Decoding the business strategy of JD Sports in detail
Brief introduction of the company
The UK specialist retail called JD Sports was founded by John Wardle and David Makin and this company especially focuses on sports and casual wear segments. This company was built in the year of 1983 and by the year of 1996, the UK outlet has expanded in the home country to a great extent. JD that year made 56 store outlets in the UK and by the year 2011, they had stretched their footprints to almost all the countries across Europe. At the same time, by the year 2011, they have expanded to Germany, EU, Ireland, Netherlands, France, Denmark, Spain, and Sweden. JD also operates through the outdoor segments as well as in the sportswear segments. There are multiple brands through which the main company business initiated itself and these segments of brand comprise JD Sports Fashion Plc, Spodis SA, John David Sports Fashion (Ireland) Limited, JD Sprinter Holdings 2010 SL, Champion Sports Ireland, JD Sports Fashion BV, JD Sports Fashion SRL, JD Sports Fashion Germany GmbH, Duffer of St George Limited, Kooga Rugby Limited, Topgrade Sportswear Limited, Focus Brands Limited and so on.
High online trading costs and significant losses
The lockdown situation has led to a great profit hit for JD Sports and the owners have blamed the online trading costs as the reason for that. A roll of half a year profit has been issued due to the situation of lockdown sales decline. At the same time, the company owner has claimed that they have implemented safety measures for their staff during the situation of COVID outbreak. But the staff of JD Sports has claimed something different. The staff amid the pandemic have claimed to the shopworkers’ union Usdaw that they are not given the precautionary measures of social distancing. The owners have shown a lack of sympathy and compassion in the situation of COVID. Furthermore, people who work under the warehouse of Rochdale, have stated the fact that they are compelled to work side by side as it is the working condition. On the contrary, the company management has stated that the safety measures are implemented to a great degree as the staff issues are a major concern for them. Hence, there is seriously a major mismatch of contrasting views that is going on. They also claim that this type of measure has been one of the reasons why the profit has resulted in that detrimental way . The issue of pandemics has cost £ 20 million in operating costs to the company. In the future, under such an uncertain situation of economic and environmental disaster, the company may face issues regarding its operating costs as well as trading costs while initiating in the online spheres.
Issues in the bottom line
The bottom line sales have been battered badly during a pandemic for JD Sports. A failure in the design segment has been issued in the company as well during the pandemic and they have disregarded the taxpayers to a great extent. There are companies such as B&M and Aldi that have paid 2 billion euros to the taxpayers while the JD has been completely disinclined to do a similar activity regarding paying the tax. The demands for the trainers and the hoodies were truly up before the pandemic.
Hence, the supply must be a great pressure to produce such a great quantity of clothes for the on-demand market. Especially meeting the demand of the youngsters would be a great challenge after a pandemic recovery. But constant denial to return the cash payer cash would be an issue for the company in the future for sure.
Few other issues
In the online customer service segment, the company JD Sports has recorded an embarrassing one-star rating out of five. It is claimed by the customer of the company that the issues are hardly resolved. When it is asked about the status or ranking of the helpfulness of the staff, the customer has given this type of rating to JD Sports. On the other hand, companies such as Marks & Spencer and Screwfix have gained a five-star rating in their customer service segment. Buying out the whole company is a choice that JD Sports have integrated. Since the issue of the £300 million price tag was a problem for the company, this decision was made. The owners of JD Sports have also planned to revitalise the growth of another company named Debenhams. This practice as per the owner would gain bargaining facilities and this is the reason why such a decision is made. On the other hand, the rival of JD Sports, Sports Direct, has also planned to buy Debenhams. Hence, it can be stated that there will be a lot of clashes and conflicts shortly regarding ultimate ownership. The training retaining competitor of JD Sports, Footasylum, has been integrated with JD Sports. JD has been ordered to sell the products of Footasylum. Moreover, the Competition and Markets Authority (CMA) oversees the sales of Footasylum. The Competition and Markets Authority (CMA) have argued that the takeover of Footasylum would be a great issue for JD Sports. Since the accountancy firm Deloitte has accused the company of certain reasons, JD has taken actions regarding reducing the proportion of agency workers on site to fewer than 30% even at peak times and increasing supervision of the agencies with which it works as well. It is seen from the above analysis, that the competition with the big retail giants has allowed the JD Sports company to take diversified decisions. In one instance, it is seen that JD Sports are willing to sell out the company and in another, they are ready to take the business of Debenhams. On the other hand, regarding taking the share of the Debenhams company, they have been entangled with Sports Direct. The Sports Direct company is also one of the companies that are willing to buy the share of Debenhams and this is the reason why the competition is there. On the other hand, the sharing partnership effort with Footasylum will also create a stake for the JD Sports company. As the company is ordered to make the partnership with Footasylum, they are also obliged to sell off the products of Footasylum. In doing so, the company will be required to make a genuine effort and in such a situation, the JD Sports company is not ready. New product creation can be a matter of supply chain issues in the company to a great extent. As the designing segment has been claimed as a problematic one, the supply chain issue can be created in the future for JD Sports. On the other hand, it is also required to make an adjustment related to low sources of raw materials issues. This is one of the important supply chain issues that can be created in the future if major importance is not given to it.
Positive areas of JD
The company JD Sports has recently shifted to Shoe Palace and this shift of focus can be a beneficial one. This stance can be effective from multiple dimensions because they have a great reputation among the customer with regards to their sales in brands like Nike and Adidas. This focus on the Shoe palace would be great for the online sales of shoes in particular. On the other hand, these sales can be expressed towards direct-to-consumer (DTC) websites as well for JD Sports since it is followed by sports companies like Nike to a great extent . This approach can strengthen the online performance of JD Sports for the trainer brands. The competitors in the UK of JD Sports are Primark, H & M, Zara, and so on, and people after the pandemic restrictions are eased, all have devoured the market. Hence, it can be stated that JD Sports must do something unique to state their different brand image as a company of high street retailers. The competition range is quite high in the UK market for JD Sports. Due to the huge level of public presence in the high streets of the UK, the uncertain situation of store closure can be an issue in the future. Since, the year 2020, after the lockdown restrictions were eased, people have come to the stores in such a quantity that the stores were compelled to be closed.
In their Pink Soda Sportswear segment, there are plenty of new and talented women who come around. The hottest new fits are available in this segment where Jena Frumes, Amber Jepson, and Daisey O’Donnell show off their aura. A great number of acquisitions, as well as investments, have been made by JD to many European and American retailers including DTLR, Wellgosh, Shoe Palace, and Oi Polloi. During the time of uncertainty, the company has also planned to purchase Topshop and Debenhams. But ultimately, Boohoo has snatched Debenhams and Topshop being a part of the family of Asos. They are also looking for an investment in the e-commerce retailer Missguided. JD is looking to the acquisition of a controlling interest but the founder of Missguided is not certain to approve a majority stake. The CEO of JD believes that double-digit sales growth can be adhered to by the sales of women’s fashion and footwear sales. The sales of JD Sports increased due to the high demand for sports-led womenswear. The market value of the company has increased to 3.3 billion which is around £ 1 billion extra from their rival shareholder, Sportsdirect. The sales also increased with the assistance of the Euro 2016 football championship. They launch products of premium brands as well. JD understands the fact that the market now has deep adoration and obsession with brands such as Ellesse, Beyonce’s athleisure line Ivy park and Pink Soda. Overseas development can certainly be possible for JD since the company has been leading the UK retail market for a long time. They are way ahead of their other competitors as well.