How the company that runs Rebel Sports is planning to deal with Amazon

Brodie Grundy of the Magpies and Nathan Vardy of the Eagles compete during the round 18 AFL match between the Collingwood Magpies and the West Coast Eagles in Melbourne. Darrian Traynor/Getty Images

The Super Retail Group is throwing everything at its Rebel sports stores, incorporating its Amart shops into a single core brand with sales of almost $1 billion, as it prepares for Amazon’s hard push into Australia.

Super Retail names Amazon as a key emerging competitor in an announcement on the new strategy, formulated after a review of the business that aims to present one brand by Christmas this year.

Shares in Super Retail were up 3.8% to $8.74 in early trade.

The company faces a retail world where prices are falling and services are getting better.

It says: “The competitive environment will change with the planned growth of Inter Sport, the launch of Decathlon and JD Sports and the impending arrival of Amazon.”

Amazon is currently ramping up its presence in Australia, looking for massive warehouse space and hiring staff, for a local launch later this year or early next.

Previous analysis by Super Retail shows the retailer is in a better position than most facing increased competition from Amazon.

The company says its international peers have maintained or grown margins despite competitive challenges.

The latest move will expand the Rebel brand’s national footprint to almost 160 stores. The Amart Sports brand will be discontinued from November this year.

The company, which also runs Supercheap Auto, BCF and Rays stores, says sales from its sports division will hit about $920 million in 2017, as this table shows:

Source: Super Retail

The conversion to one brand is expected to deliver benefits of about $15 million after two years.

The expectations of customers are rising and prices are falling, Super Retail argues.

“They will expect to be able to shop how, when and where it suits them, have access to the widest and contemporary range of products at best internationally competitive prices and be inspired through experience, service and solutions,” the strategy update says.

One-off after tax non-cash costs associated with the strategy are expected to be $34 million. One-off after tax cash costs of $3 million are expected in the 2018 financial year. The capital investment in fitting out the converted stores will be $9 million.

Super Retail today confirmed that 2017 financial year EBIT (earnings before interest and tax) will be at the upper end of previous guidance of 16% to 18% higher than the previous year.

CEO Peter Birtles says the Amart Sports brand is a strong performer, but it’s important to place the business in an optimal position to respond to changing and market dynamics.

“Coming together under the one single brand will enable our Sports Division to further accelerate the shift it has made in recent years towards a concentrated focus on delivering the solutions and services that customers today need and want in order to live their sporting passions,” he says.

He says the merger will mean an expanded range of services at more locations, with world class omni retail capabilities for sales online and in-store.