Speed is central to pretty much every sport. Today, it also is a critical factor for a related industry: companies that manufacture and sell the jerseys, shirts, hats, and other paraphernalia that fans demand to show their team spirit. Fast fashion has come to sporting apparel, driven largely by a single company.
That company, Fanatics, emerged based on the recognition that the sporting apparel market is marked by rapid, unexpected shifts in demand. When a breakout star has an amazing run (e.g., Aaron Judge), demand for shirts with that player’s name and number skyrockets. In a conventional supply chain, there was no way for the companies with licenses to product league gear to get those demanded items into shops quickly enough. In many cases, by the time they were produced and shipped, the excitement over that particular player had faded (e.g., Jeremy Lin), so stores were left with huge inventory lots and no more demand. The system failed in several ways: Customers who wanted the gear could not get it; retailers that sold it confronted frustrated customers and then huge inventory costs to hold items that they could no longer sell.
Thus Fanatics determined to adopt the rapid production model that is more generally linked to fast fashion retailers like Zara or H&M. The moment a player’s name starts trending on social media, it fires up its production lines to get shirts and other gear into the market within a week. To support this effort, it has obtained licenses from all the major sports leagues (e.g., NFL, NHL, MLB, NBA, MLS, PGA), as well as more than 500 universities. Thus, it does not need to seek separate permission to emblazon each athlete’s information on the gear that it produces. Its production efficiencies are so impressive that when the Cubs won the World Series, it had Uber drivers on standby to carry the immediately produced products into the streets for fans to purchase within minutes.
Consumers access these products mainly electronically, whether directly from Fanatics’ own site or through links on the leagues’ websites. It offers the prediction that more than 700 million consumers thus will visit the site this year. Along with this primary channel, it supplies the team stores of about 30 sports arenas and ballparks in the United States, ensuring that fans who go to the stadium can pick up their favorite player’s shirt to wear during the game that same day.
It also plans to expand globally, initially by seeking licenses from teams in the English Premier League. If it continues to grow at its current pace, Fanatics could emerge as a $10 billion company within a decade—making it bigger than Foot Locker or Dick’s Sporting Goods, even without its own dedicated storefronts.
Discussion Questions:
- Compare the supply chain of Fanatics with those of Zara and Dick’s Sporting Goods.
- How do you expect the key financial ratios discussed in Chapter 6 to be similar/different for these three retailers?
Source: Zack Schonbrun, The New York Times, November 20, 2017