History of Play It Again Sports
Some of the best businesses begin because someone somewhere was trying to solve a simple problem. This was the case for Martha Morris. In 1983, she was trying to sell her nearly new backpack for $200. To solve her own problem, she started Play It Again Sports in Minneapolis. The store was a consignment store of used sports equipment and athletic gear. In the first year, Morris sold $120K in used sporting equipment, giving her business model validation. What she didn’t know was that this model would be the basis for the multi-million dollar franchising powerhouse, Winmark.
Recognizing the potential opportunity, Morris enlisted help from Franchise Business Systems Inc. Business partners K. Jeffrey Dalhberg and Ronal G. Olson were seasoned franchise experts and took Morris on to help her break into franchising. Within 18 months, the chain grew to 19 franchise operations across six states. This led Morris to turn to franchising as a way to expand her business.
By 1990, Dalberg and Olson saw the opportunity and bought the Play It Again Sports from Morris. They continued to expand their work in franchising by buying the rights to Once Upon A Child. By the mid-90’s, the two business partners were running a franchising corporation. They IPO’s and through a few name changes, became the modern day Winmark Corporation.
Sporting Goods Stores industry
Between 2015 to 2020, The Sporting Goods Stores industry in the US shrank at an annualized rate of 2.6%. One of the main contributors to decreasing revenues is pressures from mass merchandisers and online retailers. Both groups benefit from economies of scale, which allows them to offer similar products at reduced prices. As a result, organizations in the industry must compete on price. This is difficult for traditional sporting good stores to pursue because there are minimal economies of scale in comparison to mass retailers. Consequently, this requires them to reduce their process while impacting profitability.[1] Another contributor is the Corona virus. The industry is unable to meet target revenues as non-essential stores have closed and customers remain at home.
Over the next five years, the industry outlook is optimistic. The industry is forecasted to grow at an annualized rate of 1.2% to 2025. Growth will be primarily driven by increase in disposable income and health conscious lifestyles. As individuals from all age groups incorporate healthier habits into their lifestyles, the industry expects overall sports participation to increase by 1.5% each year. The majority of the growth in revenue will come from demand for athletic wear, as participation in low intensity and individual exercises, such as walking and swimming, will increase.
Customer and competitors
The competitive landscape and intensity for the Sporting Goods Story industry is moderate. While stores like Bass Pro Shop and Dick’s Sporting Goods each contribute between 12 – 15% of the market share, their primary focus is on new products for the latest fitness trends.[2] For Play It Again Sports, their unique position enables them to capture a smaller share of the market, but with a target customer segment that has greater lifetime value. With that in mind, their direct competitors are businesses that offer a similar value proposition, such as SidelineSwap, an online sports equipment buy and sell retailer. The company differentiates itself by selling gear previously owned by amateur athletes.
Parents with children who are enrolled into sports programs opt for resale as it is less expensive than buying brand new. As children move on in the sport, they can continue to shop at Play It Again Sports by trading in their equipment for the next size up. This increases the overall lifetime value of the customer.
Play It Again Sports’ business model
Play It Again Sports’ generates revenues as a traditional buy and sell retailer. They purchase gently used and or new products at cost and resale to end customers at a higher price. Given the moderate competitive landscape within the Sporting Goods Stores industry, companies like Play It Again Sports are profitable by managing the costs and driving customer loyalty. The deeper they can build loyalty with their group, the more value they will receive from their customer base as they become repeat customers, driving both their inventory and purchases.
Play It Again Sports’ Success Factors
One of Play It Again Sports’ key success factors is the value proposition that it offers its target market. Parents looking to enroll their children into (sometimes multiple) sports face high barriers as new equipment can be cost prohibitive. As a reseller of gently used sports equipment, franchisees can lower the price of participating, allowing parents to engage their kids in multiple sports.
Additionally, by positioning itself as a buyer and reseller of sports equipment, Play It Again Sports is able to capture the full lifetime value of the customer. As the children age out of their equipment, parents can resell the equipment back to Play It Again Sports. Furthermore, they are incentivized to as it helps reduce the cost of purchasing the next set of equipment.
Looking Ahead
In the face of the pandemic, Play It Again Sports will need to re-evaluate the needs of their target customer in order to identify the correct product mix. Team sports may not resume for young athletes. This will dramatically impact the company’s value proposition to their current customers. Play It Again Sports should engage with their customers in an open dialogue for two reasons. First, it will serve as an opportunity to understand how parents are occupying their children’s leisure time. Second, Play It Again Sports can act as a partner to parents by coming up with creative alternatives for pastimes and physical fitness. This can help retain customer loyalty while finding new value propositions for existing products.
Related Readings
Professional Leadership Institute (PLI) is an educational website providing professionals from all types of businesses with practical education in human resources and leadership. To keep evolving your leadership toolkit, additional PLI resources below will be useful:
- Plato’s Closet Case Study
- Music Go Round Case Study
- Top 5 Courses for Franchisees
- Donatos Pizza Case Study
[1] Jacqueline Hiner, “Sporting Goods Stores in the US,” IBIS World, June 2020
[2] Jacqueline Hiner, “Sporting Goods Stores in the US,” IBIS World, June 2020
