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Dick's Pushes Digital This Spring But Expect to see More Private Label Marketing

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In its new spring campaign "Always Open," Dick's Sporting Goods features potential shoppers browsing its mobile app during downtime—before a college lecture, commuting home on the bus and in a locker room before a sports event.

The new campaign is meant to highlight Dick's digital prowess and ecommerce capabilities—online orders in the fourth quarter of last year, at $440 million, represented nearly a fifth of net sales. Yet the marketing tagline could also be "Still Open," as Dick's, unlike the majority of its competitors who have shuttered, declared bankruptcy and disappeared, remains one of the last men standing in the sporting goods retail arena.

Yet even though it has capitalized on the demise of retailers like Sports Authority, which went under last year, and gained market share, Coraopolis, Penn.-based Dick's, a chain with 675 locations, is not immune to the malaise affecting many retailers. Its fourth quarter earnings missed analyst expectations and sent investors into a selling spiral earlier this month. But those expectations may have been too high—Dick's reported positives, with same-store sales increasing 5%, net income of $90.2 million, and a 10.9% rise in net sales to $2.5 billion.

The 69-year-old brand is plowing ahead with new stores and has plans to open some 43 Dick's locations this year—roughly half were former Sports Authority outposts. On a recent conference call, CEO Ed Stack outlined a plan to beef up the company's private brands—labels like Carrie Underwood's Calia brand, sold exclusively at Dick's and now the retailer's third-largest women's brand—and decrease its outside vendors by 20%. The cutbacks will not affect top-performing brands such as Adidas, Under Armour or Nike.

Analysts were in favor. "Ultimately, this strategy should benefit [Dick's] sales, gross margin, and inventory turns as it focuses on brands with greater inventory return profiles," wrote Camilo Lyon, an analyst at Canaccord Genuity, in a research note.

Dick's is not alone in focusing on the potential of its own labels. Target recently said it introduce more than a dozen exclusive brands over the next two years.

Consumers can expect Dick's marketing to reflect the shift in focus.

"One of the biggest issues that we have going forward—biggest opportunities—is private brand and we're investing very heavily in them," said Mr. Stack on the call. "From an infrastructure standpoint, you're going to see more marketing of these and over the next few years, you will see our private brand business grow pretty dramatically."

Until then, the company is banking on digital this spring. The new campaign began rolling out during the live streaming of the NCAA tournament last week with 15-second clips. TV spots, including a 30-second commercial and a series of 15-second spots, that begin airing on March 21 on ESPN and during March Madness.

"Digital is a big priority for us—we're making significant investments in our ecommerce business," said Ryan Eckel, VP- brand marketing. "We wanted to come up with a fun, creative way to be top of mind for consumers for our app." He noted that the moments illustrated in the video of shopping while commuting or before class are very real moments of how consumers shop and what they do during idle time.

Anomaly worked on the campaign. Mr. Eckel said the budget is in keeping with previous efforts. Last year, Dick's spent around $89.3 million on measured media in the U.S., according to Kantar Media.

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