Market spotlight:Retailers, others hopeful for Olympic boost

NEW YORK—When the Summer Olympics kick off in Beijing on Aug. 8, many retailers and other companies are hoping for a much-needed boost to their business.

Athletic companies such as Nike Inc. are pulling out all the stops. The Beaverton, Ore.-based company in April debuted its Olympics 2008 line, its largest effort ever for the games. Nike created products for every sport at the games, ranging from BMX racing to equestrian jumping. It will also dress thousands of athletes from more than 100 countries.

Though Nike isn't an official sponsor, priceless airtime showing its products and its exposure to China's burgeoning athletic market are expected to drive sales.

To a lesser degree, general athletic retailers such as Dick's Sporting Goods Inc. and Big Five Sporting Goods Corp. are seen gaining from an increased awareness about sports and athletics as a result of the games.

"Retailers who sell sporting goods and sporting apparel may benefit simply from people seeing the newest Speedo swimsuit or Nike running shoes," and going to the store and buying them, said National Retail Federation spokesperson Ellen Davis.

Official sponsors such as Adidas will also get the benefit of being linked to the Olympics.

"We believe strong sales momentum for the Adidas brand in Asia and Europe leading up to the Euro Cup (European soccer championships) in June, and the Beijing Olympics in August, will likely offset the softness in the U.S. market," wrote Susquehanna Financial Group analyst John Shanley in a note to investors last Thursday.

Retailers such as Home Depot Inc., which sponsors the U.S. Olympic team, and non-athletic sponsors like Coca-Cola and Volkswagen should gain as well. "Being able to make an association between supporting America's athletes through employment or sponsorship may be seen favorably by the rest of the country," Davis said. "It's possible those retailers in particular will have greater customer good will."

But this year, that good will may be offset by political controversy. The international Olympic torch relay was disrupted in London, Paris and other cities by protesters opposed to Beijing's clampdown on a broad uprising among Tibetans against Chinese rule. Protests are expected to continue throughout the games.

"Retailers are watching very closely the politics surrounding this Olympics," Davis said. "Retailers are probably having a lot of discussion of sponsorship and advertising. It's more of a dicey situation than it has been in the past."

Coca-Cola, for example, faced shareholder protest as well as demonstrators outside its annual meeting in April over its decision to be a corporate sponsor of the torch relay.

Politics aside, Davis said any effect from the Olympics is likely to be muted as the difficult economic environment continues.

"Sporting goods retailers are gearing up for summertime and hoping warm weather helps sales, and certainly the Olympics could be one more notch in the belt," she said. "For a handful of retailers the Olympics can provide a nice boost."