Editors Note – Dave Matz, president of Grassroots Outdoor Alliance, attended ispo china winter 08 at the invitation of Dieter Tremp, who markets the show in the United States for Messe Munchen International.
Dave shares his observations about his recent trip to Beijing to address the Chinese Outdoor Retailers Association at the ispo China trade show
The trade show drew 329 brands, 11,108 participants and featured approximately 215,000-square-feet of exhibition space from Feb. 24 to 26. In the following interview, we asked him about his impressions of the outdoor industry in China. Matzs assignment was to deliver three presentations to members of the Chinese Outdoor Retailers Association (CORA) about store operations.
The trade show drew 329 brands, 11,108 participants and featured approximately 215,000-square-feet of exhibition space from Feb. 24 to 26. In the following interview, we asked him about his impressions of the outdoor industry in China. Matzs assignment was to deliver three presentations to members of the Chinese Outdoor Retailers Association (CORA) about store operations.
Matz has been in the Outdoor Industry for over 20 years. Prior to joining Grassroots, Dave was a regional sales manager with The North Face, worked as a sales rep with Patagonia, and was a senior instructor for Outward Bound in Ely, MN. He has a B.A. in Economics from Earlham College and enjoys mountain biking, skiing and kayaking.
BOSS: What surprised you the most about your recent visit to ispo China?
DM: I was most surprised by the lack of presence by major brand players at the show. There was no North Face or Marmot, Mountain Hardwear or Arc Teryx at all. Patagonia was there.
DM: I was most surprised by the lack of presence by major brand players at the show. There was no North Face or Marmot, Mountain Hardwear or Arc Teryx at all. Patagonia was there.
BOSS: How prevalent are U.S. outdoor brands in the country in general?
DM: The North Face was by far the most prevalent brand in terms of seeing people wearing it on the street. The second most prevalent brands were Chinese, including Ozark Gear. There was also a Korean brand called Black Yak. Vasque has been doing business there for a while and their booth was packed. Arc Teryx seemed pretty popular. I also saw Lowa, La Sportiva, Crispi and Millet.
DM: The North Face was by far the most prevalent brand in terms of seeing people wearing it on the street. The second most prevalent brands were Chinese, including Ozark Gear. There was also a Korean brand called Black Yak. Vasque has been doing business there for a while and their booth was packed. Arc Teryx seemed pretty popular. I also saw Lowa, La Sportiva, Crispi and Millet.
BOSS: Did you get to visit any stores while you were over there?
DM: I visited some Sanfo stores that were founded by Zhang Heng. He began his store in 1997 with less than 100 square feet. In 1998 he opened his second location and went back to school for his MBA. From there he started opening about one store every year until in 2007 when he opened stores number eight through 12 and he had franchised six other stores. First, we went to his store near the biggest park in Beijing. It is a very nice store; well lit, well merchandised and particularly well stocked. He had the biggest selection of footwear, over 75 SKUs, and packs, over 45 SKUs, that I have ever seen in an independent store. This is partly due to how the Chinese customer buys. They want to see a wide selection of product and for that reason department stores are perceived to be the best places to shop. An independent retailer needs to put on a strong face in order to stay competitive with these department stores.
DM: I visited some Sanfo stores that were founded by Zhang Heng. He began his store in 1997 with less than 100 square feet. In 1998 he opened his second location and went back to school for his MBA. From there he started opening about one store every year until in 2007 when he opened stores number eight through 12 and he had franchised six other stores. First, we went to his store near the biggest park in Beijing. It is a very nice store; well lit, well merchandised and particularly well stocked. He had the biggest selection of footwear, over 75 SKUs, and packs, over 45 SKUs, that I have ever seen in an independent store. This is partly due to how the Chinese customer buys. They want to see a wide selection of product and for that reason department stores are perceived to be the best places to shop. An independent retailer needs to put on a strong face in order to stay competitive with these department stores.
BOSS: Were there any other shops you visited during your stay?
DM: I also visited The Fire, owned by a husband and wife and their friend, Jason, who spoke very good English. The store was located between the busiest train station in the city and a local college.
DM: I also visited The Fire, owned by a husband and wife and their friend, Jason, who spoke very good English. The store was located between the busiest train station in the city and a local college.
BOSS: What was your impression of that store?
DM: My first comments upon walking into The Fire were about not telling a consistent story. The first display had a bike with panniers, a manikin in ski gear, a manikin in backpacking gear, travel luggage, potted plants, etc. I discussed focusing on one story, just ski as it was still ski season, for this display. The same was true throughout the store.
DM: My first comments upon walking into The Fire were about not telling a consistent story. The first display had a bike with panniers, a manikin in ski gear, a manikin in backpacking gear, travel luggage, potted plants, etc. I discussed focusing on one story, just ski as it was still ski season, for this display. The same was true throughout the store.
For example, I found picnic sets displayed with ice climbing tools, snowboarding boots with the skis and stoves with no fuel canisters. There were the common challenges with cleanliness and keeping merchandise tidy, but we also discussed increasing the size of their footwear wall and displaying outerwear with face-out displays as well as shoulder-out. They had an interesting bank of nine televisions in the front window that they would run action sports video loops on at night. During the day they would turn it off, but then it kind of looked like a used TV store. I encouraged them to keep the loop running to attract attention to the storefront. I spent about 2 hours at the store and they took a lot of notes and thanked me for the help.
BOSS: What were the biggest differences from the U.S. market?
DM: They trust advertising more than Americans. They are not cynical about it and are very brand loyal. Thats the danger of our vendors waiting – that they will get left behind.
BOSS: What about the distribution process? Did that differ from the U.S.?
DM: Distribution also works differently in China. Vendors ask for hard pre-season orders and there is very little ASAP availability. Distributors hold retailers to pre-season commitments with little flexibility. As you can imagine, this leads to a difficult relationship between retailers and distributors. The Chinese Outdoor Retailers Association helps ease this burden by acting as a distributor as well as a resource center. They distribute for Patagonia, Gregory, Salomon, Fox River, Masters Ski & Trekking Poles, Uvex, Jack Wolfskin and Coleman. They only distribute these products to their 65 members throughout China. Sanfo is the only North Face dealer in the whole city of Beijing, 17 million people. All other TNF retail is done by TNF company stores.
DM: Distribution also works differently in China. Vendors ask for hard pre-season orders and there is very little ASAP availability. Distributors hold retailers to pre-season commitments with little flexibility. As you can imagine, this leads to a difficult relationship between retailers and distributors. The Chinese Outdoor Retailers Association helps ease this burden by acting as a distributor as well as a resource center. They distribute for Patagonia, Gregory, Salomon, Fox River, Masters Ski & Trekking Poles, Uvex, Jack Wolfskin and Coleman. They only distribute these products to their 65 members throughout China. Sanfo is the only North Face dealer in the whole city of Beijing, 17 million people. All other TNF retail is done by TNF company stores.
BOSS: Did the Chinese retailers have much familiarity with how the business works in the United States?
DM: At the end of one presentation I gave about 120 retailers a four-question quiz to see how much they knew about outdoor retail in the U.S.. Out of 80 people, only 8 got two or more questions correct.
DM: At the end of one presentation I gave about 120 retailers a four-question quiz to see how much they knew about outdoor retail in the U.S.. Out of 80 people, only 8 got two or more questions correct.
BOSS: How big of a market do you think there is for Outdoor products there?
DM: Ive been visiting with international sales managers who have been around a long time and they are saying things like there are cities of 4 or 5 million people with no airport. It makes it hard to get your mind around. I think there is a strong opportunity there for somebody. Coleman, for example, has positioned itself as a high-end brand.
They have 200 ski resorts in China. There are 14 ski areas within an hour of Beijing and its pretty cheap. I think you can go skiing for 50 yuan, or about $7 and that includes the lift ticket and equipment rental and sometimes clothing. There are 100 million people in their middle class and the income is doubling every five years. The rising middle class there is very apparent. They have more enthusiasm and optimism than their American and European counterparts. They say the skiing population will grow 750,000 a year. The Chinese government wants to add 300 new resorts by 2010.
DM: Ive been visiting with international sales managers who have been around a long time and they are saying things like there are cities of 4 or 5 million people with no airport. It makes it hard to get your mind around. I think there is a strong opportunity there for somebody. Coleman, for example, has positioned itself as a high-end brand.
They have 200 ski resorts in China. There are 14 ski areas within an hour of Beijing and its pretty cheap. I think you can go skiing for 50 yuan, or about $7 and that includes the lift ticket and equipment rental and sometimes clothing. There are 100 million people in their middle class and the income is doubling every five years. The rising middle class there is very apparent. They have more enthusiasm and optimism than their American and European counterparts. They say the skiing population will grow 750,000 a year. The Chinese government wants to add 300 new resorts by 2010.
BOSS: Did you see any evidence that the retailers were getting involved in environmental causes?
DM: They are promoting trail races, getting involved in environmental efforts. The City of Beijing had much cleaner air than I anticipated. They eliminated all old taxies and buses and apparently its made a difference. One day I was actually able to see from a tall building all the way to the mountains, which I understand is somewhat unusual. I think they are primed for organization.
DM: They are promoting trail races, getting involved in environmental efforts. The City of Beijing had much cleaner air than I anticipated. They eliminated all old taxies and buses and apparently its made a difference. One day I was actually able to see from a tall building all the way to the mountains, which I understand is somewhat unusual. I think they are primed for organization.
BOSS: So what advice would you give to U.S. outdoor brands?
DM: After seeing how enthusiastic the Chinese are for non-Chinese brands that have established themselves, like Vasque, I can only encourage U.S. brands to get in the game as soon as possible.
DM: After seeing how enthusiastic the Chinese are for non-Chinese brands that have established themselves, like Vasque, I can only encourage U.S. brands to get in the game as soon as possible.
