imposed on the members of the other major British buying group, Stag, which has been growing nicely in the past few years.
Allied will have one representative on the six-strong board of Intersport U.K.. The volunteer management of Allied’s central organization will be effectively disbanded, but for the time being it will retain its own warehouse in Somerset.
The contact between the two parties was facilitated by Tom Foley, who heads up Isra. However, other members of Allied had already started studying potential partnerships for some time, and a few months ago they begun to discuss the recruitment of a general manager to run the buying group.
