Sport 24, a hard-hitting new Danish retail chain launched early last year, has rapidly opened regular stores and outlets to form a network of 36 doors around the Jutland peninsula, and plans to have at least 50 stores in place by 2015. The proliferation of outlet stores could have an adverse impact on the Danish sports market but Sport 24 executives said that they are chiefly taking business away from supermarkets.
Sport 24 is a multi-sport retailer with wide assortments for categories such as football and running, but it wants to distinguish itself from others with more lifestyle products and an offering that is more appealing to women – for example with yoga and Pilates apparel. The retailer also has its private label, Cap, which makes up about 5 percent of sales, in categories such as rainwear, soft shells and socks.
Sport 24 was formed at the start of 2012 when three former members of Intersport Danmark left the group. The three retailers, which had previously formed a group called Sport 2010, made up 15 percent of Intersport Danmark's stores but an estimated 35 percent of its turnover in 2011, amounting to some 400 million Danish kroner (€53.6m-$69.4m) including VAT. The three retailers were Bøgild Sport, H.C. Vejle and Svane Sport.
The main issue with Intersport was that they wanted to open their own outlet stores with no limitations in terms of their location, and did so in the vicinity of an existing standard Intersport store – in contradiction with the group's guidelines. An arbitration court ruled in favor of the buying group, ordering Sport 2010 to shut down and to pay a fine to Intersport Danmark. Another issue for the three former retail members was that they wanted to explore online retailing but were not allowed to do so with the Intersport banner.
The three breakaway retailers formed an integrated chain with seven shareholders. Although none of them has a majority in the business, by far the largest shareholder is Henrik Bruun, the company's general manager, who was the owner of Bøgild Sport. They then went about setting up their own buying, logistics and marketing operations in Silkeborg.
The new retail group rapidly converted 22 existing Intersport stores and outlets to Sport 24, and then opened 16 more. The company has 16 regular Sport 24 stores and 20 outlets, all of them around Jutland. The group's activities also include two online stores (the regular version and Sport24Outlet, promising to sell branded products at half price) and the Sport24 Business unit, which has seven sales offices around Jutland to deal directly with clubs and corporate customers.
The group has focused on outlet stores for its development: The group had only eight to start with, but added another 12 outlets and one online outlet store. The company's owners estimate that they have potential for about 120 stores across the country, with a mixture of standard stores and outlets.
The shareholders have invested heavily in branding, with their own in-house design team. The results are striking, with attractive and clean displays that are easy to survey, and color codes that clearly set Sport 24 apart from the other Danish sports retail groups.
In turn, the loss of retail turnover forced Intersport Danmark to reduce its own costs, shedding 15 out of 45 jobs. Still, as previously reported, the buying group was quickly enlarged again when it formed a partnership with Ny Form, a sports retailer based in Kolding, with about 30 stores around Jutland. The partnership calls for some of these stores to be converted to Intersport, with new openings to follow.
Most of the Ny Form stores are located at Danish beach resorts, with sizes ranging from 300 to 1,500 square meters, and they are in almost the same areas as the stores that switched to Sport 24. Intersport Danmark has 39 members and nearly 90 Danish Intersport stores again. It enjoyed a rebound with an increase in comparable store sales at the start of last year.
