Sports and your supply chain – how a 39 year wait can impact your supply chain

 

Those of you who are no hockey fans or those that scoff at the Boston Bruins bandwagon, might not realize that Bruins ended a 39 year drought by winning the Stanley Cup this past Wednesday. They defeated the Vancouver Canucks 4-0 and won the title 4 games to 3, setting off an entire regions joyous celebration. What it also did was send retailers scrambling for that coveted championship merchandise. As has become the custom, merchandise companies will produce championship hats, t-shirts and other gear for both teams that find themselves in the finals. How else does the winning team have the appropriate accoutrements seconds after the final whistle is blown? Of course that means that there is equal amounts of paraphernalia emblazon with the losing team’s likeness, but with “Champion” associated with that team’s logo. Which of course is merchandise with a value of zero, many times that gear is donated to charity….hopefully far from where the losing team resides!

Of course anyone in the greater Boston area and I would argue in all of Massachusetts probably all of New England can attest, getting your hands on a locker room t-shirt or hat is close to impossible. I just went to an Olympia sports (a local sports retailer) where the Bruin’s Stanley Cup section looked like the bread aisle in 1949 Soviet Russia – bare. There was not even a hint of standard Bruin’s gear. I actually saw some of this locker room gear at Paper Source…not exactly where one would expect to find it, and even there the only shirt they had was XXL. Stores are reporting fans waiting in line for 3 hours to get a chance to purchase the goodies, stores are going through their entire inventory within hours of receiving it one store reported selling $5,000 worth of merchandise in the first 2 hours! I remember back in 2004 when the Red Sox ended their 86 year curse and won the World Series – the lines for merchandise were monumental, even the local newspapers faced spikes in demand for their papers and could not keep the newspaper distributors stocked with the edition of the day.

For companies like Reebok, Dicks Sporting Goods, Moddells, and all the other distributors this would all seem like good times. Long lines of fans, who demand very specific merchandise, are most likely not going to be price sensitive and will tolerate stock outs. Yet, all is not rosy. Why? What about all the fans that walked out without that $30 championship hat, will they go back and get it? Some did purchase other related products, but not necessarily a Reebok product or one at that price point. What about getting their hands on the other championship specific merchandise? How much revenue might have these companies left on the table not being able to keep inventory levels at pace with the demand? What about the secondary level of demand – a fan might not be able to get a Bruins’ championship shirt but if there is a Bruins’ team shirt might they purchase that? Does the store have the proper inventory levels? Add this layer of complexity: player numbered shirts.

According to reports the Tim Thomas and Brad Marchand shirts are the most coveted. Makes sense for Tim Thomas – he was awarded the Conn Smythe trophy for the most valuable player. Marchand has achieved cult status for his play, toughness and scoring all as a rookie and all as a player that based on physical stature, one would not assume is a professional athlete. How could one predict those demands? What about Chara or Bergeron shirts? Chara being the captain and Bergeron having scored 2 goals in game 7 (so did Marchand). Again, no clean way to anticipate those demands.

Finally add two more events that impact the supply chain – the duck boat parade in Boston today and Father’s Day tomorrow. Many fans stated wanting gear to wear at the parade, while I am sure Bruins’ gear became a coveted gift for many fathers’ in the region. Again, two events that spiked the demand. So now what? Does Reebok and others crank up their production machine to restock shelves? Or do they assume that the window has closed – the highest demand coming in the first 3 days post event. But what if that rule does not apply to this situation? The Bruins are a storied franchise, being one if the original 6 NHL franchises. New England is not your typical sports region. Could demand remain strong for weeks? Months? Do the merchandisers have to shift resources to meet this potential demand or stay the course hoping that the consumer is flexible with timing: they want the gear and are willing to wait for it. Or do they need to strike the iron while it is hot, as I stated before the New England region is a unique sporting market and the Red Sox are a looming monster when it comes to commanding the fan’s attention.

For retailers that are involved in championship merchandising these events pose a great challenge. How to monitor the level of demand for their goods and what is the length of the peak demand. How does the region and team influence this demand? I have a feeling the demand for merchandise was very different for the Tampa Bay Lightening when they won the Stanley Cup in 2004 as it was this year or even last season when the Chicago Blackhawks ended a long cup drought themselves (they are also an original 6 team). Merchandisers have become more savvy with getting product in the hands of their fans, but the wide spread stock outs are an clear indication that much improvement could be had. I am sure fans’ want to get their hands on more product while the merchandisers want to capture more revenue associated with these demand generating events.

Maybe a demand signal needs to incorporate stature of team and time since last championship!

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