Nobody does brand relationships better than JD Sports Fashion, and this is part of the reason it continues to defy the odds against the cloud of global and economic uncertainty.
The retailer today reassured the market with sales growing 5% versus the same 14-week period last year.
Notably, this was achieved despite a “global shortfall in the supply of key certain footwear styles”.
What JD is referring to is the supply chain issues at Nike which result from the temporary closure of some of its factories.
JD is known for its strong relationships with brands such as Nike and Adidas, and that translates into a much better performance than rival Frasers Group’s Sports Direct.
In fact, it does it so well that Mike Ashely, who owns Frasers Group, seemed to have a little mope in the press a few years ago, claiming they had created an unfair monopoly situation.
Best in the business
When it comes to brand relationships, few do it better than JD in the fashion world.
Ties with Nike and Adidas are extremely strong, which is why it sweated over the shoe shortage that would have been impacted by the temporary closure of Nike’s factory, among other supply issues.
But what exactly does it do so well?
Well, according to Jonathan Pritchard, a retail analyst at Peel Hunt, it’s all in how the FTSE 100 company merchandises these products.
“The way JD brings these products to the market is very different compared to its competitors obviously,” he explained.
“Their merchandising is much more aligned with the major brands, such as Nike and Adidas.”
Specifically, the retailer listens to what its branded suppliers want - and acts on this feedback. This is “one of the secrets to the successes that JD have had,” said Pritchard.
Diversification is key
Fashion retailers were predicted to be some of the first to feel the cost-of-living crisis, as shoppers stayed away from new items to focus on more essentials rather than wants.
The latest stats from GlobalData found that the situation will get worse in that respect, with 51% of people surveyed last month believing their financial position will get worse before the end of the year.
As many as 45% of people also intended to cut back or completely stop spending on clothing and footwear products.
Yet, in the face of all this, JD saw sales inch higher by 5%.
Darcey Jupp, an apparel analyst at GlobalData, believes the retailer “proved itself to be an imitable force during the pandemic.”
It achieved this by “perfectly capturing the increased demand for sportswear and outdoor wear through its diversified and global.”
Once again, that hints at brand relationships are a key driver behind its success.
Nike and Adidas are obvious and popular names, but it also has deals with cheaper options such as Fila and Champion, more expensive items like The North Face and Polo Ralph Lauren (NYSE:RL), and solely sports brands like Asics and Wilson.
This spread of offering, both in product and price, allows it to appeal to virtually everyone, and withstand some of the issues that are plaguing most of its competitors, where their offering may limit them to one demographic.
So it’s in the clear?
JD’s wide portfolio has allowed it to achieve relative success even in the toughest of times.
However, even though “JD Sports is well-positioned to thrive,” according to Jupp, murky waters lie ahead “that pose a significant threat” to retailers.
Worsening of the economy and inflation will “disproportionality” affect younger and lower-income consumers, which make up most of JD’s core shopper base.
“To weather the storm, the retailer must retain its exclusive products and competitive pricing to ensure it remains the first choice for consumers looking to purchase sportswear.”
So far, it's shown that it can do that fairly comfortably, and that will only continue as long as it maintains those relationships with sports fashion leaders.