Mar
28
2011

Spot The Difference

The definition of undercut is to ‘undersell: sell cheaper than one’s competition’. This is not a new concept, it happens daily in supermarkets, retail stores, bars and restaurants. Selling for the cheapest price generates interest, interest transcends into sales and ultimately results in stolen sales from competitors.

The customer more often than not is attracted to the cheaper option and the opportunity to save money, after all who would want to pay more for exactly the same product when they can get it cheaper elsewhere?

The notion of one company undercutting another is all well and good in theory, but what about when both companies have the same owner?

Well this is the case currently with Newcastle United Football Club and sportswear retailer Sports Direct, two separate companies, both owned by Mike Ashley. Yet Sports Direct undercuts Newcastle United club shops on the same product by up to £15.

The table below highlights the cost of the same items sold in Sports Direct and the Newcastle United club shops, and the difference in price between items. Prices are for the current Puma 2010-2011 home kit in adult size medium. It’s worth pointing out the same price differences apply to the second and third kits.

ItemSports DirectClub ShopDifference
Total£283.96£350.00£66.04
Short Sleeved Shirt£35£45£10
Short Sleeved Shirt with Premier League Badges£35£50£15
Long Sleeved Shirt£40£50£10
Goalkeeper Shirt£40£50£10
Shorts£16£23£7
Socks£8£10£2
Polo Shirt£24.99£28£3.01
Training T-Shirt£24.99£26£1.01
Woven Jacket£39.99£45£5.01
Woven Short£19.99£23£3.01

Ten items, all cheaper in Sports Direct than in Newcastle United club shops. Going off what is seen the most at St James’ Park, we can presume that the most popular item is the short sleeved shirt, which when bought from the club shop will cost £10 more than at Sports Direct. Celebrate the return to the Premier League by adding Premier League badges to the arms of the shirt and it is an additional £5 in the club shop, compared to no extra cost in Sports Direct. That is £15 more expensive to buy exactly the same product in Newcastle United club shops than in Sports Direct.

This is not the difference between buying from a shop versus buying offer internet, buying from abroad versus buying locally or even buying real versus buying fake. It is the difference between going up a set of escalators to the floor above as is the case in the Monument Mall.

Just to keep in trend with the variation of cost between the shops for the same product. Shirt printing in the Club Shop is £10 for any player, any number, whereas in Sports Direct it is £1 per letter, £4 per number. Looking at a few players in the squad:

Name & NumberSports DirectClub ShopDifference
Harper 1£10£10£0
Nolan 4£9£10£1
Lovenkrands 11£19£10£9

Of course, Newcastle United will receive a percentage of all sales through their contract with Puma as the supplier regardless of where the products are sold. However the difference between buying from Sports Direct and Newcastle United club stores is that profit made from club shops goes straight to Newcastle United, whereas profit made at Sports Direct goes to Mike Ashley – it is then up to him how much he wants to put back into Newcastle United.

Shirts are more likely to sell at £35 than at £50, Mike Ashley knows this and by charging £35 at Sports Direct rather than the £50 in club stores, he is driving custom away from Newcastle United to Sports Direct, driving money away from the club’s bank account to his own.

It is too simplistic to say that Sports Direct have more capacity to buy in bulk at a lower cost and can sell for cheaper than the club shop. This is a man who has built up his fortune through the sportswear industry, who has the industry contacts and relationships to buy cheap and sell cheap, suitable for Sports Direct but not for Newcastle United.

Fans who are loyal to the Newcastle United brand and who buy from club shops, or who refuse to buy from Sports Direct are being unfairly asked to pay more. £15 more in some cases for exactly the same product.  Why has there not been more of an effort to price the items the same and the fans given the choice where they spend their money?

Well, because this would be fair and not in Mike Ashley’s business interests. Mike Ashley seems quite content to undercut Newcastle United in a key area of merchandising for his business/personal gains, ultimately this lack of income for the club will result in a lack of money generated by the club which could be spent on improving the team, in Newcastle United press office speak – ‘no capital outlay’.

About the Author: Ryan Davison

Ryan is an NUFC Season Ticket holder. He is also a co-founder, editor and blogger for NUFC and football blog LeazesTerrace.com. You can find him on twitter: @ryan_davison

3 Comments + Add Comment

  • Nicely detailed but I find it very difficult to get upset about this issue in terms of price, if I were Ashley I would do the same, thankfully I’m not. This whole culture of replica kit buying is relatively new and people have this bizarre belief that wearing a kit conveys some kind of image of devotion or acts as a lucky charm (if it did we’d probably be a lot better). People have another choice that you didn’t cover in your article, if you don’t like the price then don’t buy.

    Football kits are for children or for playing football in. All of these adults wandering around with them stretched over their jumpers is a little bit sad in my opinion. Where you buy a shirt is immaterial, the money is still going to an Ashley business. I am sure that it is the same with Liverpool, Man U shirts that Sports Direct sell, they’ll be more expensive than the club shops of those teams. Those clubs like NUFC will rightly trade on the aura of selling the shirt at the cradle of the team, and bung another few quid on the price where they can. It’s like going for a meal in the touristy bit of any major city, you’ll pay more than if you look around. If we were under different ownership, near the top of the league and people were hurling extra tenners at the club I for one would have no objection to taking people’s money off them to fund a successful NUFC, the choice is there whether to spend it. Now tickets are a different matter.

    Surely people who want the shirt would be better off just keeping their money in their pocket? They have a choice if they don’t like the price, there are plenty of other clothes out there to buy. Wear an old scarf to the match if it has to be black & white. This is what Ashley relies on the fact that people won’t do that and instead will buy the shirt directly. Instead of any action it’s easier to moan and complain that the shirt is a signifier of devotion and that you begrudge being ripped off but still have to wear it. You don’t.

  • I agree as a 42 year old man i find it funny/strange that so called adults need to parade around in shirts as if it means they care/know more about a club than somebody who isn’t wearing one it,come on are all Newcastle fans so shocked to discover multi- millionaire Ashley might not be as passionate about there club as they are?Next u’ll be telling me West Ham’s owners don’t know what there doing!

  • I’m beginning to suspect that Newcastle fans are being dragged kicking and screaming through a massive reality check. Previously some fans have appeared to be living in some sort of fairytale world where prospective owners, managers & players alike would crawl on hot coals with their testicles on fire to be associated with Newcastle United….owners would spend vast fortunes of their own hard earned cash just to see the Toon challenge for the title or maybe Europe. Managers and players would take massive backward career steps to be here rather than work\play for some other ‘plastic’ but rather more successful club, simply out of adulation for the club and the Geordie fans. Some of us left these unrealistic dreams behind when we saw Santa doing some unspeakable act of copulation with our mothers, and realised that the land of make-believe was just that!….it’s called Growing up!

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