Sports De France, S.A

By Smith, D. K.; Chamorand, Claude | Journal of the International Academy for Case Studies, January-February 2004 | Go to article overview

Sports De France, S.A


Smith, D. K., Chamorand, Claude, Journal of the International Academy for Case Studies


CASE OVERVIEW

This case poses a dilemma faced by mature retail chains: how can the company continue to increase revenues when it can no longer grow (for environmental, financial, and/or legal reasons) by inserting clones of existing stores into new markets? The case begins by indicating that Sports de France, a major sporting goods retailer with outlets throughout suburban Europe, has decided to terminate its unsuccessful 10 year initiative to increase revenues and profits by introducing retail sporting goods shops in city centres in France. At the last minute, however, the experienced manager assigned to terminate the initiative finds reasons to believe that adoption of a new retail strategy for the city centre shops could save the project. The challenge for students is to develop a new and profitable retail strategy. The case is based on discussions conducted by the authors in France. The case is appropriate for undergraduates as well as students in MBA and Executive Development programs. It is designed to be taught in a 1.5 hour long class session, and is likely to require a couple of hours of preparation by students.

CASE SYNOPSIS

Bernard LaCrois is Special Assistant to Louis Verdun, Chairman of Sports de France. The company owns and successfully operates a chain of large sporting goods stores in suburban locations not only throughout France but also throughout Europe as well. For the past 10 years, the company has been attempting to increase its revenues and profits by developing small retail sporting goods shops in city centres in France. Each of these last 10 years, however, this city centre initiative has generated losses of approximately half a million dollars. Based on the company=s inability to generate profits from the city centre shops, Chairman Verdun has decided to terminate this initiative, and has assigned LaCrois responsibility for accomplishing this objective within the next 180 days. However, discussions with the retail consultant hired to help terminate this initiative have convinced LaCrois that one last attempt should be made to see whether the city centre shops can be made profitable. Data and information in the case include:

1. Description of the challenge faced by the company.

2. On the company: Historical overview, current performance, and the business model underlying that performance.

3. Characteristics of the retail strategy which the company has been using for its city centre shops.

4. Characteristics of the competitive situation.

5. Information on the attitudes, shopping behaviors, and lifestyles of consumers living in city centres in France.

THE SITUATION

After a ten-year effort, Sports de France Chairman and owner Louis Verdun had announced his decision to terminate the company's City Centre Shops Project. As members of the management team packed up their notes and printouts, Verdun summoned Bernard LaCrois, special assistant to the Chairman, to give him instructions regarding the termination. Verdun's instructions were simple, and focused on three points: (1) LaCrois would be in command of the liquidation; (2) Verdun did not care how LaCrois executed the closure; and (3) Verdun wanted the City Centre Shops Project and the string of loses which it had generated over the previous ten years terminated within the next 180 days.

THE INDUSTRY

Global trade in leisure and sporting goods has increased dramatically, based on increased interest in sports from the French and many other nationalities. Over the last 25 years, the number of sport and leisure stores in France has doubled, and the number of employees working in such shops has quadrupled. The sector now employs 45,000 people (more than 2% of all retail employees), working in nearly 11,000 shops. On average, there is one sporting goods store in France for each 5,300 inhabitants. Over the last five years, sales turnover for this sector has increased 20%; during the same period, sales for all nonfood retailers grew only 10%. …

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