Sports Authority announced today that it is filing for Chapter 11 bankruptcy protection. In a statement, Sports Authority named a number of factors that led to it, including poor management and adverse weather conditions.
What always gets me about these filings is that, most of the time, the companies tend to blame external factors as if the bankruptcy filing is both a surprise and out of their control.
From Wall Street perspective, I guess this makes sense. Companies, especially those who I have filed for bankruptcy protection, don’t want the market to think that all hope is lost or that it is impossible to right the ship. Many times, as in the case with Sports Authority, the demise of a company comes as a result of years of poor decision-making and shortsightedness.
There is no reason to shop at Sports Authority.
As I think about Sports Authority, I struggle to come up with a reason as to why one would even shop there. Sports Authority has never given consumers a reason to choose them as a better alternative than the myriad of competitors in the market place. Its promise is basically, “Shop at Sports Authority, we have sporting goods and clothes.” This is akin to a restaurant saying, “Come to a restaurant, we serve food.” The claim does nothing to differentiate nor does it give a consumer a reason to believe that Sports Authority is in any way different and better than the competition.
The real issue here is meaning. With all of the Harvard MBAs running around, most businesses tend to focus solely on the business of what they do. For Sports Authority, that is selling sporting goods and opening new retail locations.
What they forget about is the meaning of their brands. It would be so much more efficient and effective if businesses started there rather than thinking about it after wondering why they are bankrupt.
Meaning as a system of understanding makes everything a company does more important and gives a reason WHY it is doing what it is doing in the first place. Most importantly, it gives any potential customer a reason why they should consider and ultimately prefer them. Building meaning should be the first place companies start.
The crazy thing is that, in most cases, there is a fix to brands having problems. Just give consumers a unique reason to choose you. How you get there is not always easy, however. It takes research, a fresh perspective and a willingness to slay some sacred cows.
As part of Sports Authority’s restructuring plan, it needs to invest in meaning in addition to becoming leaner. If it doesn’t, this bankruptcy filing could just be the beginning of the end.