Outdoor Retailer Summer Market Provides Sunshine in a Gloomy Retail Market

While many retailers and vendors were predicting a slow show, foot traffic slowly picked up later on day one and reached its peak on day two, with most exhibitors agreeing that attendance was close to last year.  However, it was clear that retailers were spending less time at the show with fewer staff members than they have in the past, making day three much slower than normal and day four irrelevant for most exhibitors.  It was common to hear from retailers and vendors alike that they flew in on the first morning and out at the end of day two in an effort to cut costs.

OR official pre-registration numbers indicate attendance was up roughly 4%.  Official attendance numbers are expected later this week.
Many retailers who had decided not to come shifted course as late as one week before the show and decided to spend at least a day or two at the show. Several retailers who spoke with Sports Executive Weekly said this was due to some last minute “vendor support” with airfare and hotels.

The earlier show dates were a clear benefit to the footwear and apparel vendors on the floor, which have been struggling with longer factory lead times.  In fact, Columbia didn’t even bring full product lines to the show, instead focusing on brand positioning and marketing since most orders were already in-house.  At the same time, most hardgoods vendors were easily able to shift their product development schedules to have samples and marketing support materials ready for the show. The only hang-up in the shift in show dates was with the paddlesports vendors and retailers.

In the footwear market, the surge in distressed acquisitions over the past six months seems to have opened doors for several brands. While some are benefiting from additional capitol and access to credit, others who were not involved in the wave of deals were able to grab market share by simply maintaining their business model and focusing on fundamentals.

Apparel vendors are looking at the heavy shift in summer sales towards rainwear and showing some concern around traditional summer best-sellers like shorts and technical tees.  Based on retail point-of-sale data, the top sellers charts in outdoor apparel have been dominated by rain gear and jackets for the last few months.  Because of the extreme wet and cool weather in the Northeast, Southeast and Rockies, both retailers and vendors are sitting on some inventory in these two categories, while rain gear and waterproof breathable outerwear is practically sold out.

Hardgoods vendors are seeing a clear shift towards value-oriented product. Retailers and consumers are looking for trusted brand names that are known for their high-end product, but they are looking for mid-tier products with good price points. For example, many tent manufacturers, known for higher end, higher price-point products, are launching entry-level tents with lower price points that are clearly differentiated with less top-tier technology and innovation than their top price-point products.

A similar trend is taking place in backpacks. For several years, pack designers were counting on consumers to have a “quiver of packs” in their gear closet, one designed for snow sports, one for climbing, one for backpacking, etc.                         

     

Today, designers are creating more versatile products that can cross over between activities with ease.

Still, some non-traditional outdoor specialty retailers were at the show looking at more premium product than they have in the past.  Two large regional sporting goods retailers that are often seen more as value destinations told Sports Executive Weekly that they were at the show to add more technical camping and other outdoor product to their mix.
While the show was no less energetic than in the past, it was an energy that was, for the most part, on the surface.  The aisles may have been upbeat, but senior executives were less enthusiastic about the near term.  The recession has led to sharp sales declines and a pullback in inventories for most retailers in the space. 

 

And while stores have turned more conservative in ordering, vendors have also become more careful and vendors do not see a turn happening until mid-2010. 

To complicate matters, the bankruptcy and quick liquidation of Joe's Sports & Outdoors left suppliers with unpaid bills and serves as a reminder of the unstable climate.  The CIT issue is also weighing on vendors’ minds as they deal with increasingly late payments from retailers and an unstable credit market for them and their retailers that makes it harder to finance goods or receivables at decent rates — if at all.

Overall, however, the industry appears to being fairing somewhat better than other industries. While perhaps lighter, attendance at Outdoor Retailer Summer Market remains healthy compared to the noticeable declines seen at many other tradeshows.  In fact, there were more footwear brands on the floor at OR that had perhaps called WSA home in years past. 

There were also retailers like Hibbett Sports in the aisles for the first time as they look for new opportunities for growth.

The industry appears to be somewhat buffered from the downturn because many of its products are functional in nature and often a required purchase as part of a personal pursuit. Consumers can much more easily cut back spending on trendy or fashionable merchandise. While equipment and apparel-particularly lifestyle offerings- have been weak this year, some categories, such as hiking boots and multi-sport shoes, appear to be selling well across the board. Functional apparel is also said to be selling well.

Also supporting the outdoor industry has been a pickup in hiking and camping. Several attendees pointed to strength in hiking boots and growth in national parks visits. Consumers are passing on the expensive trip to a distant location but spending more time locally outdoors. 
Indeed, many believe the industry is being somewhat helped because the outdoor lifestyle overall remains appealing and a “back to basics” attitude driven by the recession is leading more people to consider outdoor recreation. But with green and the outdoor ethos becoming more fashionable, elements of the outdoor lifestyle can be seen in marketing and even product design across many industries.

While perhaps not to the degree of other industries, the outdoor specialty space does continue to see declines and there are clearly some winners and losers in the market. Some feel that more established brands that consumers and retailers trust have an advantage in retaining shelf space in this climate. But many newer brands doing well believe they are providing the freshness needed to entice consumers to spend.

The OR show continued to draw more running and athletic brands to the event that want to tap into the outdoor opportunity, but attendance by the core running shops was down, according to brand sales management that spoke with SEW.                

 

The outdoor industry, particularly on the footwear side, is borrowing ideas from skate/surf styles and even athletic looks and features that have proven to be popular with the younger generation. Some believe the industry needs to do a much better job attracting youth.

“The industry has to face up the fact that the reason participation in many of the core activities is declining is because those people are getting older and they're not getting out there as much anymore,” said Peter Worley, president of Teva. “So there's this enormous generation of younger consumers that are open to the idea of outdoor activities but we're not speaking to them yet.”

While perhaps not to the degree of other industries, the outdoor specialty space does continue to see declines and there are clearly some winners and losers in the outdoor space. Some feel that more established brands that consumers and retailers can trust have an advantage in retaining shelf space in this climate. But many newer brands doing well believe they are providing the freshness needed to entice consumers to spend.

Mike Wallenfells, president at Mountain Hardwear, who also oversees Montrail, believes any slow mover is likely to lose shelf space.  “If it's not really moving, retailers don’t have much patience,” said Wallenfells.
At the same time, the performance by retailers is said to be mixed.
“At retail right now, there's a separation,” observes Bill Dodge, general manager of Patagonia Footwear. “The ones that have always been very good and are well run are doing the best. The ones that had weaknesses, those weaknesses are really amplified. It's true with manufacturers as well. Some are doing well despite what's gong on. Others are really in trouble.”

Brian Moore, VP, global men's footwear at Timberland, believes that when the economy revives, business will return to normal, including a greater reliance on pre-season orders.

“When the business picks back up and things get trendy and hot, then they're going to want a future,” said Moore.  “Since things aren't flying off the shelves today, it's easier to get sit back in with at-once orders. You're not missing that much. But as the economy improves and consumers get into things again and you miss a few sales, then retailers will shift a little bit more to balance that out.”

For now, however, partnerships between retailers and vendors remain critical.  “It's tough times for everyone,” said Ecco USA COO Dave Quel. “They'll be an end to it but in the mean time you have to be creative.”