By Thomas J. Ryan and Eric Smith
Over the past couple of weeks, the Editors of SGB Executive spoke with dozens of executives across the active lifestyle market to share their outlook for 2020. Large, medium and smaller brands and retailers in sporting goods, footwear, apparel, outdoors, and tactical were asked two questions: What gives you optimism and what causes you concern in the coming year?
This is the first of a three-part series that gauges what the industry’s key players think will or won’t happen in 2020. Today is Part One, tomorrow Part Two and on Wednesday, Part Three.*
»Jolyn de Boer, Executive Director, Tennis Industry Association
The good news is tennis is an aspirational sport. Every year, more people express their interest in tennis, and while the industry doesn’t have a problem getting people to try tennis, the challenge is in retaining and continuing to engage them in the sport. Tennis needs to increase the number of players, consumers and fans—all part of the participant base needed for a healthy industry.
The ongoing trade wars have stressed manufacturers, retailers continue their struggle and traditional tennis is challenged by social change that reflects a trend toward casual play and demand for more diverse experiences. It is vital for the industry to embrace change along with short-court formats such as pickleball, padel and paddle/POP tennis that can provide new energy, revenue and most of all add to the all-important participant base.
Additionally, the industry has many positive key messages to promote including tennis (racquet sports) is the No. 1 overall sport for health and wellness, Youth Play is up, Cardio Tennis continues as a leader of all sports and fitness activities, and the USTA is one of the strongest and most powerful federations in sport with the U.S. Open providing a dazzling annual showcase for tennis and physical fitness.
It is increasingly important for providers to deliver a connected experience for players through social group fitness and sticky technology platforms to increase retention. Equally important is the need for the industry to adopt new business practices through increased education and skills-based training. As 2020 rings in, I am excited about the innovation evolving to improve business and consumer interaction as well as the very real virtual sports world. I believe the next decade will usher in a renewed focus to improve player and customer experiences that will deliver growth for tennis as the core among racquet and paddle sports.
»Addison Edmonds, Founder, Gunner Kennels
2020 will be a year of change for Gunner. Since our inception in 2015, our compound annual growth rate has been 47 percent, and we expect to have another year of growth. In 2020 we will hire our first CEO. We will introduce our first product outside of the crate category and double-down on our pursuit of perfection when it comes to making the best gear for your dog. Our consumers are holding brands to a higher standard more than ever. It’s no longer acceptable to make a product that doesn’t last or to be opaque about the manufacturing process. We embrace this shift in the consumer mindset. Gunner will continue to thrive as long as we remain true to our mission: To create the market’s most innovative dog products, deserving of Man’s Best Friend.
The thing that keeps me up at night is the lack of regulation of pet products, and I hope we make strides in 2020. If you think about it, much of the gear we rely on in the outdoors is regulated, tested and proven to be trustworthy. That much can’t be said for the gear we buy our pets. We see more people talking about pet safety every day, but it’s a new topic for many outdoor enthusiasts. It’s my hope that Gunner Kennels can continue to inspire others to prioritize the safest, highest quality gear for their K9 companions.
»Graeme Esarey, Founder and CEO, Ignik Outdoors
I think 2020 looks to be a year of uncertainty. Economic downturn rumors are circulating. Our political situation promises to be messy with very real impacts on business. (I just paid 30.7 percent duties on our latest shipment. Thank you, Mr. Trump!) That said, my biggest fear is the impact that all this may have on Specialty. Ski season is here but the snowpack isn’t, at least in Washington, Idaho and Montana where we have been skiing. Amazon, Chain Retail and DTC put tremendous pressure on this critical contact point for new outdoor consumers. I worry that if market forces cut the legs out from under specialty retail, then expertise will be replaced with “Amazon Reviews” and that would be a sad thing for all of us. The passion of our specialty partners is amazing. These good people work holidays, stand in the snow teaching beginners how to fly fish and make ski boots actually fit. There is real value here, life-changing value, and I would hate to see it be lost to our industry.
»John Gage, Co-founder, Appalachian Gear Company
The Outdoor Industry continues to be strong, and we see that trend continuing in 2020. Increasing environmental awareness has resulted in a growing and assertive consumer base interested in sustainable, natural and novel alternatives. Innovation and evolution will be the key indicators of success in 2020.
»Chris Ann Goddard, President, CGPR LLC
My outlook for the industry is cautiously optimistic because • The U.S. economy is strong • Brands are engineering and developing product that encourages outdoor participation making it easier for consumers new to the outdoors to enjoy their first experience and to return • Retailers/brands are rising to the retail challenge of providing a substantially different kind of brick & mortar experience (yes, the retail landscape is evolving, but it has to and the end result is promising) • We are leading the globe in sustainability practices and technology • and, we are serious about tackling climate change.
Having said the above, the industry still has a long way to go to with the following • Providing gear and apparel priced for consumers on a budget—we need to be better at opening the door to this consumer, making them feel welcome, and talking about product features and benefits in a way that will connect with them so they do not feel intimidated • We have significant work to do with regard to diversity and inclusiveness • There needs to better professional paths for women to leadership positions—our industry is still male-dominated at the top.
The wild cards are the policies of the Trump Administration which directly impact all of us, over which we really have little control • The tariff roller coaster • The precarious protection of our national parks • The destruction of environmental protections for clean air and clean water and • The lack of a cohesive or any approach to climate change.
In the end, we can be thankful to work in such an amazing industry that runs on passion and the knowledge that what we do positively impacts lives, is good for one’s health and has the capacity to bring people together.
»Kris Hartner, Owner, Naperville Running Company
Since we just got back from The Running Event, my outlook may be a little product specific. There is a real buzz in run specialty because we’re seeing new technology that significantly improves performance. In the last year Nike Vapor Fly, alphaFLY and Hoka Carbon X laid the groundwork. I don’t know that we’ve ever seen such a massive shift in market share in footwear count in marathons. And 2020 marks the year that most of our other vendor partners join in the fray with shoes that will battle it out for which shoe optimizes performance the most.
Nutritional products have also joined in the performance enhancement wars. From customized blends at Infinit Nutrition to Untapped’s straight from the tree syrup, to Maurten’s ability to nearly double the normal rate of carbohydrate absorption. Even iKOR Labs and Floyd’s of Leadville bringing CBD to run specialty with a focus on post-run recovery. Sorry to sound like an ad for all of these products, that’s not what I’m trying to do, my point is that there is a sense of excitement and anticipation that we don’t often see and brick & mortar run specialty retail is uniquely positioned to bring these products to life in a cohesive way.
»John Hutchison, President, TRX
2020 will be a huge year for TRX. We recapitalized the business with new partners early last year and spent the better part of 2019 expanding our product line and making changes to our leadership team to prepare for our next chapter of growth. The health & fitness industry is on a roll right now, with technology-enabled products and services taking pole position in the race for consumer dominance. Industry veterans have keenly watched as Peloton has attempted to purchase consumer market share with strong, ubiquitous and expensive television advertising, while a handful of others have raced to copy their ads.
“At TRX, we also believe the consumer fitness landscape offers great promise,” said Randy Hetrick, TRX founder and co-chairman, “but we are equally focused on the 300k+ training professionals who have invested in TRX certifications and the 50k+ gyms that run our programs whom we truly view as our business partners. We are developing a sophisticated set of technology-enabled services designed to help training pros make more money, reduce the frictions in their lives, deliver consistently great service to the clients in the clubs they serve, and generally build better, more profitable businesses. We still very much believe that the best way for us to serve end consumers is by supporting the trainers and health club operators that helped TRX become a beloved global brand,” said Hetrick.
One of the things that concern me a great deal is our government’s failure to protect intellectual property rights in the digital consumer economy. There are literally hundreds of factories across China that do nothing but copy the innovations of western companies and launch ‘factory-direct’ stores on platforms like Amazon, Rakuten, eBay, and Alibaba. These bad-acting opportunists deliberately knock-off patents and trademarks to steal the customer at the point of online purchase with cheaper, seemingly similar offerings. Hutchison added, “It’s tough to justify investing in innovation and marketing development as a premium brand when others are allowed to illegally trade on the product of those investments. It really is time for the government to regard this behavior as the real threat to our economy that it is and take appropriate action.
Overall, however, I’ve got almost nothing but optimism. The economy is strong, the public’s awareness of the importance of exercise and nutrition is growing exponentially and yet 80 percent of the population still does not employ a trainer or belong to a gym! That’s an enormous pool of more than 200 million American customers that are out there waiting to be served by our industry. One of the limiting factors in past decades was how to deliver the message to consumers about the crucial importance of exercise in their lives. According to Hetrick, “The rise of social media and digital advertising is helping us reach tens of millions of new home consumers efficiently and persuade them to take the few small steps required to get going and to add decades of healthy, happy, high-quality years to their lives and to those of the people they love.”
»Bill Kirkendall, CEO, JackRabbit, Clever Training, Olympia Sports
We’ve seen positive momentum in 2019, and I look forward to this continuing in 2020. Our strong focus on online and physical presence, touching the customer, providing solutions for our customers’ needs, thinking locally, highlighting our brands, and continuing to enhance our customer experience, will continue to be our initiatives in the new year.
»Joe Pellegrini, Managing Director, Consumer & Retail Investment Banking, Baird, Robert W. Baird & Co.
In terms of outlook, I see a pronounced “wealth phenomenon” multiplier continue to positively impact the high-end/premium sports and outdoor equipment market across all activity categories. If your kids play a team sport like baseball or hockey, as examples, you will make sure they are outfitted with the most cutting edge performance products. I think the same thesis driving private jet ownership trickles down to the outdoor and sports equipment market including both hard and soft goods. Affluence, technology and increased accessibility (like resort consolidation and luxury homes being built at the mountain) are all converging to create the perfect storm.
Technology, including improved outdoor activity access like dedicated ski touring and mountain bike trails and forest roads, are driving niche segmentation and expansion of activities including the demand for equipment for each activity. To use the bike category as an example, many avid bicyclists, like myself, own a least one road and mountain bike, if not more, but we are now adding to our arsenal and purchasing gravel grinder bikes for long fire road type rides. Multiply this by million-plus similar affluent consumers in the United States, and you see sizable growth at the high end of the market. Also, the new definition of “wealth” is being able to experience the outdoors and away from large crowds and congestion. Being in the outdoors is the new tonic for improved health and wellness and quality of life including physical fitness activities. The negative impact is that the more wealthy have better access than ever but that can’t be said for the less fortunate, which is accelerating the divide between the “haves” and “have nots”.
»Jennifer Pringle, Vice President Marketing & Communications, Outdoor Industry Association
We see two large issues in 2020 that demand collection action from the industry—climate action and outdoor participation. OIA will champion work to drive meaningful impact and change. As we head into 2020, Outdoor Industry Association (OIA), is clear-eyed and focused on our work on behalf of the outdoor industry. As our industry, the market, our consumers, and our planet evolves, we will shift to address the most pressing needs. From a policy standpoint, in 2020, despite a presidential election and impeachment trial, we are optimistic that Congress could deliver some policy wins for the outdoor industry in 2020.
- United States-Mexico-Canada Agreement (USMCA) is set to clear Congress with broad bipartisan support this winter.
- “Phase One” deal with China will go into effect, halting additional tariffs and reducing others but significant advocacy will be required to push both sides to lift all other punitive tariffs costing the outdoor industry billions.
- 2019 delivered a large bipartisan public lands package, 2020 could do the same with full funding for LWCF, funding to repair our National Park’s infrastructure, streamlining outdated permitting systems and other public lands priorities.
Across the states, a grassroots movement is fueling the creation of offices of Outdoor Recreation, and we are proud to support this movement. 17 offices or task forces have already been created and we can expect that number to surge in 2020.
In January 2020, OIA will be announcing an industry-wide collective effort around climate change that will define this industry for generations to come. Working together and taking bold action, we can grow outdoor industry businesses and be a major force for social, political and economic change.
We see so much energy and action already taking place—from business leaders to the younger generation. 2019 saw the largest climate protests in world history as millions participated across all seven continents. Outdoor businesses like Patagonia, VF Corporation, Klean Kanteen, REI, Columbia, PrimaLoft, PMI, Burton, and others are doubling down on their climate activities—setting goals, driving innovation, engaging their consumers, and advocating. It will take every outdoor business stepping up to make a difference, and it’s exciting to see the energy building among more of the small to mid-sized brands in our industry as well.
In 2020, OIA will continue the conversation around outdoor participation and call for collective industry action to reverse declines in outdoor participation that could have big impacts on our businesses, our communities and human beings if it is not addressed.
Our latest OIA and Outdoor Foundation research on outdoor participation shows that 50 percent 0f the U.S. population reports participating in at least once per year in an outdoor activity. That also means that 50 percent report not participating in an outdoor activity at least once per year. It also indicates that fewer than 20 percent of children and adults report getting active outdoors at least once per week, which is likely the minimum amount needed to achieve the significant benefits to health and well-being that active time outside can provide.
»Nathan Pund, Managing Partner, Houlihan Lokey
I foresee another strong year of M&A activity fueled by robust demand for investment opportunities by private equity flush with capital and strategic acquirers seeking additional growth and access to new markets, customers and/or product technology. Deal activity could be especially strong if the pending Chinese trade dispute gets further resolved.
“I am concerned about the uncertainty the upcoming U.S. presidential election may have on the economy, international trade and the potential for future regulations and taxation. Companies in the active lifestyle industry can handle good news or bad news, but uncertainty makes it very difficult to make proper business decisions and often results in paralysis as to capital spending and future investment.
I am optimistic that the Chinese trade war is resolved and that has a positive impact on the economy and deal activity that I foresee.
»John Rogers, Owner, Fleet Feet Maine Running
We continue to build business efficiencies, community connectivity, customer personalization through our unique FIT ID, and build on our “Running Changes Everything” unique positioning.
Specialty running retail continues to be about building community connectivity and creating unique in-store experiences, whether in-store or through digital. We will continue to build on the unique and personalized in-store customer experience we have created with FIT ID and launch 3D personalization in 2020 with in-store 3D products. We saw major growth with our digital fulfillment platform and view this as an integrated piece for our overall customer experience.
Our customer acquisition continues to grow with medical referrals being a significant part of that. We intend on increasing our marketing and communication efforts and prioritizing Fleet Feet Maine Running as the major partner around, and within, the medical community. Continuing to find channel exclusive or unique products to enhance our specialty product offerings continues to be a priority, whether it’s footwear, apparel or accessories. In addition, creating ways to effectively improve rapid checkout without losing our high-level of customer service, is critical for future growth.
With growth throughout the channel, the financial bottom line is a huge priority, and we continue to focus on sharpening our inventory and open to buy management as well as look at every line item expense. People can get complacent with growth and there are gremlins in the marketplace that can adversely affect that growth. The way to prepare is to focus on a healthy bottom line.
With a tight job market, it has become more and more difficult to find employees that are a cultural and branded fit. We are continuing to build on “Putting People First” and growing and retaining our best employees. Health benefits continue to be a major concern. Making sure and finding ways we can affordably provide health benefits is a priority, as well, in retaining employees.
Finally, continuing to build an environment and culture of optimism and enthusiasm, not only within our stores but in our communities, has never been more important regarding why and how “Running Changes Everything”.
»Nick Sargent, President, Snowsports Industries America
With the early winter snow and retail having another successful early and holiday season, our industry is poised for another solid season and year ahead. Technological innovation continues to inspire everyone, and the growth of new segments within winter sports, such as AT, is really encouraging.
Climate change is a pressing concern. Although we’ve had a good start to the winter and potentially another solid winter like last year, we can’t let our attention lapse from what the science tells us. Boldly and urgently addressing climate change; protecting our businesses, our jobs and our way of life is going to take a collaborative effort from our entire industry.
Drawing new participants to winter sports is a concern as well. This too impacts every facet of our industry, and we need to collectively work towards getting new users to come and then come back a second and third time. While the multi-mountain passes have helped to increase the annual number of skier/snowboarder days, we still need to add new participants to the sport as we look to fill the future funnel.
The economy is strong now, we’re into a second strong winter, multi-mountain passes are bringing historical winter sports enthusiasts back to the sport, new technology is enabling us to continue the progression of our sports and the product offerings from the suppliers is all-time. If our industry continues this momentum and looks for more areas of collaboration, we should see positive growth across every aspect of our industry, including retailers, resorts and suppliers.
»Drew Saunders, Country Manager, Oberalp Group North America
We are excited about what’s ahead for Oberalp brands in 2020. Uphill skiing continues to grow in prominence, and our backcountry ski brands, Dynafit and Pomoca, are benefiting from that. Our newest brand, Evolv, is well-positioned to grow along with the explosion of climbing gyms and the indoor urban climbing scene. The 2020 Olympics and the increased worldwide exposure for climbing are going to be positive for both of our climbing brands Evolv and Wild Country. We will continue to keep our eye on the China tariffs and would love to see full relief from extra tariffs in early 2020. And our long-term commitment to partner with the best retailers to build and develop our brands together will remain year in and year out. Here’s to another good year.