This is the second installment of our annual series that gauges what the industry’s key players are projecting for the coming year. Read Part 1 by clicking here. Also, due to overwhelming response, we’ve extended our industry outlook to three parts—a lot of people wanted to contribute their thoughts on 2019. Look for even more commentary in Friday’s edition of SGB Executive.
Dan Sheridan, EVP and general manager of Global Sales, Brooks Running: “We see a ton of promise for Brooks and for the running industry in 2019. Brooks finished 2018 up 26 percent in global revenue. Having navigated out of the headwinds of 2015 and 2016, we see our success this past year mirrored by retailers across channels including specialty run and general sporting goods and we anticipate that momentum to continue through 2019. Trade is still a huge issue that we’re tracking closely and expect the industry will continue to deal with this year. The lack of total resolution to the trade disputes between the U.S. and China where we manufacture many of our products is incredibly disruptive to our business and our partners. While we actively assess our options on that front, like we know many others in the industry are doing, too, we remain committed to our focus of delivering performance product for runners. In 2019, we will continue our focus on delivering product solutions for all who run and executing our strategy through every touchpoint of our brand and business. We anticipate double-digit growth again in 2019, led by franchise footwear like the Ghost and Adrenaline GTS and will continue to invest into performance and technology across our product categories.”
Tom Cove, CEO and President, SFIA: “First, it’s hard not to recognize the potential disruption to our markets if the administration decides to impose additional 25 percent tariffs on all footwear, apparel and equipment on imports from China. SFIA is working with everyone in the U.S. government to avoid this scenario, but it’s too early to know what will happen. If the worst-case scenario were to play out, and the President imposes tariffs across the board on all products, as he has threatened to do, we forecast the greatest harm will be to small and medium-size companies. Our largest brands have aggressively moved to mitigate their exposure pretty successfully, but a number of our smaller companies have not been in the same position to shift production in real time.
“Beyond that one dire scenario, we see the fundamentals of our business still strong. Low unemployment, rising wages and positive consumer confidence all contribute to a healthy market environment. We also see more private equity investing in our category, which can drive innovation and growth, but can also create challenges around short-term goal setting. DTC continues to trend strongly positive, but physical retail remains a vital channel that is not going away. And finally, we remain concerned about lagging sports participation rates. The good news is, there is a growing awareness among many stakeholders and partners that increasing physical activity for all Americans is a priority, both for our industry and the country.”
John Rauvola, CEO, Superfeet: “Superfeet is optimistic about 2019 and looking forward to furthering our mission to deliver extraordinary comfort solutions through shape. As industry and consumer demands continue to change we will leverage new technology to deliver Superfeet shape to more people. Consumer spending will continue to shift towards personalization, with a key trend towards products that enable whole life wellness. Last year, we introduced personalized products to the run channel via Fitstation by HP technology. This year FitStation will be available at 150+ retail locations nationwide, and we’ll be expanding ME3D individualized product offerings by introducing a personalized athletic slide. Both products will be made at Flowbuilt, our new US-based footwear manufacturing facility created to increase access to personalized insoles and footwear.”
Mike Joyce, President and CEO, PrimaLoft: “As we move forward, we are encouraged by 2018. This past year was a good one for the industry, as a whole. Inventories are better balanced than they have been over the past few years; brick and mortar retail continues to be rationalized but, the pace is slowing. Looking ahead, consumer confidence has improved, and we think that trend will continue into 2019. We believe that technological innovation and sustainability will lead the way, just as it has done in 2018. We are optimistic that sustainability will continue to be a focal point in 2019, especially from a collaborative perspective. Our hope is that consumer brands, materials companies, retailers and storytellers will work in close cohesion to share ideas and resources in pursuit of a more sustainable industry.
“From a global economic perspective, there are several overarching concerns that could loom large. The negotiations between the US and China on tariffs and duties have the potential to have a major impact on our industry, if the conflict escalates. Also, after many years of economic growth coming out of the great recession, we need to ask ourselves, when will the next recession hit? Being prepared for these potential challenges will be vital.”
Kelly Nester, CEO Nester Hosiery LLC and Farm to Feet: “I foresee several themes that will carry forward in 2019:
- Sustainably-focused domestic manufacturing will continue to resonate with consumers.
- The trade situation will unfortunately continue to be a dominant subject matter creating volatility and uncertainty.
- We will all enjoy and share the joy of the outdoors as much as possible.”
Shawn Neville, CEO, Boa: “Our outlook for the global performance athletic and outdoor industries remains strong across most markets. From our vantage point, the China market is still growing and important, albeit with slower GDP growth and political headwinds. Korea and Japan remain very solid across most key categories and we see Korea getting stronger as political tensions have subsided. The EU and NA remain strong across the majority of categories as we see cycling, trail running, hiking/trekking, and Snowboarding gaining momentum. Fortunately, overall consumer confidence remains strong and consumers remain excited about new technologies and products that inspire them and improve their performance. We are fortunate to be working with so many great brands that are bringing meaningful new innovation to market, especially when they includes the Boa fit system. Happy New Year!”
Nathan Pund, Managing Partner, Houlihan Lokey: “I think this will be another good M&A year, but with two very important caveats. One, I think buyers—both strategic and private equity—are going to be more selective about their investments. People are now factoring in the likely possibility in the near term of a recession, so they are much more sensitive to what investments would be able to weather that upcoming recession. None of us can predict that, but it’s probably going to happen sooner rather than later, and in all my discussions with both strategic and private equity buyers, I hear, ‘How is this business going to handle a recession because we know one is coming.’
“Two, there is uncertainty both politically and economically. There’s political turmoil that you’re seeing in government leadership with trade tariffs and the Brexit deal and other political implications that are having economic impacts. And there’s economic turmoil in terms of volatility in the stock market, slowdown in terms of interest rates, changes in underlying economic foundation. There is more uncertainty in the economy, which gives buyers more pause as to which deal they want to pursue and how much they want to pay for it.”
Brendan Murray, U.S. Sales Manager, Inov-8: “Stay positive! The playing field is changing and so is Inov-8, with game-changing (literally!) new compounds like the use of graphene that make shoes last longer, grip better and flex more. Market segments fluctuate, and Inov-8 is staying with the trends making a big push in the fitness sector. We’re also breaking into fast hiking with the just-released ROCLITE models, so as brand Inov-8 feels positive about the road ahead.
“What concerns me? Everyone I am sure will mention e-com, and of course that’s always a concern as it’s evolving constantly. But we also try to look at that as a big opportunity to introduce people to Inov-8 in locations where specialty stores don’t exist. Another concern is the big sporting goods retailers – it’s always a challenge for the little guys to get shelf space against the mega brands. But innovations like graphene have given us a huge boost and we’re getting traction in places we haven’t before. As a focused running brand we’re grateful for the specialty stores – as they’re more willing to take us on – and we’ll continue to work closely at the ground level too, to maintain price and brand continuity across all channels.
“What makes me optimistic? The outdoors. More and more people are going outside to explore. Everyone has an adventure waiting close to home, and by working with dealers and media we can help open people’s eyes to these possibilities. Through and fast hiking are growing rapidly as well, and the new ROCLITE fast-hike series should do very well in those categories as well as the more recreational weekend hikers. This encourages Inov-8 to look to other new horizons in the future.”
Philip Curry, CEO, Astral: “As we all know, the outdoor industry is undergoing a paradigm shift due to rapid pace of change in consumer behavior and buying practices and will certainly continue a few more years. This forces brands and retailers to be adaptive, creative, and smarter than ever. We think that brands and retailers that stay true to their mission statement will endure the challenging times and become stronger.
“The exuberance in the economy reminds us of the early 2000s leading up to the recession, which makes us slightly cautious when purchasing inventory. The government’s rollback and reduction of environmental protections also concerns us. Conversely, these things also give us optimism, as recessions separate the authentically committed, creative and sustainable brands from those that are here half-heartedly to catch trends. Astral is very optimistic about the growing number of consumers that value environmental and social integrity alongside exceptional product performance and quality. These are the fundamentals Astral was built on, and increasingly more people are discovering our special blend.”
Thomas Dixon, Product Manager for Golf and Outdoor, ECCO Americas: “Consumers are shopping much smarter these days. A purchase usually involves quite a bit of online research, but at the same time we are seeing more movement back to brick and mortar. Especially for more “premium” purchases. Hybridization is one of our biggest focuses. People want to shop for premium products that have multiple uses. You can say this all started with smartphones but has made its way into almost all consumer purchases. We are creating premium footwear with multiple uses. A boot doesn’t only have to be worn on the trail. It can function extremely well on a 14er and look just as cool at the brewery.”
Stuart McCullough, Managing Director, The Woolmark Company: “We are optimistic about our industry and are looking forward to a bright year ahead. Last year saw the wool prices reach record levels, and that has put everyone, particularly our woolgrowers, in good spirits. Economically, Australia’s wool industry represents about $4.5 billion a year – it’s not a monstrous industry, but it’s significant. And culturally, there always seems to be a bit of an affinity with the wool-growing industry.
“Australia supplies about 90 percent of the world’s apparel wool, and all of it is consumed in areas where there is population, where there is affluence, and where the climate is cold. We’ve seen the biggest shift from China, a market which was once predominantly known for manufacturing is now a huge consumer of luxury goods. The economic value of what China is consuming at the moment is in the order of $3.8 billion and they also buy about 85 percent of Australia’s wool clip.
“We’re also seeing a new generation of consumers in Europe and North America demanding to know not only where products come from, but also what happens to a product after they’re finished with it, so wool works rather well in that context, as wool is biodegradable.
“In addition, the rapid growth in demand for technical textiles has significantly boosted Merino wool’s prominence in the sportswear industry due to the fiber’s naturally inherent qualities. With activewear the fastest growing sector of the US$1.7 trillion global apparel and textile industry, an increasing number of brands are looking to gain the competitive edge and innovate with natural performance fibers, such as Australian Merino wool. 2019 will see us continue to market Merino wool as the original performance fiber, championing its technical benefits to major sports and outdoor brands. We will also continue our work in the environmental and health/wellbeing space, reaching new markets through our extensive scientific research.”
John Rogers, Owner and President, Fleet Feet Maine Running: “I’m very optimistic regarding 2019 and the opportunities for continued growth, profitability enhancements and community connectivity.
“Specialty Running Retail is about creating a unique connection, personalization and experience for both our community and customers, both in store and digitally. We will continue to build on the unique and personalized customer experience we have created with FIT ID and enhance it with 3D personalization. We saw a significant increase in 2018 with both customer acquisition and retention. The personalization FIT ID creates is a major reason and personalized 3D inserts and products will continue to enhance customer engagement and provide a unique product platform in our stores.
“We will also drive greater efficiencies regarding inventory management and with unique product opportunities in footwear, apparel and accessories that can only be found at Fleet Feet, Run Specialty or branded digital. These unique products, such as Karhu, New Balance 860/880, Nike Vapor Fly 4% and Fleet Feet Apparel and Accessories, must not only enhance margin, but create value and an enhanced customer experience.
“HR is an important initiative as we compete for employees that are a cultural and branded fit. Creating a culture of ‘Putting People First’ and providing opportunities for growth, both professionally and personally, is important in attracting, as well as retaining, employees in a competitive job and hiring market.
“Finally, continuing to build an environment and culture, not only within our stores, but in our communities, that create that connectivity that we are the local running store that can change, enhance, give back, advise and make a difference with our customers and our community. Our Fleet Feet Running Club, social media platforms, data platforms are all just beginning to build on that culture of ‘Running Changes Everything’.”
Alan Davis, Owner/Founder, Blue Ridge Chair Works: “The outlook for 2019 at Blue Ridge Chair Works is very optimistic for many reasons. The Makers Movement in general, in the USA is thriving. The quality of American gear manufacturing is still second to none. As the global economy becomes more chaotic and prices begin to rise, more people in general are seeing the value in more simple, durable, long lasting, high quality goods. Our furniture fits perfectly in the modern camp culture. Opportunity abounds.”
John Delaloye, CEO, Diamond Brand Gear: Trends are still in the favor of the outdoor industry, with people wanting to get out and have healthy, meaningful experiences in the great outdoors. Sustainability continues to grow in both the outdoor and fashion industries, as does the demand for women-specific products. Our goal at Diamond Brand Gear is to create healthy products for the outdoors that are customizable to each customer, use minimal treatments and can last people a lifetime, so that we can keep product out of the landfill for generations to come.
“Concerns: Our manufacturing is based in Asheville, NC, so we haven’t felt the effects of the tariffs yet on our U.S.-made products, but we are noticing it affecting other brands and see it from some of our suppliers. We have started researching U.S. hardware and fabric suppliers so that we can be completely U.S.-made, but we aren’t there yet. Our other concern is that customers will become complacent and take what’s given to them when it comes to buying options. When our customers don’t expect more from us, then it doesn’t push us to innovate…and we want to continue creating new, innovative gear that will outperform their expectations.”
Adam Masters Owner/Founder Bellyak Inc.: “We are developing a kid specific Bellyak for 2019 which will allow more youth to get outside and develop a love for the outdoors. Our products have always been a hit with kids because they combine the best elements of boating and swimming. There is a lot of support within the industry to encourage youth participation in the outdoors and we are looking forward to playing our small role encouraging the next generation of outdoor enthusiasts.”
Mike Arbeiter, President and CEO, Fisher + Baker: “I am optimistic about the prospects for 2019. We were out early with our Autumn/Winter 2019 collection and found retailers to be generally optimistic. Orders have been coming in earlier with greater breadth across our line. While challenges exist with uncertainty within the geopolitical world, we see our customers focused on what they can do rather than concerning themselves with those things that are out of their control. Of course, we still face the realities that many small brands face in respect to inventory management, customer commitment, and consumer engagement.
“As a highly differentiated, small brand we are offering our retail partners the opportunity to maintain higher margins, while creating discovery of a new category of meaningfulness for their customer. This continues to drive our growth within our distribution channel. We are confident that this pathway will continue through 2019 and beyond.”
Ted Eynon, Owner, Meier Skis: “The introduction of the Ikon Pass in 2018 was massive. It offers a real competitor to Vail Resorts Epic Pass and gives the lift served skiing consumer access to more terrain at a tremendous value not previously seen. Not only does this help a skier experience the terrain in their own backyard, but more and more people are leveraging their ski pass to travel throughout the world at partner resorts included in their pass offering. In a sport which has seen steadily increasing costs, it’s refreshing to see the consumer gain some ground and value for their ski pass dollar.
“Meier continues to see exceptionally strong growth from all market channels fueled by the skiing consumer continuing to seek a closer and more personal relationship with their ski brand. Meier Skis developed the world’s first “Craft Skiery” which directly connects the consumer to the brand by leveraging a unique immersive and interactive brand experience. Consumers increasingly seek something unique and personalized, rather than having the same exact mass produced product which many in the lift line have strapped to their feet. Agile manufacturing based in the United States also has significant advantages over a product mass produced overseas 6-12 months before the consumer even decides to purchase it, and this shows signs of being disruptive to the ski industry hardgoods supply chain.”
Chris Goddard, Owner, CGPR: “My outlook is positive but wary. Consumers are still drawn to the outdoors either because it feels good, it enables people to spend time with friends and family, and allows consumers to perfect an outdoor skill or simple to get exercise. Regardless of what the news cycles hand us – the outdoor is soothing. It is an unbeatable remedy for what ails us. Technology, which is so critical the success of the industry, has never been better, whether it is biodegradable insulation, the first waterproof zipper, or a performance fabric that uses recycled water bottles, brands are making it easy for those new to the outdoors to participate — to feel comfortable and truly enjoy their first experience facilitating a return to that experience. As an industry, we are optimistic – this translates into our products and our story telling.
“I see three challenges—the fast pace of daily life which cuts into time for the outdoors, the overabundance of ways to communicate and social channels that consume younger generations — which serves as a huge distraction and a barrier to taking a simple walk outside and lastly, the policies in Washington D.C. that continue to harm the environment, impacting all the good work that came before in conversation, in air and water regulation, and climate change.”
Photo courtesy Brooks