Feb 22, 2012

Absence of Winter in Northeast Will Create Big Buying Opportunities

Monday marked the beginning of the winter closeout season for outdoor vendors, but there may not be many takers, especially in the Northeast. One of the most disappointing weather patterns in recent history has left many independent dealers with a surplus of winter product and no open-to-buy money.

“The problem in New England is there is no opportunity for any of the little guys to take advantage of closeouts because they have no open-to-buy,” said Chris Lathrop, a rep based in New Hampshire.

Winter not only came late to the region, it hardly came at all. Temperatures in the Tri-state area (New York, New Jersey and Connecticut) and Pennsylvania have been an average of 18 to 22 degrees warmer this winter than usual, said Will Manzer, chairman and CEO for Eastern Mountain Sports (EMS), which operates more than 60 stores from Maine to Virginia. “In December it was 70 degrees and people were coming to our Manhattan stores in T-shirts and shorts.”

Even large, healthy retailers like EMS say they have little appetite for winter closeouts this year.

“The good stuff sold and is not on the closeout lists, and what is on closeout is not premium,” said Dustin Robertson, chief marketing officer for Backcountry.com, echoing a growing sentiment in the specialty channel. “We are not buying any of it.”
The situation is sure to create great buying opportunities in the coming weeks at a time when retailers are increasingly looking for promotional items to drive traffic. While most of the glut of winter goods is already on showroom floors, one retailer said he expects credit holds could force vendors to offer spring and summer product at a discount starting next month.

Closeouts got scarce last winter thanks to the abundance of snow and duration of the season, particularly in the Rockies, the Sierra Nevada and even the Southeast. Snow sports dealers ended the season with the cleanest inventory in years, which drove double-digit increases in preseason orders for the current winter.

By comparison, some online specialty retailers were selling winter merchandise last week at 50 to 60 percent off — much deeper than the 30 to 35 percent customary for this time of year. The inventory overhang appears to be heaviest in winter sports equipment and outerwear, although no one foresees a repeat of the disastrous 2008-09 season when much of the industry was blindsided by a sudden sharp drop in demand in the wake of the financial crisis.

“Now vendors are being very conservative,” said Robertson. “Some ski vendors are only producing 90 percent of preseason orders.”

Retailers may be able to clear a lot of seasonal merchandise in the coming weeks.

“Consumers are savvy enough to know that clearance happens in mid-February,” said Jon Frederick, a manager at Bentgate Mountaineering in Golden, Colo. “They saw the snow in mid-January, but savvy consumers will wait three weeks because they are smart and that’s the way it’s been the last three years.”

Frederick added, however, that late snow in the Rockies will make for poor spring skiing, which will reduce interest in closeouts among Western backcountry ski dealers.

In New England, Lathrop said some independent dealers could opt to delay receipt of their spring orders to give them more time to clear winter merchandise during the region’s so-called “mud-season” of March.

That’s not the case at EMS, which is looking eagerly toward spring. “The customer is moving on,” said Manzer, noting that EMS began clearing hardgoods last year and will enter March with limited exposure in some EMS-branded and outerwear products. “They are not going to make big investments in anything this late in the season. We should have a great spring with boats, because there is almost 100 percent open water.