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Dick's will cast wider 'Net with triple online sales

| Wednesday, Sept. 11, 2013, 12:01 a.m.
Andrew Russell | Tribune-Review
Dicks Sporting Goods store in Cranberry appears in this photo taken Friday, Dec. 21, 2012. The company announced Tuesday, July 19, 2016, will spend $100 million to build a distribution facility in New York State to supply hundreds of stores throughout the Northeast.

Dick's Sporting Goods Inc. is looking for a home run on the Internet.

With more consumers opting to purchase goods online these days, Dick's is joining other bricks-and-mortar retailers looking for ways to make Internet operations more efficient and boost sales.

CEO Edward Stack told industry analysts on Tuesday that the Findlay-based retailer aims to triple the percentage of sales that it generates from Internet shoppers by 2016. Online sales now account for 6 percent of the company's overall revenue, which was $5.84 billion last year.

“How (customers) buy, we don't care, as long as they buy from Dick's Sporting Goods,” Stack told analysts gathered in New York for Goldman Sachs' 20th Annual Global Retailing Conference.

A significant part of the online push involves shipping more Dick's products to online purchasers from a nearby store, where possible, instead of from a centralized distribution center to speed deliveries.

Dick's, which has about 600 stores in 44 states, including 81 Golf Galaxy locations, two TrueRunner stores and one Field & Stream store, operates distribution centers in Smithton, Westmoreland County; Atlanta; Plainfield, Ind.; and Goodyear, Ariz.

The increased focus on the Internet is not surprising, given online retail growth. Annual sales ballooned from $63.6 billion in 2004 to $203.9 billion in 2011, according to data from Forrester Research Inc., which tracks online trends.

Total retail sales, including the online channel, grew just 23 percent during the same period, from $2.35 trillion to $2.88 trillion.

“Consumers have gotten more daring and are no longer afraid to shop online because they feel there's more security measures in place when they use their cards,” said Audrey Guskey, a marketing professor at Duquesne University.

Online sales pioneer and other major retailers, such as Wal-Mart and JC Penney, have grown adept at selling online, said Guskey. She noted many retailers have made buying easier for frequent shoppers by saving their credit card numbers and often offering free shipping.

Dick's joins another locally based retailer, American Eagle Outfitters Inc., that recently announced plans to improve its online business.

Earlier this month, the chain retailer of trendy clothing for younger people said it will close a distribution center in Marshall in early to mid-2015 because it has no room to expand in order to accommodate American Eagle's growing volume of sales online, which is approaching 15 percent of sales.

Instead, American Eagle will build a larger, $160 million distribution center near Hazleton, Luzerne County, which can ship purchases more quickly.

“So if you're a retailer who doesn't recognize that consumers are increasingly buying online, you'll be behind,” said Christopher Svezia, an analyst at Susquehanna Financial Group whose coverage includes Dick's.

As part of its online retail strategy, Dick's is developing a system with IBM that will enable it to ship more products to online purchasers directly from the nearest store. That provides Dick's with a better profit margin, Svezia said. Currently, Dick's ships online orders from one of its four distribution centers to a fulfillment company, which then ships the product to the consumer. The contract with that company runs out in 2017.

By the end of the year, Dick's will have a direct-ship capability at about 100 of its stores, Stack told investors.

The retailer is establishing a system by which customers could pick up their online purchases at a Dick's store, instead of waiting for the products to be shipped to them.

“Plus, if you can get the consumers in the store to pick up something or even return something, the likelihood is that shopper will buy something else,” Svezia said.

In the quarter ended on Aug. 3, Dick's earnings jumped 57 percent to $84 million from $53.7 million a year earlier.

In addition to enhancing its online sales capabilities, Dick's is pursuing the outdoors adventurer with its Field & Stream store prototype, as well as remodeling dozens of store interiors to feature popular brands such as Nike. Online is now a big focus.

When one analyst asked the CEO how engaged Dick's was to the online channel, Stack quipped that the retailer was “not engaged to it; we're married to it.”

Thomas Olson is a staff writerfor Trib Total Media.

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