Reps and brand executives said their schedules were booked with back-to-back appointments, although most also said traffic in the aisles seemed a bit lighter than last year.  One metric that didn’t suffer was the number of exhibitors as Outdoor Retailer quietly starts to show signs that it may well be the “super show” everyone is looking for in the sporting goods market.  The exhibitor list is starting to reflect a broader Active Lifestyle Retailer show than just outdoor, as more action sports brands and running brands start to proliferate on the floor. 
These non-traditional outdoor brands saw strong traffic throughout the show, reflecting a shifting opportunity in the market as younger consumers (and shop owners and buyers) see a much broader definition to the term “outdoor” in their lifestyles.  The blurring of the lines between outdoor and action sports has been talked about for the last few years in this newsletter, but is now clearly starting to materialize on the show floor – and the store  – in a bigger way

These non-traditional outdoor brands saw strong traffic throughout the show, reflecting a shifting opportunity in the market as younger consumers (and shop owners and buyers) see a much broader definition to the term “outdoor” in their lifestyles.  The blurring of the lines between outdoor and action sports has been talked about for the last few years in this newsletter, but is now clearly starting to materialize on the show floor – and the store  – in a bigger way.

While the show gets bigger – some say too big – the economy is also affecting attendance from east.  One East Coast rep noted than about four of his retailers chose not to make the trip this year, citing costs and concerns over the economy. The consensus was that retailers cut back their delegations to buyers and left behind key employees they might have brought on junkets in recent years.  Show Director Kenji Haroutunian said he expected retailer attendance to be essentially flat.  He noted, however, that there were more international retailers registered-likely an effect of the weak dollar. 

Slow traffic at the first day of the Open Air Demo at Pineview Reservoir indicated retailers may have cut a day from their annual pilgrimage to save on hotel and meal costs.  The beach got busy Thursday, however, as buyers descended on the paddlesports vendors to try out new product.

Rough Waters Ahead for the Market?

The landscape at the Demo seemed an appropriate metaphor for what is likely to occur in the coming months if consumer and retailer confidence don’t both improve. While Confluence Watersports and Johnson Outdoors enjoyed ample stretches of beach to the left, some smaller brands landed in the weeds to the right.                                                     

Tough economies are notorious for accelerating industry consolidation as companies with strong brands and balance sheets squeeze out the young and the weak.  Still, The B.O.S.S. Report was encouraged by the number of new boat builders on hand at the show, a signal that many see an opening for new brands as others get lost in the shuffle at the brand consolidators. 

Expansion of the Fittest…

The top dogs were certainly talking up their financial strength at the show. In recent conference calls, executives with Deckers and VF have told analysts they are keeping cash on hand in anticipation of distress sales.  B.O.S.S. fielded more inquiries than usual from potential strategic buyers regarding opportunities in the market.  Others see the opportunity to grab share as retailers pull back to focus on the stronger or larger brands in the stores.

“This is when the big brands thrive,” said Steve Rendle, president of The North Face, which has reorganized its R&D and sales organization to better penetrate the action sports, performance athletic and children’s channels.

“People ask, ‘Is the growth sustainable?’,” Rendle said. “Wall Street says we are tapped out and it’s all down hill from here on out. The business has tripled since the [VF Corp.] acquisition. But there is a whole new group of consumers who are not enthusiasts.  They are aspirational and we know that those customers want our products.  So the challenge is how do we grow without losing sight of our core customer, without selling out and how do we increase participation in sports.”

Rendle produced a pie chart comparing the $18 billion outdoor market to the $22 billion action sports and $48 billion performance sports markets.  TNF does not yet attend the ASR show, but they are thinking about it, Rendle said. And why not? Body Glove, Quiksilver, Roxy and a handful of skateboard and surf inspired brands exhibited at ORSM.

TNF is not the only company trying to take advantage of the down cycle to grab market share.

Switzerland’s Mammut has set its eyes on becoming one of the top three premium, multi-category mountain sports brands in the states. Mammut’s U.S. business is up 30% and Mammut Sports Group CEO Rolf Schmid believes the company can compete against Mountain Hardwear and Arc’Teryx as a top tier, one-stop-shop brand.

Japanese giant Toray, best known in the U.S. as a fabric supplier, wants U.S. brands to start thinking of it as an apparel maker. The company already has a $450 million business making apparel for TNF, Columbia, Nike, Descente and other western brands selling into Japan and Europe. Now it wants to leverage those relationships, a 1,100-strong R&D department, global supply chain and status as a fabric supplier to leading U.S. brands like REI to bring that business to America.

Despite the tough economy, Johnson Outdoors has not slowed down its product development, said Mark Leopold, who overseas the company’s boat business. “A lot of people may think it’s time to hunker down and cut spending,” he said. “Now is the time to invest.”  JOUT showed ten new hulls at the show and launched its Vapor line, which was designed with heavy input from novice paddlers. The company will be upping its consumer advertising going into 2009. “We are not stepping back,” Leopold said.

“When you walk through and see the premier brands here, they are getting bigger,” said Kevin McMullan, EVP for Toray International America, Inc. “But I also believe this is the time when good ideas come out. Innovation is not a capitalized cost.”

In paddlesports, talk centered on what to do next year when the show moves two weeks earlier to July 21-smack dab in the middle of most dealer’s busiest season. Paddlesports retailers and their suppliers have long complained about the timing of OR, but acknowledge there is no obvious alternative.

“The timing is terrible, the location is awkward and the costs are going up,” said Michael Pardy, executive director of The Association of Paddlesports, or TAPS.

In a significant development, TAPS and the Paddlesports Industry Association announced they had signed a Memorandum of Understanding to merge their operations by January. The groups have resisted merging despite pressure from their largest patrons. Debts incurred by PIA have complicated the discussions and many details remain to be worked out, particularly the fate of each organization’s executive director. Still Pardy said the MOU will give the industry a more united voice when negotiating with Nielsen about creating regional paddle shows in the fall.

The most visible trend in paddlesports at the show was the proliferation of stand-up paddle boards, or SUP boards. The boards were spawned by surfers, but are gaining traction among paddlers in inland waterways.  At the Demo, eight to 10 people could be seen at any given moment astride a SUP board.  At least six booths exhibited SUP boards or prototypes, including ULI, Legacy Paddlesports, C4 Waterman and Surftech. The general consensus among retailers was that the boards were “cool,” “fun,” and even “sexy,” but a tad impractical. Several paddle-centric retailers said they had recently, or would soon, buy one for themselves, and maybe even display them on the floor for demos. But only one said he was leaning toward placing an order.

“For something that was supposed to be a flash in the pan, there sure are a lot out there,” said John Durrua, owner of Jersey Paddler, who bought one earlier this year.

“Yeah, they’re cool,” noted another prominent shop owner, “but nobody sells any.”