With a new store format and fresh vigour, JJB Sports could potentially perform a remarkable turnaround.
Eighteen months ago, few would have put money on JJB Sports still gracing the high street. The retailer was seeking a second CVA – one that many believed would be rejected – and another substantial handout from its shareholders. It looked close to curtains for JJB.
However, in what could potentially be one of the turnarounds of the decade – admittedly still at a very early stage – JJB is still here, fighting back, and rolling out a new store design that has delivered good results so far.
The retailer has also won £30m strategic investment from US sportswear giant Dick’s Sporting Goods and, now that its coffers are potentially replenished – further fundraising will be necessary – it is going to spend wisely.
The new store model is vital. JJB chief executive Keith Jones says: “We always identified that transforming the retail environment was critical to the turnaround. It allows us to deliver a different experience for our customer. The capital constraint limited our ability to do that. Dick’s was fundamental in terms of capital and intellectual collateral.”
The prototype store in Broughton, Cheshire, was opened before the Dick’s deal was inked and epitomises the retailer’s vision of transforming itself into “the authentic sportswear retailer”, according to Jones.
The first thing to note about this 13,250 sq ft shop, comprising a ground floor and a mezzanine, is that everything about it is different from the retailer’s other branches.
Marketing director Claire Bayliss says: “Fitness is what we want to become known for and this store is about making this a reality. We did a huge amount to try to understand what customers want.” The outcome, created by London consultancy Liberation, is a shop where the emphasis is strongly upon providing customers with a series of sporting experiences.
From a practical perspective that means everything from running and gait-testing machines for joggers and more dedicated track-pounders, to “the dugout” at the back of the mezzanine. The latter enables aspiring Steven Gerrards to kick footballs into holes in a wall surrounded by goalpost netting, while large yellow graphics encourage participants to “pass and shoot”.
Signs of change
The difference between this and other branches of JJB is apparent from the moment the shopper stands on the threshold, where a legend inscribed into the welcome mat states “start”, while “finish” is in place for those leaving the shop.
The start sign leads to a racetrack that circumnavigates the ground floor – plunging shoppers into a quasi-sporting experience and taking them away from the humdrum environs of the retail park that the store is part of.
Alongside the running track there are a series of sport-specific zones with a try-before-you-buy feature in each. And if shoppers complete two-thirds of the track circuit, they arrive at the cash desk.
In the normal run of things this would be a functional affair but in Broughton the JJB cash desk features a wooden Venetian blind-style screen that forms the backing wall. An outsize version of the retailer’s logo is sandwiched in the middle of this, adjacent to a massive graphic of a footballer – it’s all about activity.
“We were really keen on not just doing another concept. What we were trying to achieve is authenticity,” says Bayliss.
Performance and running are the key categories in this store, hence their position at the front of the shop. Women’s running also takes centre stage, as this is an area the retailer wants to become famous for, and the category has outsold its male counterpart some weeks, according to trading director Alison Broadhurst.
The focal points in the store can change, however. In-built flexibility is one of the key parts of the design with many areas of the perimeter clad with wooden climbing frames that can be rapidly reconfigured. There are branded elements in the store, and a section of the mid-shop has rails that have been provided by Reebok, but for the most part the design is entirely JJB’s.
The configuration of the space is also noteworthy. The mezzanine follows, in essence, the running track and has a very large oval hole in its centre that enables shoppers on the upper level to lean over the balustrade and watch the ground floor action – spectator style.
JJB Sports in Broughton does seem to be a step forward for the retailer, particularly when set against the Slough branch, where a remodelled interior was unveiled in 2010.
The Broughton format opened in March and is already paying dividends. Sales are 26% higher than its core store performance and basket spend is up 20%. Jones says: “Customers are enjoying it at the moment and we’re seeing the rewards. If you put product in the right environment and deliver the customer an experience that differentiates, it’s going to pay back dividends.”
It’s not just customers who have bought into the new-look JJB. Many of its major suppliers have visited the store and are impressed. Jones says his suppliers are eager for JJB to “elevate the market” and he hopes that the new store format will open the door to bringing new, performance-related product into stores.
“We’ve brought product forward into the store that we’ve not been able to showcase in the same way in the past because of the environment, but there’s still an opportunity to add more product that differentiates us further,” says Jones.
“Having seen it, [the suppliers] see an opportunity to give us access to products that we haven’t had access to before.”
Along with product, the retailer is making sure its service screams “performance retailer”. The gait analysis, which gives a full breakdown on which type of running shoe is suitable on an individual basis, is already paying off. Broadhurst says running is JJB’s most improved area in the new store and average selling prices have “enhanced significantly” in the category.
Jones is no stranger to turnarounds. He was group retail director at electricals specialist Dixons through a turnaround that was not so dissimilar from JJB’s own. “Store environment was the cornerstone of what we did [at Dixons] – that and people and building the services that differentiate it from its competitors,” he says.
Jones hopes to emulate Dixons’ success at JJB. He says: “If you’re trying to sell a £100 running shoe you need to have a colleague in the store who has the specialist knowledge to tell the customer the difference between that and a £50 shoe.”
“It’s as much about the people as the store,” adds Bayliss, who says recruiting staff with a keen interest in sport has been central to its success. She repeats the mantra that appears to have informed the new design: “Celebrate, support, participate, facilitate.”
Jones admits Dick’s investment has been a “tipping point” in JJB’s turnaround programme but says such a link-up was a core part of his plan. “We always saw a strategic investor taking us through the next most important step,” he says.
He believes there is a “genuine opportunity” in the UK for an authentic sportswear retailer, which is why he says Dick’s decided to back JJB.
JJB’s renewed vigour has clearly put some of its competitors on edge – in fact, the Sports Direct store on the same retail park in Broughton is about to close for its own refurbishment.
The day the investment with Dick’s was unveiled in, Sports Direct geared up for battle by cutting its prices. Sports Direct chief executive Dave Forsey said at the time: “We just want to let them know that over here, they will fight by our rules. We have three weapons and the customer knows they are unbeatable: price, price and price.”
JD Sports executive chairman Peter Cowgill has also complained it is not a fair fight with a Dick’s-backed JJB, given it has been able to shed unprofitable stores through its two CVAs.
Jones says: “We’re concentrating on playing our own game. We have a clear ambition to be the authentic sports retailing business. If there’s a genuine market and someone can appeal to that as we are, then I find it difficult to understand how anyone can have an argument against us.
“There’s a lot more to this sector than price.
The brands know that well. They spend millions developing new technologies and increasingly products are becoming more technical and performance driven. That’s why it’s important to have a store which amplifies that and colleagues who can introduce it to customers.”
It will be a busy year for the JJB boss as he pushes ahead with the roll-out programme but Jones is no stranger to hard work – apparently he didn’t take a single day off in his first 18 months at JJB. However, he says he’s enjoying the challenge.
“I’m loving it. It was a lot of work to get to this next place but I never have a problem getting up in the morning and I’m never short of energy. I’m galvanised by a combination of opportunity and challenge,” he says.
Jones admits it’s a good time to be kick-starting a turnaround in the sportswear market. “This year is one of three Christmases,” he says. “We have the Euros, Olympics and back-to [school] season in September, which all sit ahead of Christmas itself.”
Race for space
Jones says JJB will have at least five new-format stores open before the Euro 2012 tournament in two weeks and will open 25 this year, and 35 next year.
The team admits there are some tweaks needed to the format, including giving greater space to core sports. Finance director Dave Williams says: “There’s a fight for space – so the winners get it. It’s in performance and running where we think we can dominate and win.”
Jones admits some are surprised by the struggling sportswear group’s progress. He says: “We like to please our customers more than confound our critics, but we have done.
“It’s not going to be easy but this is a vital step in our turnaround. We’re excited to have Dick’s on board. Now, frankly, we’ve got to get on executing and delivering.”
It looks as though it may be another year without a holiday for Jones.