It’s only June, which means the outdoor industry is already announcing its spring lineups and fast-approaching ordering deadlines.
Surveying the situation, it’s clear that there are many challenges: everything is already on sale, we’re still in a mini recession, many brands are mismanaging their inventory, and there are too many wrong products (many of which are soaked in PFAS) trying to sell.
While more people are going out, I’ve heard that many are going out less. Overall, it’s a tough time, and many people are being criticized.
It’s easy to blame manufacturers. They make all the goods that we are forced to sell at a discount. But of course, that’s not all. Retailers, including me, bear a lot of the responsibility for the current difficult situation. With the shopping season looming, it’s time to discuss what retailers can do to create a healthier commercial environment.
The outdoor industry has two major buying forces: independent outdoor stores scattered across the country and the massive green machine of Seattle-based Recreational Equipment Inc. (REI).
The outdoor industry’s current downturn is the result of a confluence of factors, and there’s no easy solution to the glut of products and lack of customers. But today, we’re going to talk about what two major groups of outdoor retailers are doing well, what they’re not doing well, and what they can do to be even more successful in the future.
Retailers doing the right thing
Independent
Independent retailers have deep roots in their communities. These stores are owned, managed and run by local people. They are the first to catch local trends and new activities, and they have the best sense of what works in their unique outdoor market.
These stores can really bring together the local outdoor community in a town. Locally owned, independent stores have a friendliness factor that national chains lack, allowing for greater engagement with the store and other customers.
Independent retailers give a significant percentage of their sales back to their local communities: According to the Grassroots Outdoor Alliance, the average independent retailer donates about 2% of annual sales to charity, a common trait among most independent outdoor retailers.
Ray
Floor Staff: Our green-vest clad staff is made up of thousands of passionate outdoor enthusiasts who support customers across the U.S. This is the largest group of people in the country who believe in our industry and our mission, and whose job it is to get people outside.
I’ve worked in REI stores for almost a decade, and one thing has remained constant: REI’s break rooms and floors have a greater concentration of outdoor enthusiasts than any other area in our stores.
Path Ahead Ventures is a well-run program that addresses a critical industry issue. The demographics of brand founders and executives don’t match the demographics of people who spend time outdoors in the United States. Recent data shows that over 11% of U.S. outdoor participants are minorities. This doesn’t match the people doing business in the industry. While I was skeptical of REI’s marketing around community impact, Path Ahead seems to be making a real difference.
REI also provides brands with the real-time data they need to refine their product lines. REI is the only outdoor retailer that regularly informs its vendors on how their products are performing, shaping their strategies going forward. It can’t be emphasized enough how important up-to-date data is for brands to make effective decisions. In this town, the co-op is the only option.
What retailers get wrong
Independent
Independent retailers often complain that brands’ strategies are at odds with our interests, but we rarely actually change our purchasing behavior. We love to complain about how bad things are on the manufacturer side, but we never change who we order from; we just keep paying the companies we claim are harming us.
We are also a data black hole for brands. While we want new products to meet our customers’ needs, we rarely provide our partners with the information they need to know what works. Fearing that this information will be used to boost sales, most of the products offered for next season are “best guess” designs.
Independents have very conservative buying habits, rarely commit to new product categories, and often don’t support new brands. Picking winners among new brands is difficult and risky. Making the wrong choice will hurt your bottom line. But while you can fail by investing in unproven companies, you will definitely fail if you don’t adapt to the realities of the modern market. And the reality is that many of our traditional brands are now practically commodities, off-price businesses.
Ray
REI struggles to get the right products at the right time to sell enough at full price to be profitable. Their reliance on discounts has led to the commoditization of outdoor gear. REI’s publicly disclosed financials and member perks mathematically ensure that over 45% of their revenue comes from full price sales. Their size means they are diluting the brand equity of manufacturers who (in my opinion) are trying to maintain a premium position. The co-op’s current strategy has led to losses of $500 million over the past two years.
They also tend to “catch and kill” new product launches with demands for early exclusivity. Their emphasis on product exclusivity and the relative lack of success of those exclusivities shrinks the market for innovative new products in the long run.
Some manufacturers have told me that REI is no longer a trusted planning partner for their brands, which is impacting factory buys and on-hand inventory for their brands, REI and the industry as a whole.
What we can do in the future
Independent
- Align your buying decisions with complaints: If you’re unhappy with a brand’s strategy, let that inform your buying decisions. This alignment puts pressure on brands to take retailers’ concerns into account and adjust their approach. It’s past time for us all to step up and do this. Anything less is madness. Supporting brands with solid strategies and proper inventory planning is the biggest action we can take.
- Actively share data: Collaborate with brands by sharing sales and customer data. This transparency allows them to adjust their offerings and strategies to better meet their product needs. It’s understandable that brands may be afraid to weaponize that data; in reality, brands have enough direct consumer data to be able to do just that, looking at the bigger picture. This is about working together to drive business by sharing concrete information about what actually works.
- Take more risks with new brands and products: Diversify your inventory by taking calculated risks with smaller, innovative brands and products. This will allow you to attract a wider customer base and establish yourself as a trendsetter in the market. As independent retailers, this is our most rewarding role in the outdoor industry. Buy products from small vendors as long as you can sell them.
Ray
- Invest in the Green Best: Increase training and support for your floor staff. These employees are the face of your company and play a vital role in creating a positive customer experience and driving sales. And don’t make vendors pay for staff training.
- Take back your inventory planning power: Develop more accurate forecasting methods to effectively manage your inventory levels. This will allow you to reduce your reliance on discounts and improve profitability through full price sales. For decades, this has been your superpower. We all sincerely hope that you will become even more accurate in the future.
- Be more selective with early bird offers: If you request early bird offers from brands, be strategic and ensure these launches have adequate marketing and support. This effort will lead to a successful product launch and strengthen your partnership with the brand. Ironically, getting other retailers to help launch new products at the same time can be of great benefit to the co-op in the long run.
The challenges for our industry are multifaceted and complex. No single group – retailers, salespeople, brands – can fix the malaise that unfolded this spring. But those of us at the intersection between customers and brands can take some steps to improve it.
Wes Allen, Principal at Sunlight Sports, started out on the floor of a small outdoor shop in the ’90s. Since then, he has worked for some of the largest outdoor retailers in the world, managed brands, led a leading specialty retail organization, and owned an independent retail business in Wyoming with his wife, Melissa.
