SBD/November 30, 2011/Marketing and Sponsorship

NBA Lockout Agreement Appears To Have Sparked Sales Spike For Licensed Products

NBA seeing increasing sales at its Fifth Ave. store since settlement announcement
The apparent settlement of the NBA lockout looks like it sparked consumer demand for products from league licensees. Speaking for the first time since players and management reached a tentative end to their labor dispute early Saturday morning, NBA Exec VP/Global Merchandising Group Sal LaRocca said that it was too early to assess the impact the five-month lockout had on sales of NBA-licensed consumer products. However, early indications, based on e-commerce sales and sales at the NBA's Fifth Ave. store, which opened in a new location Oct. 28, are that the sales rebound will be quick. The lockout coincided with both the back-to-school and holiday shopping seasons -- the year’s most important seasons for retailers. "We've been a retailer and a licensor for years now, and, as a retailer, I can tell you that you can't replace November sales in March," LaRocca said. Still, the early retail results have been encouraging for league. Across the retail landscape, Black Friday and Cyber Monday sales exceeded even the most optimistic projections. On an annualized sales-per-square-foot basis, sales at the new NBA Store over the Black Friday weekend were up 38% over last year’s record haul, LaRocca said, adding that the league continues to look for a larger and more permanent location for its flagship store. In its first month, NBA Store sales were up 22% on the same annualized sales per square foot metric and that is using last year’s record sales year at the old NBA store as a benchmark. Most analysts said overall retail sales were up 16% during the first weekend of the holiday shopping season. LaRocca said that on Cyber Monday, when NBA.com was offering a 25% discount to shoppers, sales were up 43% from '10. The conversion rate, a measure of site visitors who actually made purchases was almost 10% versus its normal low-single digit rate. Most industry reports pegged U.S. online sales up around 33% on Cyber Monday. “We’re outpacing general retail, so hopefully that says a lot about the resiliency of our brand," LaRocca said. “Once there was certainty of a season, we have seen demand spike and that's encouraging." 

PLAYER MOVEMENT A SALES CATALYST: Player movement is always an important catalyst for licensed product sales, and the period between now and the NBA’s projected Dec. 25 season tip-off should be filled with an unprecedented amount of signings. “We had cut back considerably on [NBA] inventory of course, but now we’re seeing a comeback and expecting it to be very strong moving forward," said Modell’s Sporting Goods CEO Mitch Modell. Without player images, NBA card licensee Panini looks like it will be the licensee most damaged by the lockout. Panini will not be able to get any cards to retail before next year, and it has scaled back its NBA card releases from 18 to eight. Panini has three top NBA draft picks under contract.
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