Busy Booths, Light Aisles at OR Summer Market

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


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.”
The other big story in paddlesports was confirmation that Confluence Watersports, probably the nation’s largest paddlesports company, was pulling its Wilderness Systems line out of big box stores, including Dick’s Sporting Goods. Going forward, Confluence CEO Sue Rechner said, Wildy will only be available through the specialty channel, including REI. Moreover, Confluence is implementing an authorized dealer program that requires dealers to carry a minimum assortment of what ever brand they carry. The aim is to prevent dealers who support the brand from losing sales to retailers who display one boat and then fulfill sales with special orders, Rechner said. Confluence will continue with its special make up, or SMU, business, in which it custom designs boats for specific retailers.
Dealers said they were encouraged by the news. With its breadth of product, Confluence remains an important and profitable partner they said. Still, rancor remains among some dealers, including one who said the new regime cut off marketing support promised last year by their rep. “I feel like they still have to earn my business,” said the dealer, who said he was surprised at how well his meeting with Confluence executives went. 

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.


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.”


The Energy Solutions Arena used to house new vendors at this year’s Outdoor Retailer show offered neither energy nor solutions, according to interviews with many of the vendors placed there. Rather than turn away new exhibitors, Outdoor Retailer had to expand the show by 20,000 square feet this year by renting space on the floor of the arena. The building hosts the NBA’s Utah Jazz two blocks from the 675,000-square-foot Salt Palace Convention Center that houses the bulk of the show.


Retailers placed in the venue were less than pleased with the location. Among them was Spira, an athletic footwear brand known for including actual springs in its shoes. Scott Carey with Spira said that being placed in the smaller arena was “entirely disappointing,” remarking that the company was the only sporting footwear company in the arena. “Footwear buyers are not going to come here,” he continued. “We’ve had people tell us they weren’t going to come out here.”


Spira has made an appearance before at OR-during the winter show, but OR exhibitors must build seniority at each show separately.  


The discontent should concern Salt Lake City and Utah officials, who added 260,000 square feet to the Salt Palace in 2006 just to keep OR in the city. The show is committed to stay in Salt Lake through 2010.


“Trying to manage space in this hall [Salt Palace] is hellacious,” said Kenji Haroutunian, who directs the show for Nielsen Sports Group, which owns the show.  To encourage traffic, OR hired bicyclists to ferry people back and forth between the arena and the Salt Palace.  The show held the industry party at the ESA plaza, where it also offered retailers free breakfast every morning and free beer every afternoon.


“It takes a couple of years for the buyers to adopt an area of the show,” Haroutunian said.  “About 20% of people are happy with their spot on the show floor. A lot of main hall brands got denied expansion.”


Nevertheless, some vendors said the weak traffic amounted to a waste of money, “To come to a show like this for the first time, you’re looking for leads,” said Scott McVay, sales executive for Bobster Eyewear. “But you can’t do anything about it if people aren’t here.”


 “It’s like being at the kids’ table,” lamented Brent Winebarger, a rep for 2XU.


One rep said that the ESA floor was so dead that he and other vendors started a game to keep occupied.  A small ledge in the middle of the show floor had caused many walking through to stumble. This happened so often and vendors were so bored that after an entire Friday of watching people trip, they created a game on Saturday. They began taking a tally of how many people missed the ledge. When the 100th person tripped over the ledge, the rep awarded him with a gift bag several of the vendors had chipped in to create. While many people tripped, it took them until late afternoon to get 100, showing how few people really visited the floor.


The fun and games ended shortly thereafter, however, as one women tripped and was hurt, prompting the show to move booths to avoid further issues.


 

About The Author

Busy Booths, Light Aisles at OR Summer Market

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


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.” 


 

The Energy Solutions Arena used to house new vendors at this year’s Outdoor Retailer show offered neither energy nor solutions, according to interviews with many of the vendors placed there. Rather than turn away new exhibitors, Outdoor Retailer had to expand the show by 20,000 square feet this year by renting space on the floor of the arena. The building hosts the NBA’s Utah Jazz two blocks from the 675,000-square-foot Salt Palace Convention Center that houses the bulk of the show.


Retailers placed in the venue were less than pleased with the location. Among them was Spira, an athletic footwear brand known for including actual springs in its shoes. Scott Carey with Spira said that being placed in the smaller arena was “entirely disappointing,” remarking that the company was the only sporting footwear company in the arena. “Footwear buyers are not going to come here,” he continued. “We’ve had people tell us they weren’t going to come out here.”


Spira has made an appearance before at OR-during the winter show, but OR exhibitors must build seniority at each show separately.  


The discontent should concern Salt Lake City and Utah officials, who added 260,000 square feet to the Salt Palace in 2006 just to keep OR in the city. The show is committed to stay in Salt Lake through 2010.


“Trying to manage space in this hall [Salt Palace] is hellacious,” said Kenji Haroutunian, who directs the show for Nielsen Sports Group, which owns the show.  To encourage traffic, OR hired bicyclists to ferry people back and forth between the arena and the Salt Palace.  The show held the industry party at the ESA plaza, where it also offered retailers free breakfast every morning and free beer every afternoon.


“It takes a couple of years for the buyers to adopt an area of the show,” Haroutunian said.  “About 20% of people are happy with their spot on the show floor. A lot of main hall brands got denied expansion.”


Nevertheless, some vendors said the weak traffic amounted to a waste of money, “To come to a show like this for the first time, you’re looking for leads,” said Scott McVay, sales executive for Bobster Eyewear. “But you can’t do anything about it if people aren’t here.”


 “It’s like being at the kids’ table,” lamented Brent Winebarger, a rep for 2XU.


One rep said that the ESA floor was so dead that he and other vendors started a game to keep occupied.  A small ledge in the middle of the show floor had caused many walking through to stumble. This happened so often and vendors were so bored that after an entire Friday of watching people trip, they created a game on Saturday. They began taking a tally of how many people missed the ledge. When the 100th person tripped over the ledge, the rep awarded him with a gift bag several of the vendors had chipped in to create. While many people tripped, it took them until late afternoon to get 100, showing how few people really visited the floor.


The fun and games ended shortly thereafter, however, as one women tripped and was hurt, prompting the show to move booths to avoid further issues.


 


 

About The Author

Busy Booths, Light Aisles at OR Summer Market

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


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.” 


 

The Energy Solutions Arena used to house new vendors at this year’s Outdoor Retailer show offered neither energy nor solutions, according to interviews with many of the vendors placed there. Rather than turn away new exhibitors, Outdoor Retailer had to expand the show by 20,000 square feet this year by renting space on the floor of the arena. The building hosts the NBA’s Utah Jazz two blocks from the 675,000-square-foot Salt Palace Convention Center that houses the bulk of the show.


Retailers placed in the venue were less than pleased with the location. Among them was Spira, an athletic footwear brand known for including actual springs in its shoes. Scott Carey with Spira said that being placed in the smaller arena was “entirely disappointing,” remarking that the company was the only sporting footwear company in the arena. “Footwear buyers are not going to come here,” he continued. “We’ve had people tell us they weren’t going to come out here.”


Spira has made an appearance before at OR-during the winter show, but OR exhibitors must build seniority at each show separately.  


The discontent should concern Salt Lake City and Utah officials, who added 260,000 square feet to the Salt Palace in 2006 just to keep OR in the city. The show is committed to stay in Salt Lake through 2010.


“Trying to manage space in this hall [Salt Palace] is hellacious,” said Kenji Haroutunian, who directs the show for Nielsen Sports Group, which owns the show.  To encourage traffic, OR hired bicyclists to ferry people back and forth between the arena and the Salt Palace.  The show held the industry party at the ESA plaza, where it also offered retailers free breakfast every morning and free beer every afternoon.


“It takes a couple of years for the buyers to adopt an area of the show,” Haroutunian said.  “About 20% of people are happy with their spot on the show floor. A lot of main hall brands got denied expansion.”


Nevertheless, some vendors said the weak traffic amounted to a waste of money, “To come to a show like this for the first time, you’re looking for leads,” said Scott McVay, sales executive for Bobster Eyewear. “But you can’t do anything about it if people aren’t here.”


 “It’s like being at the kids’ table,” lamented Brent Winebarger, a rep for 2XU.


One rep said that the ESA floor was so dead that he and other vendors started a game to keep occupied.  A small ledge in the middle of the show floor had caused many walking through to stumble. This happened so often and vendors were so bored that after an entire Friday of watching people trip, they created a game on Saturday. They began taking a tally of how many people missed the ledge. When the 100th person tripped over the ledge, the rep awarded him with a gift bag several of the vendors had chipped in to create. While many people tripped, it took them until late afternoon to get 100, showing how few people really visited the floor.


The fun and games ended shortly thereafter, however, as one women tripped and was hurt, prompting the show to move booths to avoid further issues.


 


 

About The Author

Archives

Categories

Pin It on Pinterest

Share This