Dicks Sporting Goods, Chapter 9: Tacit Collusion: Cooperation to Reduce Competition

Dick's Sporting Goods hasn't come under fire for any collusion thus far. The main reason for this could possibly be the low barrier to entry in the field of sporting goods. A high barrier to entry, as stated in chapter 9, would be a trait that would potentially be that of a business involved in collusion, even as it may be rare.

A look at DSG's net profit margin over the last decade will help show that low profits margins could insist on a low barrier to entry.

"It's likely that DKS is in an industry with low barriers to entry, spurring high competition. If Gross Margins are at least satisfactory, it's likely DKS invests heavily in R&D and Sales, General & Administrative expenses. 

Only $3.13 of every $100 of Revenue have been profit, on average over the past 10 years."

	2003	2004	2005	2006	2007	2008	2009	2010	2011	2012
Net Income	38.26M	52.82M	68.91M	72.98M	112.61M	155.04M	-35.09M	135.36M	182.08M	263.91M
divided by
Revenue	1.27B	1.47B	2.11B	2.62B	3.11B	3.89B	4.13B	4.41B	4.87B	5.21B
Net Profit Margin	3.01%	3.59%	3.27%	2.78%	3.62%	3.99%	-0.85%	3.07%	3.74%	5.06%

The reason DSG has remained successful in a volatile market is because of their contracts with high end brands and their commitment to invest in new equipment and facilities. 

There is evidence that other sporting goods companies are trying to potentially collude against Dick's to make the playing field more level. 

"The CEO of Modell's Sporting Goods is accused of going into a suburban New Jersey store of the rival chain Dick's Sporting Goods, claiming to be a senior vice president of Dick's. A lawsuit filed against him claims Mitchell Modell tried to get confidential information about Dick's online sales and the process it uses to deliver merchandise more quickly."

With this information made public, other sporting goods stores, or all retail for that matter, could obtain private information that would help other companies potentially collude against DSG in order to flatten the competitive marketplace. 

http://www.dailyfinance.com/2014/03/03/warren-buffett-investment-advice-modells-ceo-spy-dicks-sporting-goods/

http://www.vuru.co/analysis/DKS/economicMoat