The end came swiftly for Sports Authority. In just five months, the sporting goods chain declared bankruptcy, failed to find a buyer, and closed all of its 450-plus stores in the country. The retailer, once a Goliath in the industry, chalked the failure up to overwhelming debts and an inability to compete with online sales and other brick-and-mortar stores like Dick’s Sporting Goods that have managed to stay ahead of the curve. Score another win for David — although no one is going to pretend that Amazon and other online stores are just throwing pebbles anymore.
The problems for the retailer weave a familiar tale for anyone who has witnessed the plight of Radio Shack or seen the decline of Kmart. No one shops there anymore, but they’re nice tokens from yesteryear. In most cases people don’t have a necessarily negative view of the retailers — they’re just not relevant or able to meet the needs (and prices) like their competitors can. However, Sports Authority took a sharp turn from that narrative, somehow managing to alienate almost everyone who dealt with the chain: brands, employees, and customers alike.
A rocky bankruptcy for a failing chain
From the outset, Sports Authority’s bankruptcy was a rocky one. The chain originally announced it would only close a few stores during the process, then abruptly said it would be closing all of its stores by the end of the summer after a bankruptcy auction made it clear that no one wanted to purchase the washed-up retail locations. That timeline was later ratcheted up by a month, with the company saying everything would be closed by the end of July.
“I feel bad for my managers. They really worked hard, and they took it hard,” an associate at an Exton, Pa., store, who declined to give her name told the Wall Street Journal. Federal laws do require some companies to give advance notice to their employees, but ample loopholes likely got Sports Authority out of that requirement, the Journal reported. That left employees in the lurch, with a job one day and without one the next.
Sports Authority: Unable to compete
The quick closures probably came as a shock to many employees, but those who were paying attention were likely expecting some sort of doomsday scenario. The company was the leading sporting goods store just 10 years ago, but couldn’t compete with online sales — or even the tactics of competitors like Dick’s.
“It’s a hypercompetitive industry,” Katie Nemec, spokeswoman for the National Sporting Goods Association, told USA Today. Nemec added that online retailers who don’t have to charge sales tax get “an unfair advantage . . . If that company is in a state where they don’t have to charge it, we see it almost as a discount to the consumer.”
USA Today reports that athletic and sports equipments sales grew from 11.8% in 2010 to 15.8% in 2015, and online athletic and sport footwear sales increased to 17.2% across the industry, compared to 12.8% in 2010. Those increases online are coming directly out of the dent from in-store purchases, and those declines in sales were making it more difficult for Sports Authority to pay back debts of more than $1 billion and keep the company afloat.
Leaving a bad taste: Selling customer data
Loyal Sports Authority customers might be saddened to see that they can’t frequent their local store for back-to-school deals on sneakers or to purchase a pair of golf clubs anymore. However, selling customer data as part of the bankruptcy process put the nail in Sports Authority’s legacy coffin. Whatever goodwill the company still had went out the door when customers’ emails, phone numbers, and other information was sold over the auction block.
Nothing upsets consumers more than putting their privacy on the line, and auctioning off Sports Authority’s “intellectual data” to the highest bidder did just that. According to the Los Angeles Times, Dick’s paid $15 million for the Sports Authority brand name. Along with that sale went 25 million email addresses from former Sports Authority customers, and a total of 114 million customer profiles.
Naturally, some customers were outraged when they began receiving notices from Sports Authority that their information was automatically being transferred to Dick’s. However, it’s perfectly within Sports Authority’s rights to charge money for customer information, as a way to pay back some of its debts. Its customer policy states the following in the fine print: “We may transfer your personal information in the event of a corporate sale, merger, acquisition, dissolution or similar event.”
Opting out of sharing personal data
Former Sports Authority customers who gave their email address and other information to the chain did have a limited window to opt out of transferring their information to Dick’s. According to NJ.com, customers could go through the process online at www.SAPrivacyTransferNotice.com, or by calling 1-888-836-1708 no later than September 15, 2016. Customers needed to provide the notification ID number sent by email from Sports Authority in order to do so.
In theory, your information going from one sporting goods store to another might not be a big deal — especially if Dick’s will now become your destination of choice for camping gear, workout clothes, and sports equipment. However, it’s a good reminder that sharing your personal information is a bit like squeezing toothpaste out of the tube. Once it’s out there, it’s extremely difficult to get it back.
“Every time a company asks for your data and tells you it won’t be shared, just assume that’s a lie,” GeekWire summarized. “Almost certainly, it will be shared or sold or auctioned off some day. If you are fine with that, go ahead and reveal. But do so with your eyes wide open.”