May 10, 2012

As Technology Reshapes Shopping, Outdoor Brands Strive to Keep Up

Watching his wife shop on her smartphone, Eastern Mountain Sports CEO Will Manzer marvels at how much and how fast retailing has changed.

“Consumers today can scour available inventory anywhere in the world and find free shipping and discounts,” said Manzer, who currently serves as chair for the Outdoor Industry Association® (OIA) Board of Directors. “They’re becoming pros at shopping on mobile devices and are far more educated by the time they get to the store.”

Manzer recalls the 1970s and 1980s when shopping required ordering from a catalog or driving to a local shop or regional mall in hopes they would have the item you wanted in stock, on sale or both. Today, consumers often arrive at the store knowing more about a SKU than the retail associate.

For the first time in Manzer’s career, retailers are playing catch-up with consumers. This has required investing precious capital in robust e-commerce platforms, mobile apps, and state-of-the-art fulfillment and call centers — on top of upgrading brick-and-mortar stores.

“The rate of change right now is extremely fast,” said Manzer. “The retail landscape of today is dramatically different than it was seven years ago. It’s hard to imagine what it will be in another seven years.”

Despite the dramatic shifts in the retail environment, independent outdoor specialty retail seems to be maintaining its relevance — at least for now. Outdoor product sales by Independent Outdoor Specialty retailers rose 4.9 percent in March over the same month in 2011, according to the latest OIA VantagePointTM Trend Report, the only point-of-sale data platform developed specifically for OIA members.

Many executives sense Amazon, its unit, and other online retailers are driving consolidation, which usually “leads to fewer customers; customers seeking more favorable prices, payment or other terms; and a decrease in the number of stores that carry the products,” according to the annual report of one outdoor footwear vendor. “In addition, changes in the channels of distribution, such as the continued growth of Internet commerce and the trend toward the sale of private label products by major retailers, could have an adverse effect on the company’s results of operations and financial position.”

Recent shifts in other industries demonstrate how online retailers can gain the upper hand in a traditional brick-and-mortar world. The fact that Amazon came to dominate the sale of digital media such as books, music and movies suggests it could give the outdoor industry a run for its money. In response, big box outdoor retailers are experimenting with new store formats, mobile technology and private labels to keep their businesses relevant. Outdoor apparel and footwear brands have responded to the consolidation risk by elevating the strategic importance of their direct-to-consumer (DTC) businesses. (See related story).

Meanwhile, Amazon and Zappos continue to set the bar for customer satisfaction. In the process, they are changing what retail attributes consumers find relevant, notes Brodeur Research. Last month, Amazon edged out Target and Walmart as the most relevant of 21 top U.S. retailers, based on a Brodeur survey that looked at how more than 2,000 shoppers perceived how well each retailer dependably provided the best value, reflected their personal values, appealed to their senses and provided an experience they wanted to share.

“The case of highlights the incredible power of e-commerce in the retail world of today,” reads a report based on the survey’s findings. “It shows how technology can move a retailer from a specialty online bookstore to one that people view as more practical and value-driven than even Walmart.”

People generally agree that brick-and-mortar specialty will survive, but no one quite knows in what form and at what level. One thing is for certain, the traditional retail model as we know it is shifting, and outdoor retailers will have to remain nimble, be strategic and adapt their business models to the constantly changing environment.

In the stories that follow, we give you a glimpse of what some leading companies are doing and what you can do to remain relevant and profitable for many years to come.