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UnitIV_SportingGoodsWholesalingintheUS_IndustryReport.pdf
WWW.IBISWORLD.COM Sporting Goods Wholesaling in the US October 2019 1
IBISWorld Industry Report 42391 Sporting Goods Wholesaling in the US October 2019 Rohan Jaura
In the game: Demand is expected to persist from specialty sporting goods stores
2 About this Industry 2 Industry Definition
2 Main Activities
2 Similar Industries
3 Additional Resources
4 Industry at a Glance
5 Industry Performance 5 Executive Summary
5 Key External Drivers
7 Current Performance
9 Industry Outlook
11 Industry Life Cycle
13 Products and Markets 13 Supply Chain
13 Products and Services
15 Demand Determinants
15 Major Markets
16 International Trade
18 Business Locations
20 Competitive Landscape 20 Market Share Concentration
20 Key Success Factors
20 Cost Structure Benchmarks
22 Basis of Competition
23 Barriers to Entry
24 Industry Globalization
25 Major Companies 25 Pool Corporation
26 Quality Bicycle Products Inc.
26 Lipsey’s LLC
26 Maurice Sporting Goods Inc.
28 Operating Conditions 28 Capital Intensity
29 Technology and Systems
29 Revenue Volatility
30 Regulation and Policy
31 Industry Assistance
32 Key Statistics 32 Industry Data
32 Annual Change
32 Key Ratios
33 Industry Financial Ratios
34 Jargon & Glossary
www.ibisworld.com | 1-800-330-3772 | [email protected]
This report was provided to Columbia Southern University (2134268182) by IBISWorld on 07 November 2019 in accordance with their license agreement with IBISWorld
WWW.IBISWORLD.COM Sporting Goods Wholesaling in the US October 2019 2
Operators in the Sporting Goods Wholesaling industry wholesale a range of sporting and recreational goods and accessories, such as billiards equipment, sporting firearms and ammunition,
marine craft and equipment and pool supplies. This industry does not include the wholesale of athletic apparel and footwear, automobiles, other motor vehicles or transportation equipment.
The primary activities of this industry are
Baseball, bowling, football, golf, hockey and tennis equipment wholesaling
Bicycle (except motorized) and go-cart wholesaling
Camping and fishing equipment wholesaling
Fitness equipment wholesaling
Guns, firearms, ammunition and hunting equipment wholesaling
Athletic uniform wholesaling
Boat, boating and marine equipment wholesaling
Skiing equipment wholesaling
Swimming pools, hot tubs and supplies wholesaling
Playground equipment and supplies wholesaling
33992a Athletic & Sporting Goods Manufacturing in the US This industry manufactures sporting and athletic goods in the United States.
33992b Gym & Exercise Equipment Manufacturing in the US This industry manufactures gym and exercise equipment in the United States.
42392 Toy & Craft Supplies Wholesaling in the US This industry primarily wholesales hobby goods.
42432 Men’s & Boys’ Apparel Wholesaling in the US This industry includes operators involved in the wholesale of men’s and boy’s sporting apparel.
42433 Women’s & Children’s Apparel Wholesaling in the US This industry wholesales sporting apparel for women and infants.
Industry Definition
Main Activities
Similar Industries
About this Industry
The major products and services in this industry are
Athletic equipment
Bicycles
Billiards
Camping and fishing equipment
Hunting equipment and firearms
Marine pleasure craft, equipment and accessories
Skiing and snowboarding equipment
Pools and other
Provided to: Columbia Southern University (2134268182) | 07 November 2019
WWW.IBISWORLD.COM Sporting Goods Wholesaling in the US October 2019 3
About this Industry
42434 Footwear Wholesaling in the US This industry wholesales sporting footwear.
45111 Sporting Goods Stores in the US This industry includes operators that retail sporting goods.
Similar Industries continued
For additional information on this industry
www.nasgw.org National Association of Sporting Goods Wholesalers
www.nsga.org National Sporting Goods Association
www.sfia.org Sports & Fitness Industry Association
www.census.gov US Census Bureau
Additional Resources
IBISWorld writes over 1000 US industry reports, which are updated up to four times a year. To see all reports, go to www.ibisworld.com
Provided to: Columbia Southern University (2134268182) | 07 November 2019
WWW.IBISWORLD.COM Sporting Goods Wholesaling in the US October 2019 4
%
0.22
0.18
0.19
0.20
0.21
2612 14 16 18 20 22 24Year
Participation in sports
SOURCE: WWW.IBISWORLD.COM
% c
ha ng
e
15
-10
-5
0
5
10
2511 13 15 17 19 21 23Year
Revenue Employment
Revenue vs. employment growth
Products and services segmentation (2019)
25.4% Hunting equipment
and firearms
5.6% Marine pleasure craft,
equipment and accessories
24.7% Athletic equipment
1.8% Skiing and
snowboarding equipment
1.4% Billiards
19.4% Pools and other
15.0% Bicycles
6.7% Camping and fishing equipment
Key Statistics Snapshot
Industry at a Glance Sporting Goods Wholesaling in 2019
Industry Structure Life Cycle Stage Mature Revenue Volatility Medium
Capital Intensity Low
Industry Assistance Low
Concentration Level Low
Regulation Level Light
Technology Change Medium
Barriers to Entry Medium
Industry Globalization Low
Competition Level High
Revenue
$39.1bn Profit
$1.9bn Wages
$4.1bn Businesses
20,965
Annual Growth 19–24
0.9% Annual Growth 14–19
-0.1%
Key External Drivers Participation in sports Percentage of services conducted online Per capita disposable income Demand from sporting goods stores
Market Share Pool Corporation 8.0%
p. 25
p. 5
FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 32
SOURCE: WWW.IBISWORLD.COM
Provided to: Columbia Southern University (2134268182) | 07 November 2019
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Key External Drivers Participation in sports As the rate of sports participation increases, so does demand for sporting and other recreational goods. Factors increasing participation in sports include the popularity of organized team sports and athletic department funding in schools. Growth for these programs increases the rate of sports participation, positively affecting demand for sporting goods and increasing demand for sporting goods wholesalers’ services. Professional sporting events also fuel
sports participation by exciting and inspiring youth audiences. Participation in sports is expected to increase in 2019.
Percentage of services conducted online Growth in the percentage of services conducted online negatively affects Sporting Goods Wholesaling industry revenue. Often, online retailers will ship goods directly from manufacturers to consumers, without the use of wholesalers to supply in-store inventory. As retailers’ e-commerce platforms
Executive Summary The Sporting Goods Wholesaling industry has contracted marginally over the five years to 2019, as large sporting goods manufacturers have bypassed wholesalers to sell directly to retailers. Additionally, many manufacturers have built vast e-commerce channels, bypassing both retailers and wholesalers. However, wholesalers’ strong relationships with small, specialty retailers have enabled them to partially mitigate revenue declines. Overall, industry revenue is projected to decline at an annualized rate
of 1.4% to $36.6 billion, with a 0.5% projected increase in 2019.
Specialty goods wholesaled by industry operators include equipment for niche sports or products that manufacturers cannot sell directly to consumers online. As disposable income, Consumer Confidence Index and participation in sports have risen over the past five years, revenue for specialty sporting goods retailers has risen as well, becoming a major source of demand for sporting goods wholesalers during the period. The increased sale of
high-margin specialty goods resulted in the industry’s profit expanding. The industry will become increasingly composed of nonemployer operators that supply small sporting goods retailers with specialty products that are not commonly found in national sporting goods chains. Hence, the number of industry enterprises and number of employees is expected to grow marginally over the five years to 2019 at an annualized rate of 1.2%, due to the entrance of nonemployers.
Over the five years to 2024, demand for industry services from large, national retailers is expected to fall as these retailers continue to buy directly from manufacturers. However, demand for industry services will persist from specialty sporting goods stores and localized, family-owned retailers. The number of nonemployers is expected to increase by 2024, further contributing toward growth in the industry. These stores will depend on industry establishments to source specialty products, such as niche sports gear. Local and specialty retailers are expected to be the primary source of industry demand during the outlook period. Industry revenue is expected to marginally increase over the next five years, increasing at an annualized rate of 0.6% to reach $37.7 billion in revenue by 2024.
Industry Performance Executive Summary | Key External Drivers | Current Performance Industry Outlook | Life Cycle Stage
Revenue for specialty sporting goods retailers has risen, becoming a major source of demand for sporting goods wholesalers
Provided to: Columbia Southern University (2134268182) | 07 November 2019
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Industry Performance
Key External Drivers continued
grow, they will increasingly sell goods online without the use of a wholesaler. As a result, the growth of e-commerce poses a threat to the sporting goods wholesaling business. The percentage of services conducted online is expected to grow in 2019.
Per capita disposable income As per capita disposable income increases, consumers are more willing to invest in or upgrade the sporting goods and equipment used during their leisure time. This is particularly important for higher-priced sports, such as skiing, scuba diving and golf, which require higher initial investment compared with other sports, such as soccer and football.
Per capita disposable income is expected to increase in 2019, representing a potential opportunity for the industry.
Demand from sporting goods stores The Sporting Goods Wholesaling industry derives a large share of demand from the Sporting Goods Stores industry (IBISWorld report 45111). As the Sporting Goods Stores industry performs well, it increases demand for wholesalers’ services and lifts industry revenue. While demand from sporting goods stores is expected to grow in 2019, the trend of sporting goods retailers bypassing wholesalers and sourcing from manufacturers is expected to pose a continued threat to the industry.
%
30
5
10
15
20
25
2612 14 16 18 20 22 24Year
Percentage of services conducted online
SOURCE: WWW.IBISWORLD.COM
%
0.22
0.18
0.19
0.20
0.21
2612 14 16 18 20 22 24Year
Participation in sports
Provided to: Columbia Southern University (2134268182) | 07 November 2019
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Industry Performance
Current Performance
Over the five years to 2019, the Sporting Goods Wholesaling industry is expected to contract moderately. However, national sporting goods retailers are anticipated to grow, bypassing sporting goods wholesalers and sourcing directly from manufacturers. Additionally, vertically integrated manufacturers that have developed e-commerce platforms are selling sporting goods directly to consumers. As a result, over the five years to 2019, industry revenue is projected to decline at an annualized rate of 1.4% to $36.6 billion, with a projected increase of 0.5% in 2019. However, industry profit, measured as earnings before interest and taxes, is expected to rise from 4.0% of revenue in 2014 to 5.2% in 2019, due to
the sale of high-margin specialty sporting goods to niche retailers.
% c
ha ng
e
15
-10
-5
0
5
10
2511 13 15 17 19 21 23Year
Industry revenue
SOURCE: WWW.IBISWORLD.COM
External factors Various factors have contributed to the growth of downstream sporting goods retailers overall. The Sporting Goods Stores industry (IBISWorld report 45111) has been positively affected by the increased popularity of sports participation and rising consumer spending. Participation in sports is expected to increase steadily, rising at an annualized rate of 1.4% over the five years to 2019. Further, Consumer Confidence Index is anticipated to grow at an annualized rate of 7.5% during the current period. However, the majority of growth for sporting goods stores is concentrated among a few large, national chains, such as Dick’s Sporting Goods and Bass Pro Shops. These large operators provide great convenience due to their large number of establishments and high product variety, which stems from numerous supplier relationships. Their significant purchasing power also enables many of these national sporting goods stores to bypass sporting goods wholesalers and source products directly from manufacturers. The Sporting Goods Stores industry is anticipated to grow an annualized 1.3% over the five years to 2019 as a result of growing in-store and e-commerce sporting goods sales.
Furthermore, the Gym, Health and Fitness Clubs industry (IBISWorld report 71394) is anticipated to grow an annualized 3.5% over the five years to 2019. More gyms, fitness clubs and consumers have required treadmills, weight machines, stair climbers and free weights from wholesalers as the number of gym memberships has risen and more individuals have participated in fitness at home or at gyms. Growth in sporting goods stores and fitness centers is reflective of greater interest in recreational sports and exercise nationwide. Greater interest in sports and physical activities in general will contribute to greater demand for athletic equipment and gear for common sports, but will also contribute to the growth of niche sports and activities. Frequently, niche sports, such as cycling, fencing, archery and hunting require equipment and gear that is not commonly found in national sporting goods stores. In addition, manufacturers of this niche equipment are more likely to go through wholesalers to find the most relevant demographics and neighborhoods in which to sell merchandise. Therefore, as the popularity of niche sports rises during
Provided to: Columbia Southern University (2134268182) | 07 November 2019
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Industry Performance
the current period, demand for sporting goods wholesalers to service specialty sporting goods stores will increase similarly. Revenue from servicing localized, specialty sporting goods stores will therefore mitigate the decline in industry revenue resulting from decreased demand from large, national sporting goods chains.
The online sale of sporting goods is also intensifying competition for sporting goods wholesalers. As more sporting goods retailers develop online presences, they will sell products online and ship directly from manufacturers, removing the need for wholesalers to replenish in-store inventory. In some cases,
sporting goods manufacturers will sell online directly to final customers, bypassing both wholesalers and retailers. However, some sporting goods cannot be purchased online. For example, firearms require in-store sale for identification purposes, and the wholesale distribution network for the supply of firearms is well- established. In addition, many retailers of firearms are small, family-owned enterprises that rely on wholesalers to give them access to a wider range of products and negotiate purchase prices on their behalf. These segments have thus created a stable source of industry demand during the current period.
External factors continued
Dominant trends Generally, the US consumer has become more health-conscious over recent years. In particular, the trend of more individuals participating in Pilates, cycling and individualized fitness activities has spurred demand for sporting goods from retailers. As a result, many downstream markets have demanded athletic gear and other sporting equipment from wholesalers to appeal to various demographics. For example, hunting equipment, which includes guns, knives and other accessories, such as vests, fared well over recent years due to an increase in the number of female hunters. Furthermore, as a growing number of individuals participated in fishing and hunting, according to the US Fish and Wildlife Service, more anglers and hunters required related equipment.
The dominant trend in the Sporting Goods Stores industry is that of manufacturers supplying the bulk of
products, while smaller wholesalers supply a handful of niche products. For example, Dick’s Sporting Goods, the largest operator in the Sporting Goods Stores industry, purchases 19.0% of its stock directly from Nike (latest data available). The remaining stock was purchased from 1,200 vendors, with no other vendor supplying more than 10.0% of the retailer’s total inventory. Providing a specialized range of products to large retailers is a viable strategy for industry operators and attests to the overall makeup of the industry. In fact, nonemployer establishments comprise over 70.0% of total industry establishments.
The US consumer has become more health- conscious over recent years
Industry landscape Over the five years to 2019, the number of industry enterprises is expected to increase at an annualized rate of 1.2% to 20,391 operators. Enterprise figures have been buoyed by small industry
operators, which have found a way to enter and remain in the industry by targeting niche retail chains or specialty sporting goods stores and offering a slim product portfolio of
Provided to: Columbia Southern University (2134268182) | 07 November 2019
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Industry Performance
Industry Outlook
Operators in the Sporting Goods Wholesaling industry are expected to encounter increasing competition from vertically integrated manufacturers selling directly to retailers over the five years to 2024. However, demand will persist from high-end, niche sporting goods retailers and from small, localized sporting goods stores. In addition, the industry will experience strong price-based competition from global manufacturers, which will inundate the market with low-cost
sporting goods to be sold in large, national sporting goods retailers. Often, these global manufacturers have the ability to sell directly to retailers, bypassing wholesalers altogether. Industry profit is expected to stagnate as strong demand for niche industry products is counteracted by retailers bypassing wholesalers and sourcing directly from manufacturers. Sporting goods wholesalers will adapt by specializing in servicing niche downstream markets.
high-quality goods. Additionally, though nonemployers comprise most of industry establishments, they account for less than 3.0% of industry revenue. As establishment numbers increase due to an influx of nonemployers, the net
effect is a slight increase in the number of industry employees. Over the five years to 2019, the number of industry employees is expected to increase at an annualized rate of 1.1% to 76,677 workers.
Industry landscape continued
External factors Participation in sports is expected to increase steadily during the five-year period. Similar to the current period, participation in sports is anticipated to grow at an annualized rate of 1.4% over the five years to 2024. Further, per capita disposable income is anticipated to grow at an annualized rate of 1.5% during the outlook period. Thus, as domestic consumers become increasingly health- conscious, sports grow in popularity and consumer spending rises, consumers are expected to increase their demand for sporting goods products. The majority of consumers will purchase sporting goods equipment from a handful of large, national sporting goods chains due to these retailers’ convenience and product variety. The competitive advantage of these massive sporting goods retailers arises from their brand recognition. Most of these large, national chains bypass sporting goods wholesalers, and due to their immense buying power, source
products directly from manufacturers. The Sporting Goods Stores industry (IBISWorld report 45111) is anticipated to grow an annualized 1.2% over the five years to 2024, due to growth in in-store and e-commerce sporting goods sales. However, most of this growth will not benefit sporting goods wholesalers, as the largest sporting goods retail stores will source directly from manufacturers.
Likewise, the Gym, Health and Fitness Clubs industry (IBISWorld report 71394) is anticipated to grow an annualized 0.7% over the five years to 2024. This trend, along with growth in sporting goods retail stores, is indicative of greater interest in sports nationwide. This interest will persist for common sports and activities
Participation in sports is expected to increase steadily during the period
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Industry Performance
that require general athletic equipment and gear but will also contribute to the growth of niche sports and activities. Often, specialty sports require equipment and gear not found in national sporting goods stores. In addition, manufacturers of this niche equipment are more likely to go through a wholesaler to find the correct vendors for their merchandise. As a result, as demand for specialty stores rises during the outlook period, demand from specialty sporting goods stores for industry services is expected to increase in like measure.
In addition, the rise of e-commerce sporting goods sales will result in retailers bypassing wholesalers and selling directly on online platforms, where products are
shipped directly from manufacturers. In some cases, sporting goods manufacturers will sell directly to final customers, bypassing both wholesalers and retailers. Consequently, various forms of competition, made possible by technology or the buying power of national sporting goods chains, will squeeze the financial opportunities of sporting goods wholesalers. However, some demand for sporting goods wholesaled by industry operators will also persist because of goods that cannot be purchased online, such as firearms. Overall, industry revenue is projected to increase over the five years to 2024, rising at an annualized rate of 0.6% to $37.7 billion.
External factors continued
Changing attitudes Current federal guidelines, as indicated by the President’s Council on Sports, Fitness, & Nutrition, propose that adults should get 150 minutes of moderately intense aerobic activity each week, such as walking, for at least 10 minutes at a time. According to the US National Health Interview Survey, which has been conducted on an annual basis since 1997, more than half of Americans reported that they got the recommended amount of leisurely physical activity. This represents an increase in physical activity from prior periods, reflecting the changing attitudes of the US population toward health and wellness routines and supporting underlying demand for the Sporting Goods Wholesaling industry.
Further, it is likely that changing perceptions and a shift toward a healthier society will be sustained in younger generations, supporting industry demand for years to come. Additionally, states such as Pennsylvania have passed regulations that encourage hunting. These new regulations will begin in early 2020 and are expected to further increase industry revenue.
More than half of Americans reported getting the recommended amount of leisurely physical activity
Industry structure Industry revenue is expected to marginally increase during the outlook period because more nonemploying enterprises that primarily aim to serve small, family-owned sporting goods stores are expected to enter the industry. As a result, the number of industry enterprises is projected to rise at an
annualized rate of 1.1% to 21,576 operators. Growth in industry participation is expected to yield an increase in industry employment. The number of industry employees is projected to rise at an annualized rate of 0.8% to 79,623 workers over the five years to 2024.
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Industry Performance The industry exhibits a moderate increase in profitability
The industry is tightly correlated with the general economy
The industry is susceptible to new technology and distribution methods
Life Cycle Stage
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Industry Performance
Industry Life Cycle Over the 10 years to 2024, industry value added, which measures an industry’s contribution to the overall economy, is expected to increase at an annualized rate of 1.3% for the Sporting Goods Wholesaling industry. Comparatively, US GDP is anticipated to rise at an annualized rate of 2.1% during the same period. Typically, an industry with an IVA lower than the growth rate of the overall economy reflects that the industry generates a decreasing share of total economic output. However, the industry still receives demand from a reliable customer base and exhibits a growing number of industry enterprises and employment during the 10-year period. The industry is also highly influenced by the general economic environment, such as growth in consumer spending and disposable income, reflecting its maturity. To support profit, many
sporting goods wholesalers have invested in online ordering and other tracking technologies to lower operational costs and streamline their distribution networks. Technological innovation primarily targets distribution methods, rather than industry products, another characteristic of a mature industry.
The trend of retailers buying directly from manufacturers remains the largest obstacle to viability for industry operators. Though there remain small niches of opportunity for industry operators, such as specializing in high- end, niche sporting goods products, this strategy will continue to be met with competition from vertically integrated manufacturers. Nevertheless, the industry’s shift toward specialization and cultivating strong relationships with end users will prevent drastic declines in industry revenue.
This industry is Mature
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Products and Services Hunting equipment and firearms The wholesaling of hunting equipment and firearms has steadily increased as a share of revenue for the Sporting Goods Wholesaling industry over the five years to 2019, accounting for 25.4% of revenue in 2019. The wholesaling of hunting equipment and firearms is a significant source of industry revenue, as the sale of firearms is entirely unaffected by the growth of e-commerce and relies on wholesaler relationships to service many small, family-owned dealers. Sales of high-end hunting equipment are supporting a fast-growing niche of high-income sportsmen in the Hunting and Trapping industry (IBISWorld report 11421). Additionally, much of the growth in this product segment over the past five years can be attributed to growth in the number of female hunters, an increase which has been sustained by industry associations’ marketing and outreach efforts to diversify the sport’s fan base. In
addition to increases in demand for hunting products, gun ownership has also grown over the past five years, which has also contributed to the boom in this product segment.
Bicycles Bicycles are expected to account for 15.0% of industry revenue in 2019. According to IBISWorld estimates, bike sales are expected to rise negligibly over the five years to 2019; however, due to growing popularity of public bikes and bike-sharing services in urban transportation, bike accessory sales, such as sales of helmets, are an increasing share of total sales in this product segment. Bicycles are expected to decline as a portion of industry revenue over the next five years.
Athletic equipment Athletic equipment is expected to make up 24.7% of industry revenue in 2019.
Products & Markets Supply Chain | Products and Services | Demand Determinants Major Markets | International Trade | Business Locations
KEY BUYING INDUSTRIES
45111 Sporting Goods Stores in the US Operators in this industry demand a range of sporting goods, which are then retailed to household consumers.
45211 Department Stores in the US Businesses that operate as department stores often have a store section dedicated to sporting goods that are in high demand by consumers.
45291 Warehouse Clubs & Supercenters in the US Warehouse clubs and superstores are also key buyers of sporting equipment and accessories from wholesalers.
71391 Golf Courses & Country Clubs in the US Golf courses and country clubs may purchase golf equipment from wholesalers.
71394 Gym, Health & Fitness Clubs in the US Gym, health and fitness clubs purchase exercise equipment from sporting goods wholesalers.
KEY SELLING INDUSTRIES
33992a Athletic & Sporting Goods Manufacturing in the US Manufacturers supply a range of sporting goods, including exercise equipment, golf equipment, camping equipment and fishing equipment.
33992b Gym & Exercise Equipment Manufacturing in the US Manufacturers supply a range of sporting goods, including exercise equipment, golf equipment, camping equipment and fishing equipment.
Supply Chain
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Products & Markets
Products and Services continued
Sporting goods wholesalers have increased their sales of treadmills, weight machines and stair climbers, due to growing demand from health clubs and gyms that required more equipment to address rising gym membership rates. The steady rise in gym membership can be attributed to many trends, such as more health-conscious individuals incorporating exercise into their daily regimen. Sales have also been supported by consumer involvement in campaigns combating adult and childhood obesity, such as the President’s Council on Sports, Fitness & Nutrition.
Camping and fishing equipment Camping and fishing equipment have risen as a share of revenue over the past five years. Camping equipment has largely increased because of an increase in the number of people that are camping than five years ago, according to the National Sporting Goods Association (NSGA). Camping and fishing equipment tend to be expensive, as products in this segment typically have a long useful life; hence, purchase in this product segment are less frequent compared with other sporting goods products. Camping and fishing equipment are expected to make up 6.7% of industry revenue in 2019.
Marine pleasure craft and other sporting goods The wholesale of marine pleasure craft is expected to account for an expected 5.6% of industry revenue in 2019. This product segment includes boats used for recreation, engines, mufflers, fuel and water pumps, in addition to assorted parts and supplies. A variety of other sports equipment, including gear and supplies for billiards, golf, scuba diving, snowboarding and skiing, is also wholesaled through this segment. This segment also includes optics gear and multisport protective equipment such as helmets. This segment has increased as a share of revenue over the five years to 2019.
Swimming pools, pool supplies and other equipment Swimming pools and pool supplies are expected to account for 12.2% of industry revenue in 2019. This product segment includes outdoor pools, automatic pool cleaners, pool-maintenance items, pool pumps and filters, safety equipment, pool accessories and pool toys. Since items in this product segment are largely considered to be discretionary, this category is expected to have grown in response to rising disposable incomes over the past five years.
Products and services segmentation (2019)
Total $39.1bn
25.4% Hunting equipment and firearms
5.6% Marine pleasure craft,
equipment and accessories
24.7% Athletic equipment
1.8% Skiing and
snowboarding equipment
1.4% Billiards
19.4% Pools and other
15.0% Bicycles
6.7% Camping and fishing equipment
SOURCE: WWW.IBISWORLD.COM
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Products & Markets
Major Markets Businesses Businesses are expected to account for 62.3% of revenue for the Sporting Goods Wholesaling industry. This market segment includes retailers that resell goods wholesaled from industry operators, businesses for end use in their own operations and export sales to business abroad. Over the five years to 2019, the Sporting Goods Stores industry (IBISWorld report 45111) exhibited growth, which has created some demand for sporting goods wholesaled by industry operators. However, large-scale sporting goods stores were able to bypass sporting
goods wholesalers by securing contracts directly with manufacturers. Nonetheless, many small, specialty sporting goods stores still purchased sporting goods at the wholesale level.
Over the five years to 2024, this market segment will grow as a percentage of revenue as sporting goods wholesalers continue to develop niches and relationships with specialty sporting goods stores. In addition, businesses’ consumption of industry products for end use will rise during the outlook period, as more corporations invest in recreational facilities.
Demand Determinants
Demand for the Sporting Goods Wholesaling industry is driven by consumer spending, consumer preferences for various types of sporting activities and overall participation in sports. Consumer preferences are influenced by a range of factors including endorsements of specific sporting goods by popular athletes, which may contribute to a rise in the popularity of a particular sport, or growing consumer awareness about the importance of regular exercise.
Wholesale demand for sporting and recreational equipment is largely driven by trends at the retail level. Consumers’ discretionary income determines the quality, quantity and frequency of sporting goods purchased. The sports participation rate, which measures the percentage of people who participate in sports or recreational exercise daily, also determines demand for sporting goods. As the sports participation rate rises, demand for sporting goods rises in like measure. Further, rising disposable income will lead
to greater participation in niche sports, such as cycling, fencing and various fitness regimens, which require the purchase of expensive equipment.
The growth and age of the population also affects demand for sporting goods. Population demographics influence the type of sporting activity undertaken by consumers and the type of equipment they require. For example, younger consumers, such as adolescents and teenagers, commonly demand bicycles, whereas older demographics prefer golfing and bowling equipment. Furthermore, leisure time determines demand for sporting goods. Seasonal factors will also affect demand for products in this industry. For example, weather conditions, such as precipitation and heat, determine if certain outdoor sports can be played. More periods of favorable weather conditions, such as longer summers, tend to encourage more outdoor activities, which increases demand for sporting goods.
Products and Services continued
Other equipment is expected to generate 7.2% of industry revenue in 2019. This segment includes equipment for playgrounds and other recreational
games such as bingo. This product segment has fallen over the past five years as consumers have gravitated to purchases for sport-specific equipment.
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Products & Markets
Major Markets continued
Wholesalers for resale Wholesalers often trade among themselves for various reasons, including profitable last-minute deals, shortages of inventory, spikes in demand due to seasonality and their inability to source products directly from overseas. Such trade is expected to account for 25.4% of revenue in 2019. This segment’s share has increased over the past five years. As retailers bypass wholesalers in the supply chain, several wholesalers’ abilities to procure items directly from large manufacturers have diminished, leading to the need for relationships with other wholesalers.
Other This segment is expected to make up 12.3% of industry revenue in 2019. This segment includes all the remaining consumers of industry products, such as repair shops and household consumers. This segment is expected to shrink over the five years to 2019 as household consumers increasingly purchase from online retailers. Repair shops, however, will generate steady demand in this segment, as an increased number of products in circulation leads to greater need for product repair. However, demand from household consumers is expected to dwindle further, due to the rise of vertical integrated manufacturers and online retailers.
Major market segmentation (2019)
Total $39.1bn
62.3% Retailers for resale
25.4% Wholesale establishments for resale
12.3% Other
SOURCE: WWW.IBISWORLD.COM
International Trade International trade is typically registered at the manufacturing level instead of the wholesale level. However, changes in the trade of sporting goods still affect operators in the Sporting Goods Wholesaling industry. International trade in sporting goods has been subject to increasing levels of competition from products manufactured in Asia, particularly in China and Taiwan. Typically, foreign manufacturers are able to produce similar products at
comparatively lower operating costs. The influx of imported goods into the domestic market has created an intense competitive environment for wholesalers. The availability of low-cost sporting goods has made it difficult for wholesalers to sell their merchandise to retailers at profit. As a result, many industry operators have resorted to differentiating themselves on the bases of product quality, durability and customer loyalty. However,
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WWW.IBISWORLD.COM Sporting Goods Wholesaling in the US October 2019 17
Products & Markets
specialty imported sporting goods often require the aid of sporting goods wholesalers to find the correct
demographics and locations in which to sell merchandise, creating an opportunity for industry operators.
International Trade continued
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Products & Markets
Business Locations 2019
MO 1.6
West
West
West
Rocky Mountains Plains
Southwest
Southeast
New England
VT 0.3
MA 1.9
RI 0.4
NJ 3.3
DE 0.1
NH 0.6
CT 0.9
MD 1.3
DC 0.0
1
5
3
7
2
6
4
8 9
Additional States (as marked on map)
AZ 1.9
CA 19.0
NV 1.0
OR 1.5
WA 3.7
MT 0.5
NE 0.3
MN 2.4
IA 0.7
OH 2.9
VA 1.5
FL 10.0
KS 0.7
CO 2.8
UT 1.9
ID 0.6
TX 6.5
OK 0.7
NC 2.1
AK 0.3
WY 0.2
TN 1.6
KY 0.7
GA 3.0
IL 3.7
ME 0.4
ND 0.1
WI 1.6 MI
2.4 PA 2.5
WV 0.2
SD 0.2
NM 0.3
AR 0.7
MS 0.3
AL 1.1
SC 1.3
LA 1.0
HI 0.5
IN 1.6
NY 5.2 5
6 7
8
3 21
4
9
SOURCE: WWW.IBISWORLD.COM
Mid- Atlantic
Establishments (%)
Less than 3% 3% to less than 10% 10% to less than 20% 20% or more
Great Lakes
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Products & Markets
Business Locations The Sporting Goods Wholesaling industry is concentrated in the Southeast and West regions of the United States, which combined account for just under 50.0% of total industry establishments. Population, climate and access to transportation are determinants of geographic industry segmentation.
Sporting goods wholesalers in the Southeast (23.5% of establishments) are concentrated in Florida, which comprises 10.0% of total establishments. The state’s warmer climate makes it ideal for sporting and recreational activity. Similarly, the West (26.2%) region offers a warm and sunny climate, which is conducive for sporting and recreational activities. California, the most concentrated state in the country in terms of industry establishments, makes up 19.0% of total industry establishments. Additionally, California has some of the largest seaports in the United States, offering wholesalers the ability to transport industry products to foreign markets and receive imports from China and Taiwan. Due to its high population and warmer climate conducive to outdoor activity, Texas is also a prominent state in the industry, representing 6.5% of the industry’s establishments.
New York is one of the United States’ largest seaports and makes up 5.1% of
total industry establishments, offering wholesalers based in this region the ability to transport goods to Europe and abroad. Wholesalers in the New England region, which makes up 4.6% of industry establishments, also benefit from being near New York’s seaports. The regions located across the Rocky Mountains (6.0%) generated the majority of their sales from skiing, snowboarding, camping and outdoor equipment, reflective of the activities most popular in this region.
%
30
0
10
20
So ut
hw es
t
W es
t
G re
at L
ak es
M id
-A tl
an ti
c
N ew
E ng
la nd
Pl ai
ns
R oc
ky M
ou nt
ai ns
So ut
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t
Establishments Population
Distribution of establishments vs. population
SOURCE: WWW.IBISWORLD.COM
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Cost Structure Benchmarks
Depending on an operator’s size and location, cost structures vary in the Sporting Goods Wholesaling industry. The following breakdown provides cost associated with each segment for the average industry operator.
Wages In 2019, wages are expected to account for 10.6% of industry revenue. While wholesalers use technology for packaging, sorting, storing and transporting sporting goods, which is an
Key Success Factors Ability to control stock on hand A lower stock level attained through the use of computer inventory management technology lowers the costs of warehousing and minimizes cash tied up in stock.
Upstream vertical integration (ownership links) To be successful, wholesalers need to have the control over their costs and product design. Vertical integration grants these benefits.
Having contacts within key markets Contacts with retailers not only gives the wholesaler the luxury of a constant income stream but also enables them to trim their inventory to reflect retail
market conditions. Contacts with suppliers enable wholesalers to source lowest-cost products.
Must have license A license to distribute a popular brand enables the wholesaler to corner a niche market.
Proximity to key markets Close relationships with localized retail stores is crucial to sustaining cash flow and maintaining profitability.
Effective product promotion Promotion of the wholesaler’s products by manufacturers and retailers saves the wholesaler marketing costs.
Market Share Concentration
The Sporting Goods Wholesaling industry is very fragmented, as the industry largely consists of small wholesalers that distribute sporting goods for a particular sport. Most customers of the industry are small, localized sporting goods stores that specialize in a particular type of sporting good. For example, many wholesalers specialize in golf equipment, cycling, firearms or home fitness equipment with minimal overlap. Catering to localized sporting goods retailers grants sporting goods wholesalers the greatest opportunity to add value in the supply chain, since large, national retailers can simply source generic products directly from manufacturers. As a result of the industry’s localized focus, market share
concentration remains low. In 2019, the top five sporting goods wholesalers are expected to account for less than 11.0% of industry revenue. Further, nonemployers are expected to account for more than 70.0% of all industry establishments; nonemployers have increased as a share of total industry establishments over the five years to 2019.
Due to low market share concentration and high fragmentation, the industry is highly competitive, with wholesalers competing on the bases of product variety, distribution and price. Consolidation and merger activity will exacerbate the movement toward greater market share concentration, but the industry will remain highly fragmented for the foreseeable future.
Competitive Landscape Market Share Concentration | Key Success Factors | Cost Structure Benchmarks Basis of Competition | Barriers to Entry | Industry Globalization
Level Concentration in this industry is Low
IBISWorld identifies 250 Key Success Factors for a business. The most important for this industry are:
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Competitive Landscape
Cost Structure Benchmarks continued
integral component in ensuring accurate and timely delivery of merchandise to retailers, the distribution process relies primarily on labor. Employees are required to maintain inventory levels by negotiating purchase costs with sporting goods manufacturers and establishing favorable contracts with retailers. Over the past five years, wages have risen as a share of revenue due to the expanded payrolls of the industry’s largest operators and the entrance of nonemployer operators. Advances in data storage, product tracking and inventory management have revolutionized the ordering and delivery process from wholesalers to retailers; however, labor remains an integral component in the production process.
Purchases The greatest cost for operators in the Sporting Goods Wholesaling industry is
the purchase of product stock. This expense can fluctuate between 60.0% and 70.0% of a sporting wholesaler’s revenue. In 2019, purchase costs are anticipated to make up 62.8% of industry revenue on average. In general, the health of the domestic economy dictates retail sales and therefore demand at the wholesale and manufacturing levels. As a result, purchases are anticipated to increase slightly over the five years to 2024, driven by higher disposable income and consumer spending.
Profit The Sporting Goods Wholesaling industry’s profit, measured as earnings before interest and taxes, is expected to account for 4.7% of industry revenue in 2019, rising from 4.0% in 2014. The influx of low-cost sporting goods imports from global sporting goods manufacturers has presented a threat for wholesalers, as
Sector vs. Industry Costs
n Profi t n Wages n Purchases n Depreciation n Marketing n Rent & Utilities n Other
Average Costs of all Industries in sector (2019)
Industry Costs (2019)
0
20
40
60
Pe rc
en ta
ge o
f re
ve nu
e
80
100
SOURCE: WWW.IBISWORLD.COM
3.6 4.8
20.3 0.4 0.60.6
62.9
10.4
14.1 0.60.3 0.6
75.2
5.6
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Competitive Landscape
Basis of Competition Operators in the Sporting Goods Wholesaling industry compete with each other on the bases of price, product range, product quality, reliability and speed of delivery, customer service and brand recognition. Over the five years to 2019, the level of internal competition within this industry has intensified, owing to growth in the volume of sporting goods imported into the United States from
China. Retailers want to pay the lowest possible price for a given product or brand to maximize their own profit. As a result, price is a major source of competition between wholesalers. Wholesalers that can negotiate exclusive distribution rights can limit supply of that product and preserve profit. Retailers have many different vendors from which to purchase sporting goods products, which keeps the
Cost Structure Benchmarks continued
retailers often purchase directly from these companies due to their competitive pricing. In addition, the entry of less expensive, imported goods leads to intense price-based competition among industry operators, which must sell their inventory at below-market rates.
While wholesalers benefited from more manufacturers investing in new technologies, such as new fitness equipment, which attract higher prices for sporting goods, the benefits of this trend were neutralized as retailers bypassed wholesalers and purchased directly from manufacturers. Together, competition from vertically integrated manufactures and the presence of inexpensive imports have placed downward pressure on industry profitability over the five years to 2019. Nonetheless, industry profit has expanded during the period due to the sale of high margin specialty equipment that is less vulnerable to imports.
Depreciation Depreciation costs are low for industry operators and generally include charges applicable to assets such as buildings, vehicles, storage equipment, machinery and computer inventory systems. In 2019, depreciation is expected to account for 0.6% of the average operator’s revenue.
Marketing Advertising expenditure is estimated to account for 0.6% of total industry sales.
Wholesalers, more than 70.0% of which are nonemployers, must effectively advertise to small sporting goods stores nationwide, which are more difficult to reach and retain as clients. Thus, advertising comprises a noteworthy share of industry revenue. Larger wholesalers largely rely on the establishment of loyal relationships with suppliers and retailers, rather than investing in advertising.
Rent Rent costs for this industry largely cover expenditure required for storage facilities and the use of machinery and equipment, such as forklifts, which may be leased. In 2019, rent and utilities are expected to comprise 0.3% of industry revenue. Over the past five years, rental costs have remained relatively stable.
Utilities Utility costs are low for wholesale operators, as much of their work is done in warehouses and on the road. As a result, utilities are expected to account for just 0.1% of industry revenue in 2019.
Other Other costs include fuel and vehicular expenses, taxes and licensing fees, in addition to purchased professional and technical services, all of which amount to 20.2% of industry revenue in this distribution-oriented industry.
Level & Trend Competition in this industry is High and the trend is Steady
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Competitive Landscape
Barriers to Entry The Sporting Goods Wholesaling industry is characterized by moderate barriers to entry. Over the five years to 2019, the business environment for operators has become intensely competitive due to the influx of merchandise manufactured in Asia. Wholesalers that do not stock low- cost merchandise manufactured in Asia have differentiated themselves on the bases of product range and quality. Alternatively, wholesalers that have chosen to stock goods manufactured from global markets, especially from China, have contended with strong price-based competition.
New industry entrants are required to outlay capital to establish and maintain computerized inventory controls, machinery to move stock and invest in
warehousing and transportation. Established players have integrated supply and distribution systems with manufacturers and retailers. The presence of existing distribution networks between operators and
Basis of Competition continued
general level of pricing charged by wholesalers relatively low.
Internal competition Wholesalers may compete on the basis of product range; being a one-stop shop supply of sporting goods to retailers is a competitive advantage. Large retailers will tend to favor large wholesalers that have the inventory and distribution network necessary to stock their shelves with sporting goods. Retailers may also integrate supply into their operations, posing a threat to industry wholesalers. Wholesalers also compete based on access to high-quality sporting goods from manufacturers, commonly produced in the United States, as a point of differentiation from less expensive Asian imports. Retailers demand accurate and timely orders, therefore, wholesalers that have a reputation for meeting strict delivery dates and times will remain competitive. Large wholesalers that have the distribution network necessary to supply multiple locations worldwide, particularly for chain retailers, will be favored compared
with small-scale wholesalers. Additionally, the level of customer service by a wholesaler, when interacting with a retailer or manufacturer, is critical for engendering repeat sales. Maintaining strong customer service can range from the hours of operation and delivery to and product packaging. The potential introduction of stricter regulations on firearms poses a potential threat to the industry.
External competition Sporting good wholesalers compete with other industries that offer alternative ways for consumers to spend their leisure time. For example, the rising variety of video games is a threat to sporting goods as consumers forego real sports for playing sports-oriented video games. Similarly, consumers may choose toy and hobby goods, arts and crafts or games and puzzles instead of participating in sports. Wholesalers also compete with manufacturer sales to retailers, which undercut wholesalers altogether. In response, wholesalers have invested in online ordering systems for end users.
Level & Trend Barriers to Entry in this industry are Medium and Steady
Barriers to Entry checklist
Competition High Concentration Low Life Cycle Stage Mature Capital Intensity Low Technology Change Medium Regulation and Policy Light Industry Assistance Low
SOURCE: WWW.IBISWORLD.COM
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Competitive Landscape
Industry Globalization
Globalization levels for the Sporting Goods Wholesaling industry have remained low over the five years to 2019, owing largely to the continued dominance of US-owned companies operating in the domestic market and the industry’s high composition of domestic nonemployers. While the globalization level for this industry is low, globalization for this industry may increase as
domestic sporting goods retailers source products directly from foreign manufactures. One way that incumbent wholesalers will gain competitive advantage is through the import and distribution of foreign sporting goods. The trend of rising imports, detailed in IBISWorld report 33992a, is expected to create opportunities for wholesalers over the five years to 2019.
Barriers to Entry continued
suppliers are a barrier to entry for new entrants. To compete with incumbent operators, a new entrant would require strong relationships with upstream manufacturers and downstream retailers. This may involve the acquisition of expensive licensing agreements and the discounting of stock to obtain market share. The level of product differentiation among industry players is varied. Most industry
operators, serving a localized, niche market of sporting goods retailers, wholesale a specialized line of sporting goods. By specializing in a product line, operators are able to provide retailers with an extensive product range within a category and create a competitive advantage. Developing relationships to supply such a product line requires investments in capital, labor and time, creating additional barriers to entry.
Level & Trend Globalization in this industry is Low and the trend is Steady
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Player Performance Founded in 1993, Pool Corporation is headquartered in Covington, LA. The company is the world’s largest distributor of pool supplies, operating 364 sales centers globally. Due to the highly fragmented nature of retailing swimming pools, the company thrives by nurturing relationships with many manufacturers and purchasing a wide variety of products. This business strategy enables retail customers to secure greater variety at a better price. The company has a diversified customer base, as the company’s 100 largest customers account for just over 10.0% of total sales; in 2018, the company served 120,000 customers, 98.0% of which are small, family-owned businesses. These customers are typically specialty swimming pool retailers, swimming pool remodelers and builders, in addition to swimming pool repair services. The company employed an estimated 4,000 people as of the end of 2018.
Financial performance The company has posted strong gains in revenue over the five years to 2019. The company has also experienced higher profitability, resulting from the sale of high-margin specialty pool products. The company forecasts favorable revenue growth over the five years to 2024, due to growth of commercial pools and anticipated increases in pool remodeling and construction. Over the past five years, Pool Corporation is anticipated to generate $2.9 billion in revenue, growing an annualized 7.6%. In addition, operating income is anticipated to reach $356.9 million in 2019, supported by improvements in supply chain management and price negotiations. Pool Corporation acquired the distribution assets of Turf & Garden Inc. (Turf & Garden) in November 2018, for the amount of $1.5 million. Turf & Garden are a wholesale distributor of irrigation
Major Companies Pool Corporation | Other Companies
92.0% Other
Pool Corporation 8.0% SOURCE: WWW.IBISWORLD.COM
Major Players (Market Share)
Pool Corporation (US industry-specifi c segment) - fi nancial performance*
Year Revenue
($ million) (% change) Operating Income
($ million) (% change)
2014 2,037 N/C 188.4 N/C
2015 2,168.8 6.5 217.7 15.6
2016 2,354.7 8.6 255.9 17.5
2017 2,545.3 8.1 259.6 1.4
2018 2,720.1 6.9 284.8 9.7
2019 2,937.7 8.0 325.5 14.3
*Estimates SOURCE: ANNUAL REPORT AND IBISWORLD
Pool Corporation Market Share: 8.0%
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Major Companies
Other Company Performance
Founded in 1953 as a wholesale hunting and fishing distributor, Lipsey’s LLC is a leading distributor of wholesale firearms in the United States, servicing over 7,600 dealers across the country. The company is headquartered near New Orleans and remains independently owned. Across
the company’s history, it has distributed a wide range of sporting goods, including fishing supplies, athletic gear and sneakers. However, the company exited the distribution of athletic goods in the late 1980’s to focus exclusively on the distribution of firearms, where it currently holds a
Other Company Performance
Since its founding in 1923, Maurice Sporting Goods Inc. (Maurice) has grown into a premier international sporting goods distributor. From its headquarters in the Chicago suburb of Northbrook, IL, the company operates three distribution facilities and maintains partnerships with over 1,000 vendors, distributing fishing, hunting, camping, hiking and athletic equipment and products to over 15,000 brick-and-mortar retailers. The company’s distribution centers are in Northbrook, IL; Reno, NV; and St. Clair, MO. The company employs over 250 people, a large
share of whom are field representatives that build new retail relationships. Industry revenue is derived from a variety of core services, including retail category management, merchandising expertise, in-store merchandising and its vast distribution network. Maurice was acquired by private equity firm Middleton Partners following bankruptcy in 2017. The firm now reports to be capitalized to continue operations over the coming years. In 2019, the company is expected to generate $118.2 million in industry- specific revenue.
Other Company Performance
Headquartered in Bloomington, MN, Quality Bicycle Products Inc. (QBP) is a leading wholesale distributor of bicycles and bicycle supplies and accessories. Founded in 1981, the company has grown to become one of the largest bicycle wholesalers in the United States, carrying more than 36,000 products from 450 different vendors and providing service to more than 5,000 independent bicycle dealers across the country. QBP employs 600 workers and has four distribution centers in the United States, including its
120,000-square foot location in Lancaster, PA, which opened in 2013. Besides the company’s Bloomington headquarters and Lancaster distribution center, the company also manages locations in Reno, NV, and Denver. Due to the company’s wide distribution base and infrastructure in the United States, it is expected to be one of the largest bicycle retailers in the Sporting Goods Wholesaling industry. Based on company locations, IBISWorld estimates that the company will generate $283.6 million in revenue in 2019.
Player Performance continued
products and landscape maintenance equipment, parts and supplies. They have three locations in Virginia and one location in North Carolina. This
acquisition will improve their distribution in the US and help further solidify themselves as the largest distributor of pool supplies.
Quality Bicycle Products Inc. Market Share: 0.8%
Maurice Sporting Goods Inc. Market Share: 0.3%
Lipsey’s LLC Market Share: 0.1%
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Major Companies
Other Company Performance continued
commanding market position. The company current employs more than 80 people and is expected to generate $38.7 million in revenue in 2019.
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Capital Intensity The Sporting Goods Wholesaling industry exhibits a low level of capital intensity. In 2019, for every $1.00 spent on labor, the industry spends $0.06 on capital. Typically, industry operators invest in capital such as warehousing facilities, machinery and equipment to lift or load merchandise, transportation for the delivery of merchandise, along with computer systems for the management of inventory. The use of computer technology in inventory management reduces the costs involved in locating stock and storing additional, unnecessary stock. Also, it aims to reduce the amount of time that stock remains in the wholesaler’s possession. Stagnant stock incurs significant carrying costs for the wholesaler. While in the past, employees have controlled inventory via
manual records and stock counts, computer technology is faster and more cost efficient.
Operating Conditions Capital Intensity | Technology & Systems | Revenue Volatility Regulation & Policy | Industry Assistance
Capital Intensity
0.5
0.0
0.1
0.2
0.3
0.4
SOURCE: WWW.IBISWORLD.COM Dotted line shows a high level of capital intensity
Capital units per labor unit
Sporting Goods Wholesaling
Wholesale Trade
Economy
Level The level of capital intensity is Low
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Operating Conditions
Revenue Volatility The Sporting Goods Wholesaling industry has a low level of revenue volatility. Although industry revenue has been gradually declining over the five years to 2019, demand from specialized, local sporting goods retailers has tempered this decline. Demand from specialty sporting goods stores for industry operators has grown during the five-year period as these stores grow in revenue and profitability. Revenue for specialty sporting goods is sustained by healthy per capita disposable income and higher consumer spending among consumers since the products they sell are discretionary in nature.
In addition, the emergence of e-commerce has negatively affected retailer sporting goods stores. As customers buy an increasing amount of sporting goods, especially athletic equipment, online, wholesalers receive smaller retail orders for sporting goods, contributing to decline in industry revenue during the five-year period. The effects of retailers bypassing wholesalers and e-commerce hindering wholesale revenue growth are gradual and are only expected to moderately depress industry revenue; strong demand for wholesalers still exists from specialty sporting goods retailers.
Technology and Systems
The use of computerized systems for data storage, product tracking and customer relationship management for sporting goods wholesaling has been increasing, particularly with regard to inventory control systems using electronic data interchange (EDI). Wholesalers’ profitability depends on the time between purchase and resale of Sporting Goods Wholesaling industry products. Therefore, it is paramount that up-to- date knowledge of existing stock and customer orders exists. Computerized inventory control systems are specifically designed to facilitate efficient throughput. These systems increase profitability by reducing the cost of holding unnecessary inventory and
ensuring that there is sufficient inventory of in-demand products.
The use of EDI can assist wholesalers that are active in importing and exporting sporting goods. Not only does EDI provide an instant and open link with the customer or supplier, it can also provide an accurate status report on the cargo, whether it is in transit or awaiting customs clearance. Furthermore, the use of material handling equipment (forklifts, conveyors) to facilitate the flow of materials at warehouses has been established over the past several decades. Also, various location services are deployed by wholesalers to track storage and shipment of inventory, maximizing the efficiency of deliveries.
Capital Intensity continued
Despite the industry’s need for capital, labor remains the dominant component of daily operations. The level of labor is reflective in the industry’s need for sales, stock persons and apprentices for the sales and distribution of the products. The primary function of the wholesaling industry is to transport merchandise into the market. This involves marketing
products and collecting, preparing, checking and shipping orders to customers. While the industry is increasingly relying on greater use of computer technology, there will always be a need for human labor to oversee the ordering and dispatch of merchandise and to provide additional customer service to manufacturers and retailers.
Level The level of technology change is Medium
Level The level of volatility is Medium
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Operating Conditions
Regulation and Policy The level of regulation imposed specifically on the Sporting Goods Wholesaling industry is generally light. However, participants are subject to antitrust regulations that apply to companies of all industries. Antitrust laws outlined in the Sherman Antitrust Act (1890), the Wilson Act (1894), the Clayton Act (1914) and the Robinson- Patman Act (1936) are relevant to this industry. These laws are particularly pertinent to this wholesale industry as any attempts by manufacturers or retailers to vertically integrate will be heavily scrutinized by the Federal Trade Commission (FTC).
Sherman Antitrust Act (1890) This was the first measure passed by US Congress to prohibit trusts, which affects the sale of products and services generally across the United States. Prior to its enactment, various states had passed similar laws, but they were limited to intrastate businesses. Opposition to the concentration of economic power in large corporations and in combinations of business concerns led Congress to pass the Sherman Act. The Act, based on the constitutional power of Congress to
regulate interstate commerce, declared illegal every contract, combination (in the form of trust or otherwise) or conspiracy in restraint of interstate and foreign trade. The Act authorized the federal government to institute proceedings against trusts to dissolve them, but Supreme Court rulings prevented federal authorities from using the act for some years. As a result of President Theodore Roosevelt’s trust- busting campaigns, the Sherman Act began to be invoked with some success.
Clayton Antitrust Act (1914) This Act was enacted to supplement the Sherman Antitrust Act, partially by setting up the Federal Trade Commission (1914). Antitrust action sharply declined in the 1920s, but under President Franklin Roosevelt, new acts supplementary to the Sherman Antitrust Act were passed (e.g., the Robinson-Patman Act). The Hart- Scott-Rodino Anti-Trust Improvement Act (1976) made it easier for regulators to investigate mergers for antitrust violations, but few mergers were blocked during the merger boom of the 1980s.
The act prohibited exclusive sales contracts, local price cutting to freeze out competitors, rebates, interlocking
Revenue Volatility continued
Level & Trend The level of Regulation is Light and the trend is Steady
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Operating Conditions
Industry Assistance The Sporting Goods Wholesaling industry receives no assistance from the government. However, the national Association of Sporting Goods Wholesalers (NASGW) serves the
industry by organizing sporting expos, awarding manufacturers of premium sporting goods products and serving as an intermediary with other sporting goods associations.
Regulation and Policy continued
directorates in corporations capitalized at $1.0 million or more in the same field of business and intercorporate stock holdings. Later amendments to the act strengthened its provisions against unfair price cutting (1936) and intercorporate stock holdings (1950).
Robinson-Patman Act (1936) The Robinson-Patman Act was passed by US Congress in 1936 to supplement the Clayton Antitrust Act. It forbade any person or operator engaged in interstate commerce to discriminate in price to different purchasers of the same commodity when the effect would be to
lessen competition or to create a monopoly. Sometimes called the Anti- Chain-Store Act, this legislation was directed at protecting the independent retailer from chain-store competition, but it was also strongly supported by wholesalers eager to prevent large chain stores from buying directly from the manufacturers for lower prices.
Various other regulations regarding unfair competition affect the manner in which a wholesaler does business. In addition, states have enacted their own antitrust laws to ensure that the general public is provided with best prices, quality and competition among businesses.
Level & Trend The level of Industry Assistance is Low and the trend is Steady
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Key Statistics Revenue
($m)
Industry Value Added
($m) Establish-
ments Enterprises Employment Exports Imports Wages ($m)
Domestic Demand
Participa- tion in sport
(%) 2010 38,498.5 4,887.0 16,781 16,372 62,735 -- -- 3,039.1 N/A 18.5 2011 37,804.8 4,789.2 17,242 16,700 63,841 -- -- 3,012.4 N/A 18.6 2012 42,089.0 4,925.9 18,401 17,213 71,133 -- -- 3,073.9 N/A 19.3 2013 40,122.1 5,631.0 19,377 18,610 71,543 -- -- 3,584.8 N/A 18.6 2014 39,225.2 5,301.7 19,687 19,215 72,422 -- -- 3,497.4 N/A 19.1 2015 36,387.1 5,310.1 20,270 19,494 74,396 -- -- 3,527.2 N/A 20.4 2016 35,653.9 5,575.6 19,879 19,215 73,550 -- -- 3,721.6 N/A 20.9 2017 37,070.7 6,114.1 20,498 19,797 76,062 -- -- 3,852.8 N/A 19.0 2018 39,148.8 6,123.5 21,319 20,565 79,664 -- -- 4,042.0 N/A 20.3 2019 39,102.3 6,212.0 21,706 20,965 80,420 -- -- 4,071.7 N/A 20.5 2020 39,173.4 6,247.8 22,036 21,312 81,039 -- -- 4,098.2 N/A 21.0 2021 38,815.4 6,194.3 22,203 21,499 81,011 -- -- 4,089.6 N/A 20.7 2022 39,563.9 6,326.6 22,607 21,886 82,508 -- -- 4,165.8 N/A 21.2 2023 40,397.4 6,460.0 23,013 22,277 84,095 -- -- 4,247.5 N/A 21.8 2024 40,943.3 6,543.1 23,429 22,687 85,409 -- -- 4,312.1 N/A 22.0 Sector Rank 47/67 37/67 5/67 6/67 30/67 N/A N/A 33/67 N/A N/A Economy Rank 252/694 357/694 213/694 205/694 353/694 N/A N/A 328/694 N/A N/A
IVA/Revenue (%)
Imports/ Demand
(%)
Exports/ Revenue
(%)
Revenue per Employee
($’000) Wages/Revenue
(%) Employees
per Est. Average Wage
($)
Share of the Economy
(%) 2010 12.69 N/A N/A 613.67 7.89 3.74 48,443.45 0.03 2011 12.67 N/A N/A 592.17 7.97 3.70 47,185.98 0.03 2012 11.70 N/A N/A 591.69 7.30 3.87 43,213.42 0.03 2013 14.03 N/A N/A 560.81 8.93 3.69 50,106.93 0.03 2014 13.52 N/A N/A 541.62 8.92 3.68 48,291.96 0.03 2015 14.59 N/A N/A 489.10 9.69 3.67 47,411.15 0.03 2016 15.64 N/A N/A 484.76 10.44 3.70 50,599.59 0.03 2017 16.49 N/A N/A 487.37 10.39 3.71 50,653.41 0.03 2018 15.64 N/A N/A 491.42 10.32 3.74 50,738.10 0.03 2019 15.89 N/A N/A 486.23 10.41 3.70 50,630.44 0.03 2020 15.95 N/A N/A 483.39 10.46 3.68 50,570.71 0.03 2021 15.96 N/A N/A 479.14 10.54 3.65 50,482.03 0.03 2022 15.99 N/A N/A 479.52 10.53 3.65 50,489.65 0.03 2023 15.99 N/A N/A 480.38 10.51 3.65 50,508.35 0.03 2024 15.98 N/A N/A 479.38 10.53 3.65 50,487.65 0.03 Sector Rank 12/67 N/A N/A 61/67 11/67 66/67 57/67 37/67 Economy Rank 577/694 N/A N/A 209/694 514/694 518/694 379/694 357/694
Figures are in inflation-adjusted 2019 dollars. Rank refers to 2019 data.
Revenue (%)
Industry Value Added
(%)
Establish- ments
(%) Enterprises
(%) Employment
(%) Exports
(%) Imports
(%) Wages
(%)
Domestic Demand
(%)
Participa- tion in sport
(%) 2011 -1.8 -2.0 2.7 2.0 1.8 N/A N/A -0.9 N/A 0.5 2012 11.3 2.9 6.7 3.1 11.4 N/A N/A 2.0 N/A 3.8 2013 -4.7 14.3 5.3 8.1 0.6 N/A N/A 16.6 N/A -3.6 2014 -2.2 -5.8 1.6 3.3 1.2 N/A N/A -2.4 N/A 2.7 2015 -7.2 0.2 3.0 1.5 2.7 N/A N/A 0.9 N/A 6.8 2016 -2.0 5.0 -1.9 -1.4 -1.1 N/A N/A 5.5 N/A 2.5 2017 4.0 9.7 3.1 3.0 3.4 N/A N/A 3.5 N/A -9.1 2018 5.6 0.2 4.0 3.9 4.7 N/A N/A 4.9 N/A 6.8 2019 -0.1 1.4 1.8 1.9 0.9 N/A N/A 0.7 N/A 1.0 2020 0.2 0.6 1.5 1.7 0.8 N/A N/A 0.7 N/A 2.4 2021 -0.9 -0.9 0.8 0.9 0.0 N/A N/A -0.2 N/A -1.4 2022 1.9 2.1 1.8 1.8 1.8 N/A N/A 1.9 N/A 2.4 2023 2.1 2.1 1.8 1.8 1.9 N/A N/A 2.0 N/A 2.8 2024 1.4 1.3 1.8 1.8 1.6 N/A N/A 1.5 N/A 0.9 Sector Rank 45/67 30/67 7/67 6/67 35/67 N/A N/A 39/67 N/A N/A Economy Rank 548/694 367/694 209/694 190/694 427/694 N/A N/A 465/694 N/A N/A
Annual Change
Key Ratios
Industry Data
SOURCE: WWW.IBISWORLD.COM
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WWW.IBISWORLD.COM Sporting Goods Wholesaling in the US October 2019 33
Apr 2017 - Mar 2018 by company revenue Apr 2014 - Apr 2015 - Apr 2016 - Apr 2017 - Small Medium Large Mar 2015 Mar 2016 Mar 2017 Mar 2018 (<$10m) ($10-50m) (>$50m)
Liquidity Ratios
Current Ratio 1.8 1.7 2.0 1.8 2.1 1.7 1.6 Quick Ratio 0.7 0.7 0.7 0.7 0.8 0.6 0.6 Sales / Receivables (Trade Receivables Turnover) 10.9 11.3 10.7 11.4 17.7 9.4 8.3
Days’ Receivables 33.5 32.3 34.1 32.0 20.6 38.8 44.0 Cost of Sales / Inventory (Inventory Turnover) 3.3 3.2 3.2 3.3 3.2 3.1 3.4
Days’ Inventory 110.6 114.1 114.1 110.6 114.1 117.7 107.4 Cost of Sales / Payables (Payables Turnover) 11.3 11.4 11.3 11.2 14.1 9.6 8.0
Days’ Payables 32.3 32.0 32.3 32.6 25.9 38.0 45.6 Sales / Working Capital 7.0 7.3 6.3 6.6 5.7 7.5 7.9
Coverage Ratios
Earnings Before Interest & Taxes (EBIT) / Interest 3.9 4.4 4.9 5.6 3.3 7.9 3.1
Net Profit + Dep., Depletion, Amort. / Current Maturities LT Debt 3.7 2.8 2.4 3.7 n/a 4.1 4.7
Leverage Ratios
Fixed Assets / Net Worth 0.2 0.2 0.2 0.2 0.1 0.1 0.2 Debt / Net Worth 1.9 1.8 1.8 1.7 1.5 1.7 2.5 Tangible Net Worth 29.5 30.5 35.1 34.6 33.0 37.5 32.6
Operating Ratios
Profit before Taxes / Net Worth, % 19.2 17.7 18.0 23.1 18.6 31.3 13.7 Profit before Taxes / Total Assets, % 5.4 5.0 5.2 6.4 5.9 8.6 2.9 Sales / Net Fixed Assets 55.2 53.5 42.6 50.7 46.2 60.8 37.5 Sales / Total Assets (Asset Turnover) 2.3 2.2 2.2 2.2 2.2 2.2 2.1
Cash Flow & Debt Service Ratios (% of sales)
Cash from Trading 28.3 29.8 30.2 31.1 37.0 26.9 25.9 Cash after Operations 2.4 3.1 3.1 4.1 4.9 3.2 3.5 Net Cash after Operations 2.7 3.1 3.2 4.0 4.5 3.7 2.6 Cash after Debt Amortization n/a n/a 0.7 0.5 0.7 0.2 0.5 Debt Service P&I Coverage 1.7 2.1 2.4 2.6 2.3 3.5 2.7 Interest Coverage (Operating Cash) 3.3 4.0 5.4 4.4 3.7 5.2 4.6
Assets, %
Cash & Equivalents 8.8 9.9 10.6 10.7 13.6 9.3 6.6 Trade Receivables (net) 23.6 22.6 23.0 22.4 16.8 26.3 27.9 Inventory 45.8 44.7 44.4 44.2 44.2 44.5 43.3 All Other Current Assets 2.5 2.8 3.1 2.9 3.0 2.5 3.3 Total Current Assets 80.6 80.1 81.1 80.1 77.6 82.7 81.1 Fixed Assets (net) 9.1 9.5 9.3 10.8 13.4 8.4 9.0 Intangibles (net) 4.8 5.1 3.9 4.1 3.2 4.5 5.5 All Other Non-Current Assets 5.5 5.3 5.8 5.0 5.7 4.4 4.4 Total Assets 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Total Assets ($m) 8,280.9 8,104.1 7,671.5 6,905.5 343.2 1,433.2 5,129.1
Liabilities, %
Notes Payable-Short Term 17.3 17.2 16.9 14.2 10.9 15.6 18.9 Current Maturities L/T/D 1.7 2.2 1.6 2.1 3.0 1.4 1.4 Trade Payables 19.6 18.9 18.6 19.2 16.2 21.8 21.2 Income Taxes Payable 0.2 0.2 0.1 0.4 0.8 0.2 0.1 All Other Current Liabilities 9.3 9.5 9.2 9.3 10.1 8.2 9.1 Total Current Liabilities 48.0 47.9 46.5 45.1 41.0 47.2 50.8 Long Term Debt 8.2 8.7 9.0 10.3 16.0 5.8 5.8 Deferred Taxes 0.1 0.2 0.1 0.1 0.1 0.1 0.3 All Other Non-Current Liabilities 9.3 7.6 5.4 5.7 6.7 4.9 5.0 Net Worth 34.3 35.6 39.0 38.7 36.2 42.0 38.1 Total Liabilities & Net Worth ($m) 8,280.9 8,104.1 7,671.5 6,905.5 343.2 1,433.2 5,129.1
Maximum Number of Statements Used 394 391 316 331 147 120 64
Industry Financial Ratios
Source: RMA Annual Statement Studies, rmahq.org. RMA data for all industries is derived directly from more than 260,000 statements of member financial institutions’ borrowers and prospects. Note: For a full description of the ratios refer to the Key Statistics chapter online.
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Jargon & Glossary
BARRIERS TO ENTRY High barriers to entry mean that new companies struggle to enter an industry, while low barriers mean it is easy for new companies to enter an industry.
CAPITAL INTENSITY Compares the amount of money spent on capital (plant, machinery and equipment) with that spent on labor. IBISWorld uses the ratio of depreciation to wages as a proxy for capital intensity. High capital intensity is more than $0.333 of capital to $1 of labor; medium is $0.125 to $0.333 of capital to $1 of labor; low is less than $0.125 of capital for every $1 of labor.
CONSTANT PRICES The dollar figures in the Key Statistics table, including forecasts, are adjusted for inflation using the current year (i.e. year published) as the base year. This removes the impact of changes in the purchasing power of the dollar, leaving only the “real” growth or decline in industry metrics. The inflation adjustments in IBISWorld’s reports are made using the US Bureau of Economic Analysis’ implicit GDP price deflator.
DOMESTIC DEMAND Spending on industry goods and services within the United States, regardless of their country of origin. It is derived by adding imports to industry revenue, and then subtracting exports.
EMPLOYMENT The number of permanent, part-time, temporary and seasonal employees, working proprietors, partners, managers and executives within the industry.
ENTERPRISE A division that is separately managed and keeps management accounts. Each enterprise consists of one or more establishments that are under common ownership or control.
ESTABLISHMENT The smallest type of accounting unit within an enterprise, an establishment is a single physical location where business is conducted or where services or industrial operations are performed. Multiple establishments under common control make up an enterprise.
EXPORTS Total value of industry goods and services sold by US companies to customers abroad.
IMPORTS Total value of industry goods and services brought in from foreign countries to be sold in the United States.
INDUSTRY CONCENTRATION An indicator of the dominance of the top four players in an industry. Concentration is considered high if the top players account for more than 70% of industry revenue. Medium is 40% to 70% of industry revenue. Low is less than 40%.
INDUSTRY REVENUE The total sales of industry goods and services (exclusive of excise and sales tax); subsidies on production; all other operating income from outside the firm (such as commission income, repair and service income, and rent, leasing and hiring income); and capital work done by rental or lease. Receipts from interest royalties, dividends and the sale of fixed tangible assets are excluded.
INDUSTRY VALUE ADDED (IVA) The market value of goods and services produced by the industry minus the cost of goods and services used in production. IVA is also described as the industry’s contribution to GDP, or profit plus wages and depreciation.
INTERNATIONAL TRADE The level of international trade is determined by ratios of exports to revenue and imports to domestic demand. For exports/revenue: low is less than 5%, medium is 5% to 20%, and high is more than 20%. Imports/domestic demand: low is less than 5%, medium is 5% to 35%, and high is more than 35%.
LIFE CYCLE All industries go through periods of growth, maturity and decline. IBISWorld determines an industry’s life cycle by considering its growth rate (measured by IVA) compared with GDP; the growth rate of the number of establishments; the amount of change the industry’s products are undergoing; the rate of technological change; and the level of customer acceptance of industry products and services.
NONEMPLOYING ESTABLISHMENT Businesses with no paid employment or payroll, also known as nonemployers. These are mostly set up by self-employed individuals.
PROFIT IBISWorld uses earnings before interest and tax (EBIT) as an indicator of a company’s profitability. It is calculated as revenue minus expenses, excluding interest and tax.
Industry Jargon
IBISWorld Glossary
ELECTRONIC DATA INTERCHANGE (EDI) The transmission of electronic documents between businesses from one computer system to another.
SPORTS PARTICIPATION RATE The number of people in the population that plays at least one sport.
WHOLESALE BYPASS A popular trend within retail and manufacturing industries whereby producers supply goods directly to stores, eliminating external wholesalers from the supply chain.
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Jargon & Glossary
VOLATILITY The level of volatility is determined by averaging the absolute change in revenue in each of the past five years. Volatility levels: very high is more than ±20%; high volatility is ±10% to ±20%; moderate volatility is ±3% to ±10%; and low volatility is less than ±3%.
WAGES The gross total wages and salaries of all employees in the industry. The cost of benefits is also included in this figure.
IBISWorld Glossary continued
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