At a time when Americans are supposedly trading down and costs are rising, one could expect a lot of trepidation as the outdoor industry prepares to convene for the bi-annual trade show at the Salt Palace next month. After all, the consumer confidence index hit a 50-year low in June and the BOSS Index of outdoor stocks has fallen nearly 24% since the end of last year. But even as specialty retailers are cutting back their assortments and reps are grousing about their skyrocketing gasoline bills, the outdoor industry clearly has a few things to celebrate as it approaches the 27th annual Outdoor Retailer Summer Market in Salt Lake City.
While some Americans are clearly shifting down market, worldwide demand for outdoor lifestyle brands like Keen, Merrell, Teva and The North Face remains strong. These brands are powering the bulk of the growth at some of the largest and most successful apparel and footwear companies in the U.S., including Wolverine Worldwide, Deckers and VF Corp. Wolverine last week reported that its Outdoor Group, which includes Merrell and Patagonia Footwear, continued to grow at double-digit rates and remains its largest source of profits and earnings even as backlogs suffer across the board.
The private equity firm that bought Kellwood Co. last year is preparing to break out its American Recreational Products operation to unlock value. Mountain Hardwear remains the bright spot at Columbia Sportswear and Jarden Corp. said its Marmot and Coleman businesses outgrew its many other brands in the first quarter.
This, of course, elicits that old industry saw about how the outdoor industry always holds its own even thrives in a down economy. Stressed financially and emotionally, the thinking goes, Americans turn to the great outdoors in search of peace, solitude and value. Nevertheless, many in the industry are also using another word to describe current market conditions “interesting.”
Interesting as in, it will be interesting to see how many retail buyers show up for the Open Air Demo and OR Summer Market given the rising cost of gas, airfare, hotels, food, etc… Interesting as in, how will the younger brands fare against the giants in a down market? Or, will Americans rising concerns over energy and environmental issues lead to a significant and sustainable rise in participation in outdoor sports?
One thing is clear. Demand for space at the show remains strong. OR remains Nielsen Sports Groups fastest growing show. Trade Show Week designated OR as one of the nations 50 fastest growing trade shows from 2004 to 2006.
While there will be no net increase in the number of exhibitors at this summers show, there will be 100 new ones. Overall exhibit space will grow nearly 5% with the addition of space at the Energy Solutions Arena. “The square footage of the show has not expanded very much since 2006 because it cant,” said Kenji Haroutunian, OR show director. “We have no more space to sell. Outdoor is popular and people want a piece of that.”
Nielsen is moving new exhibitors to the ESA this year in a move that has prompted criticism from some retailers. They complain that they already have enough to do without having to leave the exhibit hall to search out the next Keen, Crocs, Life is Good or Cloudveil. To lure retailers, Nielsen will offer them a free breakfast at the arena every morning. Haroutunian has also booked live entertainment to perform in front of the arena.
Before OR can lure retailers to the arena, however, it must lure them to Salt Lake, which Haroutunian acknowledges will be tougher this year. Many in the industry expect attendance to drop off as smaller retailers, like Arthur Kearns, hunker down to wait out the downturn. “Im not going this year,” Kearns told BOSS two weeks ago while attending the Eastern Outdoor Rep Associations Early Show in Asheville. “Im cutting expenses, trimming brands and focusing on controlling my inventory. I just cant do it this year.”
Instead, Kearns, who owns the store Mountain Trails 25 miles north of Shenandoah National Park, will attend regional shows organized by EORA. Now in its third year, the EORA Early Summer Show draws retailers from as far away as Florida. It has spilled out of a banquet hall at the Crowne Plaza Resort and into adjacent meeting rooms and even the parking lot. Reps for Columbia Sportswear attended the show for the first time this year, while other reps have begun showing packs and luggage alongside their apparel and footwear lines. Next year, the show will move into a new 16,600-square-foot banquet hall being built by the hotel.
Reps interviewed at the EORA show said many of their accounts wont travel to OR this year. Big retailers will still send delegations, reps said.
The truth is, however, that while ORs success still hinges on serving retailers, the shows purpose like the industry it serves, has changed. As the line between retailers and vendors blurs, so has the function of the show and the constituencies its serves. “Its not as simple any more as dividing it into retailers and vendors,” said Haroutunian. “Nau just got bought by Horny Toad. REI has a design team. Do they care about the suppliers being there? Its getting to be a fairly complicated matrix of business.”
Michael Pardy, executive director of the Trade Association of Paddlesports, said the most important reason for attending OR Summer Market is that it unites the sectors within the industry at a time when all are struggling to reverse a decline in participation in outdoor sports.
“There are a number of worrying trends in the outdoor recreation industry,” Pardy said. “Trips are getting shorter, they are getting closer to home and they are getting less technical and that has all sorts of implications. Those trends are not unique to paddlesports and the solutions we are going to find we will find together, collectively.”
To be continued…
