Aug 16, 2012

Innovation, Diversification and Consumer Trends Boosting Vendor Confidence

Confidence in the long-term prospects for the outdoor industry trumped concern over looming liquidity issues at Outdoor Retailer Summer Market (ORSM) in Salt Lake City last week. Overwhelmingly, vendors said the dedication of core enthusiasts to their sports, consumers’ growing desire to collect experiences, and product innovation and diversification by the industry are softening the blow from last winter.

While the warmest winter in decades hurt the snowsports industry, year-to-date sales of paddlesports and bicycling gear are 6.2 and 5.6 percent higher than a year ago, according to OIA VantagePoint™. Indeed, OIA VantagePoint shows sales of most hardgoods categories — a good indicator of demand among core enthusiasts — tracking ahead of last year through July.

“There is more downside concern right now than there is upside opportunity, but slow growth does not mean there won’t be certain categories and brands growing,” said Jim Zwiers, president of The Outdoor Group at Wolverine Worldwide Inc., which owns the Merrell, Chaco and Patagonia footwear brands. “The outdoor industry has done such a good job because it helps people be what they want to be.”

Even core backcountry gear brands say their pre-season orders are up.

“I am bullish and I was not two months ago, but I just had record sales in July due to ski boot shipments, and the orders came from my biggest dealers,” said Kim Miller, president of SCARPA USA.

Outdoor vendors have diversified by season, by category, by sales channel and by country to the point where even brands identified primarily with snowsports are reporting strong performance. Black Diamond Ltd. has greatly diversified its product line across seasons and categories through its acquisition of Gregory Packs and the European action sports and helmet brand POC, while The North Face has broadened into running and mountain biking in recent years. The company opened 120 specialty running accounts in the last 12 months and was nominated by REI as one of its top bike vendors this year, notes Todd Spaletto, president of The North Face – Americas, where sales grew more than 15 percent in the second quarter.

Since taking the reins at SCARPA USA in 2005, Miller has worked hard to move production outside of Italy so the company can hit U.S. price points for trail running and hiking boots, thereby lessening its dependence on backcountry skiing.

“We are making a lot of product now that is specifically dialed in for the North American market,” said Miller, who has also diversified distribution by growing sales to college outdoor programs, U.S. Special Forces and other institutional customers in addition to building direct-to-consumer sales via SCARPA’s e-commerce store.

Brand executives, as well as market researchers brought to the show by Outdoor Industry Association’s (OIA) Outdoor University®, also agreed the industry is well positioned to meet consumers’ yearning for sharing experiences online. Millennials, in particular, have a penchant for posting photos, videos and stories of outdoor adventures on social media sites, according to preliminary results of an OIA-commissioned research study by TRU, presented at ORSM.

“All the macro trends are moving in our direction,” said Spaletto, referring to consumer hunger for authentic, healthy, adrenalin-inducing and memorable experiences they can share with friends both during the activity and afterwards via social media. In a game of one-upsmanship that is being fueled in part by social media, runners are venturing off their treadmills and the streets and onto trails in search of more “tellable” experiences.

“’I ran on a treadmill for 30 minutes,’ is not that interesting an experience,” noted Zwiers.

Triathlons, mud runs, adventure races and gravity sports are thriving in this environment and propelling sales of everything from trail running shoes, hydration packs, mountain bikes, energy foods and personal GPS devices to wrist instruments. Products that help Millennials stay connected outdoors and record and share their exploits are also thriving. Sales of portable solar chargers and action cameras were up 120 and 56 percent respectively in the first six months of this year, according to Leisure Trends Group.

“People have no problem buying an iPhone, which pays for three or four outdoor products,” said Zwiers. “We need to tell them, ‘Now you need to go out and get an experience to share on that iPhone. Are you going to play Angry Birds all day?‘”