Mike Ashley has made his desire to target JD Sports no secret and his latest acquisition of clothing retailer Republic aids his plans to grow the fashion side of the business further, intensifying competition between the two.
Sports Direct’s success provides an opportunity for Mike Ashley to diversify and grow the business beyond the sports sector; acquiring fashion-focused brands and retailers is a quick way of doing this and cost effective when they are cheap.
Sports Direct’s fondness for rescuing brands, such as Firetrap and Full Circle, allows the retailer to take advantage of any existing brand awareness and consumer interest, making it easier to build these brands back up than starting anew with private label brands. As part of the acquisition, Sports Direct has purchased Republic’s own brands, Soul Cal, Fabric and Crafted – which all hold strong potential and will help it compete with the likes of Blue Inc and Superdry.
The move into the fashion sector, though not completely new to Sports Direct is outside its true comfort zone of sports retailing and it will take hard work to build a formidable competitor to JD Sports, which still has the edge in terms of fashionability.
The young fashion market (16-24 year olds) has been one of the hardest hit by the recession due to high unemployment, increased living expenses and rising university fees. More retailers are likely to become casualties of the challenging trading environment in 2013. So with no doubt more brands on Mike Ashley’s hit list, we expect to see further acquisitions of this nature bolstering Sports Direct’s fashion division in the near future.
What is of interest now is what else Mike Ashley has his eye on. Rumours surrounding an acquisition of House of Fraser continue, and this would give him another distribution channel for Sports Direct’s ever growing stable of brands as well as increased scale to drive down costs with suppliers.
Furthermore a more comprehensive move into online fashion retailing is more than likely on the cards with the purchase of Republic’s transactional website – potentially competing with brand magnet Asos.
Kate Ormrod is a retail analyst at Verdict Research