Monday, June 4, 2007

Dick's tests women's apparel concept: New Ativa offshoot emphasizes upscale athletic lifestyle

ALBANY, N.Y. -- Dick's Sporting Goods opened a new female-oriented retail concept last month, named after its Ativa store brand that could provide a significant source of new growth to a company whose existing operations already possess attractive expansion prospects. The first Ativa store opened last month at the Crossgates Mall in Albany, N.Y., and a second unit is scheduled to open this month at the Walden Galleria Mall in Cheektowaga, N.Y., on the outskirts of Buffalo.

The most intriguing aspect of this new concept is the degree to which it differs from Dick's core focus on freestanding superstores, which generate 60% of sales through hard-lines categories such as golf, fishing and fitness equipment. Ativa, by comparison, is a mall-based concept that measures just 6,000 square feet. The merchandise assortment of apparel and footwear targets women with active and athletic lifestyles, while hard-lines are virtually nonexistent. In fact, Ativa bears virtually no resemblance to Dick's full-line sporting goods stores, and there is nothing in the Ativa store to suggest it is affiliated with Dick's.

Instead, Ativa features a wide entrance from the mall and a predominantly white color scheme with subtle shades of blue and teal used as accent colors. A 4-foot-wide and 10-foot-tall waterfall creates interest at the rear of the store while wooden floors, full-length wooden doors in the fitting rooms, a finished ceiling and recessed lighting create an upscale, feminine environment. There is also a service orientation to the store. The fitting rooms are equipped with call buttons and the footwear department is full service. The store also features a yoga studio with room for 12 people that can double as a community meeting room.

From a merchandise standpoint, Ativa is an apparel store first with at least 90% of the space devoted to women's athletic wear and athletic-inspired casual wear. At least 15% of the space is devoted to the Ativa brand. The broad merchandise mix targets a full range of athletic activities, with looks and at price points ranging from $100 for a sleeveless Nike golf sweater to opening price point Ativa brand merchandise. Leading brands such as Nike, Adidas, Fila, Asics and New Balance are predictably well represented at the store. Those same brands and others such as Merrell are also part of the footwear department, where roughly 70 styles are offered. The very limited selection of hardline merchandise consists of videos, energy bars, fitness magazines and hand weights.

Overall, Dick's appears to have succeeded in creating a store that will interest female mall shoppers and if successful could presumably be expanded quickly given Ativa's small size, reduced staffing requirements, simplified operations and available mall space. Beyond confirming the existence of the initial two units, Dick's has said nothing publicly about its plans for the concept and company officials were not available to speak with DSN Retailing Today.

However, the introduction of Ativa shedes sheds some light on comments Dick's chairman and ceo Ed Stack made in January to a group of financial analysts attending a trade show in Las Vegas. During his presentation, Stack commented that within three years private label would represent 15% of total company sales compared to the current 6%.

"[Private label] is an aspect of our business we are very enthusiastic about," Stack said at the time.

He offered no details of how the dramatic growth in private label would be achieve, but clearly expansion of a store format bearing the name of the company's private label in which 15% of the selling space is devoted to private label would have a big impact.

Before further expansion takes place, Dick's will get a good read on the concept's viability from the two known test locations. The store in Albany is located in a mall that counts as its anchor tenants upscale department stores such as Macy's and Lord & Taylor and footwear stores such as Foot Locker, Lady Foot Locker, Kids Foot Locker and The Finish Line. Meanwhile, the Walden Gallena near Buffalo contains a Lord & Taylor, Galyan's, Champs, The Finish Line, Foot Action and all three Foot Locker formats.

Even if the Ativa concept is deemed worthy of further expansion, Dick's is under no pressure to immediately do so because its existing full-line stores--the company operates two primary formats, 30,000 square feet and 48,000 square feet-are effectively being expanded in new and existing markets. Dick's ended last year with 141 stores, of which 58 were opened during the past three years. Another 20 stores are scheduled to open this year.

In addition, since disclosing its financial results and completing an initial public offering of its stock last fall, Dick's has emerged as a favorite of financial analysts. The company's sales increased 16% to $395 million and profits increased 48% to $19 million during the fourth quarter ended Feb. 1, 2003, prompting William Blair & Company analyst Bob Simonson to comment, "We believe this is a very impressive performance, especially in light of the difficult overall retailing environment, including the sporting goods sector."