Executives in the outdoor industry don't expect an economic recovery to occur earlier than the second half of 2009, according to a survey recently conducted by the Outdoor Industry Association and Piper Jaffray. The survey also finds suppliers with a more pessimistic view than retailers. Overall, nearly 70% of those surveyed expect current business trends to remain flat or to deteriorate through 2008.


Approximately 88% of respondents expect their business to improve in the second half of 2009 or later. Similarly, 95% of manufacturers/distributors and 100% of retailers indicated they are “very” or “somewhat concerned” that current economic conditions will negatively affect their business.

 

Initiatives to preserve margin and mitigate risk are in place, but slippage is starting to occur. Approximately 46% of manufacturers/distributors are reducing inventory exposure and cutting future orders, while 38% are eliminating overhead and fixed expenses. Among retailers, 73% are reducing inventory exposure and 18% are eliminating overhead. A shift in the merchandise mix toward higher margin categories was cited by only 9% of respondents.


Cost inflation was signaled by 88% of executives with nearly 76% indicating increases in the 5% to 15% range. Higher costs will translate into higher prices on consumer goods. Approximately 89% of suppliers and retailers plan to pass along higher costs and pricing to their customers.