Industry Executives Mostly Hopeful About 2011

That's the word from several executives The B.O.S.S. Report reached out to last week as well as the general feedback from a recent e-mailed survey of SportsOneSource subscribers probing the outlook for 2011. Many are comforted that many Americans continue to favor an active lifestyle and the scores of big and small programs are out there encouraging people to get in shape and get outdoors. Many were also confident about the promise of innovations to create some buzz in the market.

One fresh concern is rising prices and delivery challenges emanating from China. Some retailers also continue to be nagged that more and more vendors are opening up their own stores as well as competition from the Internet. But the biggest lingering worry is the economy. While many are thankful to see the U.S. in recovery mode this past year, most are eying only slow growth until the job market wakes up.
The following are a few of the responses:

Jim Zwiers, president, Wolverine World Wide Outdoor Group: 2011 is going to be about job creation. We're expecting the consumer to be fairly activated and energized for holiday 2010 and then the question will really evolve around the economy and job creation for 2011. We expect strong market share gains within our brands and we're hearing solid reports from our retailers about their outlooks for 2011. But there's some cautiousness around it. We need jobs to be created and not just in America but globally to drive dramatic growth in the economy. So it’s a guarded outlook. But there's a potential for things to get very strong if we can turn the corner and get some job growth.

Andy Vecchione, president, Polartec LLC: Polartec is optimistic about 2011. Consumer sentiment is much better today than it was this time last year and we believe the recovery will steadily continue into 2011. 2010 was a good year for Polartec as apparel brands and retailers became more optimistic about the retail environment and we believe the trend will continue. Our big concerns would be the volatility in raw material markets and utility costs.

Will Manzer, president and CEO, Eastern Mountain Sports: I spend a lot of time looking at the bond markets and stock charts and economic indicators and I don't see an awful lot of good news in 2011. I see mild, mild growth. Unemployment has been stuck around 9.8% all year and as long companies aren't hiring, people won't get jobs. So I see a long, protracted recovery. And it's not the same for everyone. It really depends on how your state or local municipal budgets affect your business. So I think people are going to have to find very creative ways to draw customers into their stores. They have to offer a great value proposition. But we feel good about our business. I think people like the personal attention that a store like ours provides in this environment. They're looking for a warm place to shop – not just the cheapest price. But that's not every retailer out there.

David Campisi, president and CEO, The Sports Authority: We see spending confidence returning to the customer, but we are still very cautious about the economic challenges that the nation faces and how that will affect our bottom line in 2011. As for Sports Authority, our outlook is very positive for two reasons; 1) our product offerings, level of innovation, and color extension of products are the best we have seen in years, and 2) we are seeing a renaissance of the active and fit families who have been and continue to be our core customer.

Dan Winchester, VP, chief merchandising officer, MC Sports: Our 2011 outlook at MC Sports remains cautiously optimistic.  While we are very pleased with our current business trends, we still look at the general economy and employment situation with some concern.  We are seeing solid results in all our product categories, which points to the overall strength of the sporting goods retail sector. There isn’t one item or category that is artificially propping up our numbers. One other concern is the growing direction of the sporting goods vendor community to want to enter the retail and/or direct e-commerce business.  This creates direct competition with brick and mortar retailers and is another channel that we need to compete against.

Frank Hugelmeyer, president, OIA: The over used phrase “cautiously optimistic” seems appropriate. Maybe very cautiously optimistic is more accurate. Retail sales in many specialty channels are growing, consumer confidence is on the rise and affordable outdoor activities seem to be gaining market share. So overall we are holding up well. However, we remain in a fragile recovery and there are some disturbing indicators still out there. I am most concerned about the rapidly expanding supplier disruptions out of Asia and the dramatic deficits being reported by many states and municipalities. The outdoor industry is heavily dependent on China and manufacturers are scrambling to find consistent suppliers in that region. States agencies provide untold jobs and severe budget cutbacks could have a material negative impact on both unemployment and consumer confidence.

 

I am also concerned about the rapid transition of retail sales to online channels and the small specialty retailers who need to survive in this new market paradigm. I am very optimistic about the active outdoor lifestyle which seems to have made the cut as many Americans revised their spending and leisure priorities. We even have the President and First Lady promoting the active outdoor lifestyle. In addition, multiple outdoor brands are in a strong cash position which has fueled strategic investments. Overall, the outdoor companies who have made focused strategic investments are realizing strong returns.

Peter Sachs general manager, Lowa Boots: I think it is clear that Congress can’t figure out the big picture so there is little hope that they will do anything that will help sell hiking boots with any consumer’s disposable income that may be leftover. We are on our own to make or break our own business.

David Ingemie, president, SIA: My outlook is positive but cautious. We are off to a very good start but I believe in averages and I hope suppliers and retailers take that into consideration going forward.  Economy-wise, the recession has bottomed out and we are seeing people beginning to spend (purchase on discretionary items). My concerns are several. One is over-ordering or under-ordering at both the supplier and retailer level. 

 

Another concern is how specialty retailers and suppliers can improve efforts for reaching their target customer or potential customers. There are plenty of opportunities with social media, the internet, etc. but the challenge is that there is not one easy solution for reaching everyone – in the past we were able to do outreach with local newspapers and industry publications, which just isn’t the case any longer. My optimism is in the economy and that we are pulling up from the bottom. Also, there is a lot of discussion and promotion on getting kids and the rest of the population active and that is a good thing for our very active snow sports industry. We also have some cool new technological developments in hardgoods and accessories.

Marty Weening, president/COO/CCO, Gramicci: Our outlook is positive but careful. Labor and material costs have risen. This will be reflected in rising wholesale and retail prices by Fall 2011. There is a lot of supply chain maneuvering that also tends to de-stabilize the manufacturing process and make it harder to deliver a quality product on time. Simply put; it is far more difficult to make and deliver on time than it was a year ago. But we're also positive. Gramicci bookings are up 27% for the first half of 2011. We are still in Fall 2011 preline so the jury is still out as to the effects these circumstances will have on this second half of the year. But we believe the authentic and distinctive roots of being a naturally engineered climbing and lifestyle product is perfectly positioned to connect with a younger consumer base. Our people are bringing some very strong new ideas and products to the table. We have been fortunate to attract some very talented people to come work with us and they are making a significant difference.

 

Shawn White, partner, The Life is Good Company: We’re optimistic about most everything; it’s part of our DNA at Life is good. But as it relates to the outdoor industry specifically, we believe the current economic climate has opened the eyes of many consumers to the notion that getting outside and doing something active can be a great release, add new perspective and is affordable. 

 

We’re blessed with a country that allows most people to be able to shop locally for gear and also get outdoors somewhere pretty cool within a few miles of where they live. Our concern is all about kids. As a company, we get our inspiration from children. Making sure our children have an interest or opportunity to appreciate the outdoors is a big challenge for the outdoor industry because the children not only represent our future customers, but they are the stewards of a sustainable, enjoyable outdoors. It’s understandably difficult for outdoor businesses to be focused on something so far into the future, with no immediate ROI, but we think it’s really important and worth the investment.

Alex Kutches, VP of Sales, Outdoor Research: The thing that makes me optimistic is that we are coming of our best year ever in the history of the company. For 2010, we are tracking to be 15% over 2009 and for 2011 we are conservatively targeting to be just north of a 10% increase over 2010. We have our spring bookings in the hopper and we are probably at 95 percent of budget. And we are very optimistic we will exceed those numbers because Fall 10 sell-through has been amazing, which leads to Fall 11 sell-in, which is going very well. I'm also encouraged that the outdoor segment has been affected the least in terms of the sports markets, and has been very resilient in a down economy because of the very nature of the self-propelled sports we represent.

Greg Thomsen, U.S. Managing Director of Adidas Outdoor: For the short term, I am cautiously optimistic that the U.S. outdoor industry will continue to grow at a steady pace. The fact that people still take great comfort from human powered outdoor recreation is a positive sign. This belief and the fact that American consumers are getting smarter about the health benefits of being outdoors give me tremendous reason to be positive.

 

I am also heartened by the fact that manufacturers, including Adidas Outdoor, are designing outerwear and footwear that provide the best performance and comfort for consumers — consumers can be warm and dry in almost every condition. With regard to concerns, I am hugely concerned about the next generation and their interest in the outdoor experience — they are over scheduled and consumed by indoor diversions. I am not sure we are doing a good enough job as an industry in engaging the younger consumer. Outdoor Nation is a good start, but we must do more.

Bill Bartee, owner, Jesse Brown's Outdoors, Charlotte, NC: Industry outlook is good. My concerns deal mainly with our local economy and how my business is positioned for the future (near and far). My optimism is that people are always going to do what makes them up. Thankfully a lot of people get outside.

Ron Ten Berge, VP, Business Development, Yakima: Our whole category is benefiting from consumers buying smaller cars and vacationing closer to home. Retailers are noticing these trends and are gaining for more interest for the category.