Adventure 16 Wholesale’s New Owner Vows to Help Mom and Pops Compete

The acquisition more than tripled the number of brands Summit distributes, expanded it beyond electronics accessories, added a West Coast warehouse and surfaced a new champion for the industry’s mom and pop retailers. In fact, by purchasing the profitable wholesale division, Summit has provided employee-owned Adventure 16’s remaining retail business with the capital it needs to revitalize one of the industry’s most cherished retail brands.

In an interview with The B.O.S.S. Report Friday, Summit Founder and President Larry Locks spoke about the need for independent retailers to unite and pressure brands to tighten distribution.

Locks founded Summit in 2003 after selling his family’s third-generation commercial printing business to distribute electronics accessories to Outdoor Sports, Recreation, Fishing, and Shooting Sports retailers.

“The bulk of business is independent mom and pops stores and they need help,” said Locks. “They are being challenged by Amazon and big boxes. So we are a bit of a hybrid; a sales organization, a stocking distributor and a value added partner. We have 98 sales reps nationwide. There are boots on ground that provide planograms, clinics and provide support. You can’t just be there waiting for orders. You have to help.”

For instance, Summit has developed a program to take much of the pain and risk out of entering the rapidly growing mobile electronics category. Under the program, retailers can place a single order for a Mobile Electronics Center consisting of products from 14 brands. If products don’t sell through, Summit takes them back.

“Everyone used to get excited when you get a new door but that's not where we stop,” said Locks. “What defines success is helping them sell through.”

As part of that mission, Summit has done a lot of work helping brands clean up their distribution. As GoPro’s original distributor, Summit persuaded the action camera company to put serial numbers on its product so it could track unauthorized sales on Amazon. He said he wants to help unite independent retailers to pressure more outdoor brands to stop selling direct to Amazon and other third-party marketplaces. 

 

“When we unite, we can utilize our buying power to force manufacturers to be better citizens,” he said of the more than 6,000 independently owned stores that sell outdoor sporting and recreational products. “If the independents go away, what are you left with? You've got Amazon running the program and good luck trying to dictate MAP to them.”

 

 

With the Adventure 16 acquisition, Summit grows its brand portfolio from 38 to about 170 and adds a San Diego fulfillment center that enables it to reach all its customers within 1 to 2 days via ground shipping. Just as importantly, he said, he has brought over 30 very experienced employees.

 

 

“In most acquisitions, the buyer comes in and strips out the employees and takes the assets,” said Locks. “We do the reverse. We look for acquisitions where the company is good and where there is upside potential and we grow the people.”

 

He estimated that the deal makes Summit the second largest outdoor products distributor in the nation. The largest is thought to be Liberty Mountain, the Salt Lake City company that acquired Pennsylvania-based competitor Peregrine Outfitters in 2011 and now carries more than 600 outdoor specialty brands.

 

For employee-owned Adventure 16 Inc., the sale provides capital to upgrade its retail business, which closed its fifth store last week, said President John Mead. The store opened in Oceanside, CA in 2004, but was never profitable. It had been used primarily as a clearance outlet in recent years.

 

 

“That store was not bleeding the company, but it was not contributing either,” said Mead.

 

 

Mead had been seeking investors for the retail business for about a year when Locks approached him about a year ago to discuss a deal. Although Adventure 16 had been doing business with Summit affiliate Aquapac USA for years, Mead said it took him a year to conclude Summit was a good match.

 

 

“It probably took half of the 12 months for me to decide not only, is this the right price, but is this the right buyer,” said Mead. “It was very important we sell the business to someone who could take it to another level that we could not. We wanted to make sure he would keep it in San Diego. He understood the value of bringing over all the people.”

 

Under the agreement, Summit has the right to the Adventure 16 Wholesale name through 2015 and will continue to operate the business from Adventure 16’s headquarters in San Diego, which also houses the company’s flagship store.

 

Proceeds from the sale will enable Adventure 16 to launch an online store and upgrade its remaining four stores in time for the holidays. Adventure 16 took down its original e-commerce store in 2006 after concluding it did not have the back-end systems needed to provide a competitive shopping experience. A new ERP system the company began brining online in March will run integrated inventory management, POS, CRM and e-commerce systems that will enable Adventure 16 to fulfill online orders from any of its four retail stores and create highly segmented marketing campaigns.

 

“We had not upgraded our system for 10 years and we were limping along with what we had,” said Mead. “This sets us up for omnichannel retail.”

 

Mead said that while he expects the online store to enhance profitability and generate incremental sales, he views it primarily as a way for the company’s bricks-and-mortar stores to be more competitive.

 

“We are not out to set world on fire with the online business,” he said. “It's a very competitive business. But in this day and age, you need to be online to be relevant with a bricks-and-mortar store. We also look at it as a way to advertise and promote retail stores.”

 

Adventure 16 will beef up inventory at its flagship store in San Diego to support online sales. Because Summit will continue to run the wholesale business next door, Adventure16.com will be able to fulfill many orders with a single shipment, giving it a competitive advantage against online retailers who may have to ship accessories in one box and sleeping bags, apparel and footwear in another.

 

“We want to leverage our relationship with Summit, who is very savvy in this area,” said Mead.

 

Shian Sung, a computer savvy employee and Triple Crown hiker who ran customer service at Adventure 16 Wholesale for years, was tapped last year to oversee the ERP and e-commerce launches. Mead said plans call for launching the online store and upgrading its bricks-and-mortar stores in the next six months.

 

“The retail business has been tough and there has been a lot of deferred maintenance,” said Mead. “We like our stores to appear worn, but we don't want to be worn out. This sale allows us to upgrade facades, signs, security and store interiors by the holidays.”

 

Mead said the biggest challenge will be learning how to win in the emerging omnichannel retail environment, which requires delivering a consistent, convenient and exciting brand experience across multiple touch points.

 

“This allows us to just focus on doing one thing really well,” he said. “Our plan is to become more of a sales organization in a rapidly changing world where you can't just work with the best brands and discount products to stimulate sales,” said Mead. “We've got to become more savvy sales people.“