Winter Agnostic Products, Flexible Vendors and Wants-Based Selling Will Rule for Rest of Year
Which companies will come out ahead in the second half of 2012? In talking with industry representatives at Outdoor Retailer Summer Market, it seems clear that the ones who will have a leg up are those who make and sell outdoor gear that isn’t snow-dependent.
Retailers in milder climates who have carried over a lot of winter goods from last season say they are shifting their open-to-buy dollars toward other categories in order to lessen their exposure in the event of another unusually warm winter. If the snow falls early and hard, they know there will be plenty of inventory available to chase.
“There will be a lot of price pressure on the carryover product,” said Mike Massey, owner of Massey’s Outfitters, which operates five brick-and-mortar stores in the New Orleans area as well as an online store. “We are trying to determine if we can move our open-to-buy from higher risk to lower risk hardgoods.
In colder climates, retailers have no choice but to stock winter product — but they are looking very closely at what mix of product to carry and in what quantities.
In Bozeman, Mont., Mike Garcia has instructed his buyers at Northern Lights Trading Co. to focus on fast-turning, less seasonal core apparel pieces with margins that will stand up regardless of the weather. “We are focusing on less product with some staying power,” said Garcia, who added that he is approaching the fourth quarter with fairly clean inventory. “If I have to go back to the well to reorder winter product, so be it.”
Among the categories that may benefit are consumer electronics and accessories, yoga, running and biking gear. Last week, Backcountry.com announced it had begun selling bikes once available only through its bicycling-specific online stores.
Brands and retailers who master wants- versus needs-based selling to persuade consumers to buy winter gear early will also have an advantage in the next two quarters.
“You want new product on the shelf early,” said Kim Miller, president of SCARPA USA. “You want to have product out there and selling before you know whether it’s going to be a good ski year or not.”
There is also some advantage for companies that broaden their product lines and/or develop new offerings that become must-have items no matter what. This worked well for La Sportiva last winter despite the weather.
“For 2011-12 we launched our ski mountaineering category, and we sold out of our North American-focused ski, the Hi5,” said Jonathan Lantz, president of La Sportiva. “Many retailers told us that this was the only ski that people were coming in and asking for last season. It showed us that targeted innovative product that is end-use specific has a place in the market.”
Vendors and retailers with strong finances are also poised to benefit.
“People may not want to hear this at this show, but this (carryover of winter product) creates a great buying opportunities for retailers with good finances,” said Kat Jobanputra, executive vice president and chief operating officer for Specialty Sports Venture, the retail arm of Vail Resorts Inc. “When you have great opportunities for the consumer, that’s a great story to tell, and with Vail Resorts, we have a great customer list to tell that story.”
Vendors willing to help specialty accounts work through their liquidity issues by extending deadlines, sweetening terms, taking on more inventory risk and replenishing in smaller and more frequent shipments also stand to gain.
“We have taken a position to bring in a lot of product, which puts the risk onus on us, but retailers are leaning into vendors who provide this,” said Jim Zwiers, president of the Outdoor Group, the Wolverine Worldwide, Inc. unit that owns the Merrell, Chaco and Patagonia footwear brands. “I do believe retailers are going into the quarter underbought, and brands who provide inventory will gain an advantage.”
The North Face plans to invest a record amount in its dealers this fall though co-op advertising, events and other promotions, said Todd Spaletto, president of The North Face – Americas. “In times of uncertainty, retailers tend to go with brands they know will invest,” he said.
Finally, companies that “move fast and break things” will improve their chances of success in the rapidly changing retail environment, according to Carol Spieckerman, president and CEO for newmarketbuilders, a retail and brand consultancy. Retailers cannot stand still in an era where fashion designers are opting to design product exclusively for Target, Amazon is sponsoring skateboarders, Cabela’s is experimenting with smaller store formats, Sports Authority has spun off its own specialty chain and Walmart is gobbling technology start-ups.
“It’s really no longer good enough to follow your industry, your product or your niche when so many other people are borrowing from outside their industry,” said Spieckerman, who delivered an Outdoor University® presentation for Outdoor Industry Association® at Outdoor Retailer Summer Market. “Nobody is staying in their own sandbox, and the definition of your competition is changing. Retailing is opportunistic, customer-stealing and format-crazy.”
A handful of retailers outside the industry are demonstrating that retail innovation will be as important as product innovation. Despite widespread indications that consumer demand was tapering off in June, Macy’s surprised investors last week when it nudged up its earnings guidance after reporting net income in the second quarter increased 16 percent on comp store sales growth of 3 percent. “We are entering the fall season with optimism about our ability to grow sales and capture market share,” said a cheerful Chairman, CEO and President Terry Lundgren. Macy’s has credited much of its success of late to its ability to tailor its fashions to local markets, secure popular brands, train its sales associates and fulfill online orders at its stores.
Other major retailers show no signs of suffering. Sales at Apple’s stores for the nine months ended June 30 are running 38 percent ahead of their level a year earlier. Amazon’s North American sales are up 36 percent in the six months ended June 30 on top of 48 percent growth a year earlier. Both companies have thrived by providing a combination of excellent customer service, product expertise and an in-store experience that keeps consumers coming back.
“The onus is on the industry right now to convey an amazing consumer experience,” said Zwiers. “The level of expectation has just gone up and the gap between good retail and great retail is bigger than ever.”