JD Sports record profits show just how powerful physical retail can be, especially when combined with an aggressive pricing strategy. However, the news that the retailer has doubled it pre-pandemic profits, while interesting, isn’t as interesting as its purchase of The Total Swimming Group.
Founded by Olympic swimmers Steve Parry, Rebecca Adlington and Adrian Turner, Total Swimming Group was set up to make swimming more accessible to the masses, especially children, encompassing swimming lessons and more.
The purchase of it by JD Sports is a continuation of the sports retailers on-going quest to augment its retail business with actual physical sporting locations and peripheral services in a bid to not only sell the sports apparel and equipment needed to play sports, swim or go to the gym, but also to own the actual experience itself.
The retailer set up JD Gyms in 2014, but in recent months it has ramped up its investment in physical sports locations, investing many millions in West Yorkshire-based Gym King to turn the gym chain into, what it says will be, a “world renowned ‘Lifestyle Performance’ brand”.
The partnership with Gym Kings comes a year after JD Sports also invested in Oakgate Group, to acquite its 50 Xercise4less gyms to integrate into the JD Gyms stable. This means the retailer now owns more than 70 gyms across the UK.
The sports retailer has long managed to combine yearly increases in sales revenue and profits – pandemic years excluded – and it has returned to this pattern, doubling 2020’s profits and forecasting more growth in 2022. It has also always been well positioned at the nexus of fashion and sportswear and, as the trend for athleisurewear continues to hold, its close relationship with Nike and Adidas – the former considering JD a strategic partner – places the company well for more growth.
Couple this with JD Sports on going investment in the US, where it spent £200m on US sports chain Finish Line, and the retailer has the athleisurewear market across the UK and the US in its grasp.
Particularly interesting is the group’s focus on the budget end of the market in both apparel and leisure facilities. This end of the sector is poorly serviced, with gyms in particular often seen as a higher-end lifestyle purchase, rather than a necessity.
Sports have become a key market sector for retailers, with more consumers than ever looking to take part. Research in the RetailX Sports Goods Sector Report 2022 suggest that the pandemic has focussed consumer’s minds on health and wellbeing and has driven a surge in sporting activity, with data showing that, across Germany, Italy, Spain and the UK, 65% of people are now more likely to consider their health in day-to-day decision-making.
With that in mind, affordable gyms and swimming are likely to prove very popular with its base. And where are they going to turn to buy the items they need to take part? From the pile ‘em high, sell ‘em cheap retailer, where bargains are the name of the game.