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Placer Bytes: Post Pandemic Prognosis for Dick's and Pier 1 Closure Beneficiaries

by 
Ethan Chernofsky
 on 
June 1, 2020
Placer Bytes: Post Pandemic Prognosis for Dick's and Pier 1 Closure Beneficiaries

Pre-pandemic, Dick’s Sporting Goods was riding high with strong traffic growth and some powerful initiatives to drive further in-store strength. Pier 1, on the other hand, is facing the end of its road.

So we decided to dive into both to analyze pre-COVID performance and the post-pandemic implications.

Dick’s Showing Signs of Strength

Dick’s Sporting Goods had an exceptionally strong 2019 with visits that rose 17.8% year over year. And 2020 looked to be kicking off with similar strength. January and February visits in 2020 were up 7.3% and 13.9% year over year. Yet, the hammer did hit in March with visits declining 64.4% year over year before bottoming out in April because of widespread store closures.

Yet, the story is far more complex than a simple decline. The last full week that Dick’s was open prior to COVID-led closings, saw visits rise 27.8% above the weekly baseline for the period beginning January 2019 and running through May 18th 2020. This amounted to a 13.3% year-over-year increase in visits for the week, pushing it to surpass any visit week over the first five months of 2019 or 2020. 

And just as the brand entered the pandemic as one of the strongest retailers, so does its recovery look to be one of the fastest-paced. The week of May 4th 2020 saw growth of nearly 15% compared to the week that preceded it and this was surpassed by near 16% growth heading into the week of the 11th. In fact, in many states including Arizona and South Carolina, the brand has already returned to year-over-year growth by May 20th. And even in states where there are still declines, visit rates are rapidly returning to normal - even in areas where many other retailers are still lagging farther behind.

The takeaway? Dick’s Sporting Goods is one of the strongest offline retail brands and is rapidly reaching a status where declines - at least those not driven by worldwide pandemics - are almost unimaginable. Even in an especially difficult environment the rapid rise and pre-pandemic strength speak to the potential for an exceptionally quick bounceback.

Pier 1’s Closure Beneficiaries

In late January, we analyzed the potential impact of Pier 1 Imports announcing the closure of half of its stores. But now with the announcement of the closure of the entire chain, it felt like it was time to revisit.

To begin, cross-shopping patterns can be especially important for a brand like Pier 1, which shows a strong element of being part of a ‘multi-trip’ journey. Comparing Pier 1 to a Dick’s Sporting Goods in January through May of 2019 and 2020, shows that in both cases Pier 1 sees a significantly higher proportion of their visitors come from another retail location before visiting and a higher percentage of visits going to another retailer after. Averaging out data from those periods in 2019 and 2020 shows that 30% of Pier 1 visitors are coming from another retailer directly before visiting a Pier 1, while over 33% visit one immediately after. This compared to only 25% and 28% for Dick’s Sporting Goods pre and post-visit. So whether this is a unique particularity of Pier 1 or a wider statement about Home Goods and Improvement, the closing of these stores does mean quite a bit for competitors.

When attempting to identify the brands with the highest likelihood to gain from these closings, one effective mechanism is to look at cross-shopping patterns. To do so, we analyzed cross-shopping percentages between January through May in 2018, 2019, and 2020 to create a rough idea of which brands may be best positioned to take in Pier 1’s former customer base.

The obvious starting point is Walmart and Target, though these numbers are clearly buoyed by the fact that essentially everyone shops at Walmart and Target in a 5 month period. Though it does further indicate the power of these brands and the near-endless opportunities they can avail themselves of.

The next group is dominated by the kings of the DIY hill in Home Depot and Lowe’s who both see over 40% cross-shopping with Pier 1. Though the ready-made element of Pier 1 isn’t the core focus for these brands, there is still something to be said for a potential uptick in traffic.

The next tier may be the most interesting. Home Goods and Bed, Bath & Beyond see very high levels of cross-shopping with the average actually weighed down by pandemic closures and shopping patterns in 2020. The result is that both brands have a powerful opportunity to leverage these closures as a means of targeting these audiences to try and fill areas of the gap Pier 1 will leave.

And the same holds true for brands with lower cross-shopping than the national giants, but still relatively high levels of overlap - there is an opportunity to take advantage of. On a local level, looking at the True Trade Area for any Pier 1 should create ready-made targeting tool through a variety of channels to help bring these customers into the mix for a Pier 1 replacement. The point is further reinforced when looking at how closely audiences resemble each other. Analyzing Household Income breakdowns shows the tremendous similarity in audiences between several of these brands and Pier 1. The result? An opportunity for the brands that move fast enough to take it.

Can Dick’s recovery bring the chain back to pre-pandemic levels? Which brand will succeed in looping in Pier 1 customers? 

Visit Placer.ai to find out.

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