There’s one way to capitalise on the demise of a major competitor – buy their identity.
That’s what US retailer Dick’s Sporting Goods looked to do after another sports brand, Sports Authority, collapsed earlier this year. Dick’s put in a bid for the company’s intellectual property, with the Wall Street Journal reporting that it placed a successful $15 million bid for the name and intellectual property of the brand – including a number of store leases sold at the bankruptcy auction.
At the end of August, Sports Authority contacted its customer base, providing the opportunity to opt out before customer data was passed along to Dick’s. This morning Wall Street Journal journalist Sara Germano noted that Sports Authority’s website was redirecting to Dick’s Sporting Goods. Typing ‘Sports Authority’ into Google will get the Dick’s Sporting Goods website.
Fun fact: try to go to Sports Authority dot com + it redirects to Dick’s Sporting Goods site. Boosted $DKS traffic 73% last month (per Citi)
— Sara Germano (@germanotes) September 21, 2016
Dick’s is fast becoming a retail darling in the US as other competitors fall down around it and its share price posts gains, but this isn’t the first time a company has taken over its competition by claiming naming rights. When US bookselling chain Borders Group filed for bankruptcy in 2011, rival Barnes and Noble bought its customer database and trademarks. To this day, when customers type in the Borders website, it redirects to Barnes and Noble’s online store.
Closer to home, electronics retailer Kogan.com bought the online store and databases of the failed Dick Smith business earlier this year. Kogan reported the move has already added value and expanded the number of customers and sales on the books. It’s a reminder that beyond the name of a company, information about customers that are interested in particular products is very valuable.
But there may be times when buying up another business’s identity could be seen as swooping in on misfortune, which is why it’s important for companies to be clear about how they came to acquire databases or take up the brand of another company, says InsideOutPR director Nicole Reaney.
“Mergers happen all the time, but here it depends how a company has gone about the process and its communications,” Reaney says.
“Businesses need to have clear communications with their stakeholders about how they came to this.”
For customers who want a product anyway – like sports equipment – the process of buying up IP to redirect your users to your company might be met with relief.
“You might have consumers that are really happy that you’ve come in, and maybe saved a brand,” Reaney says.
In the case of Sports Authority, the brand will not be returning but the customer base will be accessed by Dick’s Sporting Goods unless customers opt out.
With analysts currently arguing over the future of the bricks-and-mortar sports sector in the US, it’s a reminder that if a business is going to buy the intellectual property of a competitor, there better be a strong business plan in place.
“This is where people need to conduct all the due diligence to understand the purchase,” says Reaney.