Outdoor Industry Faces Challenging Fourth Quarter, Bright Long-Term Future

Aug 16, 2012

Topics: Business, Economy, Retail

Despite a worrisome overhang of winter inventory that is clouding the fourth-quarter outlook, attendees departed Outdoor Retailer Summer Market in Salt Lake City as bullish as ever.

Clearly, vendors and retailers who rely on cold, snowy winters to make a profit face a challenging second half of the year. Some alpine ski equipment makers have said they expect to sell 20 percent fewer skis this year as their dealers work through inventory carried over from last year both in the United States and Europe. (See related story.)

Yet in the face of this adversity lies opportunity. Retailers with strong finances could enhance their margins in this environment through opportunistic buying. Likewise, vendors stand to benefit if they have the financial resources and the willingness to take more of the inventory risk and support key dealers through the cycle. Vendors and retailers who work together to persuade consumers to purchase early based on their wants — versus later based on their needs — will fare much better should the winter come late again. (See related story.)

Looking beyond the immediate fallout from the disastrous 2011-12 winter, many believe that the long-term outlook is promising. In nearly two dozen interviews during the show, leaders from within and outside the industry agreed that outdoor brands are becoming more relevant as Americans yearn for the kinds of memorable, healthy and even adrenalin-filled experiences that the outdoors is uniquely positioned to deliver. Indeed, the desire of the Millennial Generation to share such experiences online could be seen spurring innovation by the growing number of action camera, portable solar charger and wrist instrument brands exhibiting at the show.  (See related story.)

Keeping up with how consumers shop for and purchase such products seemed to displace concern over whether the industry is doing enough to grow participation among an increasingly urban and screen-centric youth. There is a growing appreciation for how smartphones — the dreaded harbinger of “showrooming” — are helping expand access to outdoor recreation by helping core enthusiasts and novices track weather conditions, find local trailheads and register for outdoor events.

What also emerged in discussions during the show is the need to live with uncertainty. Learn more in our story about what is keeping industry executives up at night. (See related story.