September 20, 2023
On September 19, 2023, Sigma Sports published its annual report, marking a first-time £4.1m loss in what they described as a 'challenging year' for the industry. Aimondo Team analyses what actual challenges are to blame
On September 19, Sigma Sports published its annual report, marking a first-time £4.1m loss in what they described as a 'challenging year' for the industry. The company attributed the downturn to geopolitics, post-COVID dynamics, and interestingly, shoppers' behaviours [Link to the report].
“FY22 was a challenging year for retailers in the UK,” wrote finance director Oli Lawson, “as businesses had to deal with the economic environment post Covid-19 which was compounded by Russia’s invasion of Ukraine, rising interest rates and the fallout from September’s mini budget - all factors contributing to a decline in consumer confidence.”
While these factors undeniably played a role, at Aimondo, we chose to delve into Sigma Sports' pricing strategy for a more data-driven perspective. Earlier, we conducted a similar examination of The Works after their report showing a decrease in profit margins. Our simple analysis revealed two significant findings:
Turning our attention to Sigma Sports, what does their data reveal?
The insights are somewhat disheartening. For products where Sigma Sports already presents the lowest price, their discounts drastically undercut the market average.
An 18% discount might appear enticing on their site, but shouldn't the company evaluate market data before launching a discount campaign? They might realise their offer is already competitive. If aggressive promotions don't spur sales, perhaps the product's price elasticity has been overestimated or the market saturated. Thoughtless discounting can plunge companies into a damaging pricing spiral. A clear, solid data-driven approach seems absent in their promotional strategy.
Another conclusion we can all make assessing Sigma Sports' methods: they lack pricing intelligence tools. It's typically easy to identify such use, as data patterns rapidly highlight Price Intelligence application.
In summary, while Sigma Sports faces considerable revenue losses, their approach to discounting appears misguided. They seem to lack timely, data-driven insights into market dynamics. Hopefully, this serves as a wake-up call, encouraging them to invest in pertinent analytics. Aimondo Team wishes them a swift recovery.
Now, how about you? Have you reviewed your pricing data lately? Before initiating a discount campaign, do you assess your market position for a product? Do you evaluate a product's price elasticity prior to forecasting sales and setting revenue targets via aggressive pricing? If you need guidance or training in this domain, reach out to us or sign up for our free Pricing Expert course. We delve into all these areas and more.
Step-by-step guide on maintaining high profitability in retail.