Sporting Goods Pest Analysis Paper

PEST Analysis – U.S. Sporting Goods Stores
Political – Minimum wage laws have a large impact on retailers. The minimum wage has incrementally increased to $7.25 per hour (Hoover's Inc. , 2014). Increase in minimum wage laws foreign and domestic has caused increased costs for retailers and suppliers. Hunting and gun registration legislation also impacts the purchase of firearms in the US.
Economic - The health and wellbeing of the economy has a huge impact on the revenue of sporting goods stores. Sport are often considered leisure activities and thus is sensitive to the condition of the economy (Hoover's Inc. , 2014). When an economic slowdown occurs, consumers focus on the essential spending rather than on leisure activities. In February 2014,

Many of the big companies in this industry use a cost leader strategy, and this requires large purchases of products but benefits them with pricing discounts. This also helps in product differentiation with competitors. Capital requirements - HIGH. The barriers to entry are high given the fixed costs associated with retail stores (Sporting Goods Stores, IBIS World). The amount of inventory required to open a story is also substantial. Access to distribution channels - LOW. The distribution channel to customers is simple with sporting goods stores. It usually goes straight from the store to the individual

The two types of suppliers for sporting goods stores are manufacturers and wholesalers. There are 1,053 sporting goods manufacturers and 15,406 wholesalers in the US (IBISWorld report 33992a, 2014). These numbers combined with the manufacturers outside of the US make the total number of suppliers very big. Threat of forward integration by the supplier - MEDIUM. While it is uncommon for sporting goods retailers to integrate backwards, the threat of forward integration by suppliers strengthens their bargaining power. To increase margins, manufacturers like Mike have already integrated forwards into retail stores which sell their goods directly to customers. Differentiation of the supplier’s product and services - HIGH. The sporting goods equipment that a supplier sells is usually more than one kind. They are able to find alternative markets with diversification of their products and services. The quality and price of their products also differ based on Research and Development, innovation and new materials (Sports Equipment Industry Profile: United States,