Steve’s breakdown: Retailer has historically handled its $60 million creative account in-house so there will be a bit of culture shock once the new shop is in. But on the other hand
PITTSBURGH, PA: Dick’s Sporting Goods is making the rounds with creative agencies.
The retailer is having discussions with several shops about handling creative work. Final presentations are expected to take place before the end of the month. Dick’s declined to comment.
It’s a marked shift for the sporting-goods giant, which has traditionally relied on a team of in-house creatives and partnered with production companies. The move to a more formal agency relationship follows the appointment of Lauren Hobart, a 14-year veteran of PepsiCo, to the top marketing job earlier this year.
Once considered a rising star at PepsiCo and named an Ad Age Woman to Watch in 2010, Ms. Hobart is no stranger to working with major agencies on large campaigns, though she’s also well-versed in less traditional efforts. She was influential in the launch of Pepsi Refresh Project and presided over the 2006 relaunch of Diet Mtn Dew.
Dick’s has been increasing its advertising expenses as a percentage of net sales as it looks to gain market share, according to its annual report. It spends about $60 million annually on measured media, according to Kantar Media. The chain is growing rapidly, adding 19 new stores during the third quarter, for a total of 474 stores in 42 states. It also operates the Golf Galaxy chain, which operates 81 stores in 30 states.
Morningstar analyst Paul Swinand said that Dick’s has “substantial” opportunities for growth, noting that despite reaching nearly $5 billion in revenue, it still controls less than 10% of the market. Earlier this week the retailer increased its guidance for the full year, based in part on a strong third quarter. It reported net sales for the third quarter jumped 9% to $1.2 billion, while sales at stores open at least a year rose 4%.
“In a relatively short time, Dick’s Sporting Goods has established itself as the best-in-breed sporting-goods retailer,” Mr. Swinand wrote in an overview of the company. “Over the next several years, we believe Dick’s has a significant opportunity to expand nationwide and take incremental market share in the highly fragmented sporting-goods industry, which represents roughly $55 billion in domestic sales.”
Dick’s isn’t the only retail account in flux. Earlier this week, JCPenney confirmed that it has added Peterson Milla Hooks to its roster. Saatchi & Saatchi has been JCPenney’s agency of record since 2006. A spokeswoman for the retailer said it’s not yet clear what each agency will handle. Peterson Milla Hooks also works with Kmart, which could be considered a conflict of interest, though representatives from both parties said the relationship will continue. JCPenney, Kmart, Target and Old Navy are all conducting searches for new chief marketing officers.