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Outdoor Industry Association Takes the Pulse of Outdoor Retail at Outdoor Retailer

By Outdoor Industry Assocation
Reprinted with permission of Outdoor Industry Association.

Outdoor Industry Association (OIA) is the leading trade association for the outdoor industry and the title sponsor of the Outdoor Retailer trade show.

The Outdoor Retail of the Future Project is a multi-year initiative aimed at reinventing the outdoor retail experience. Working with and for its members, OIA is uncovering actionable strategies to help OIA members adapt to the rapidly shifting needs and expectations of outdoor consumers.

Unless outdoor specialty retailers can adapt to rapidly changing consumer behavior and attitudes, the marketplace is at risk of losing a distribution channel that is critical to sustaining long-term growth of the outdoor industry and recruiting new outdoor consumers.

In response to this, Outdoor Industry Association® (OIA) kicked off the Outdoor Retail of the Future Project at Outdoor Retailer Summer Market last week. Nearly 800 people packed the room at the OIA Industry Breakfast, presented by The North Face, to hear a presentation by IDEO, the global design and innovation firm with which OIA is partnering on this multi-year project. Aimed at reinventing the outdoor retail experience, the Outdoor Retail of the Future Project will uncover actionable strategies to address the drastically shifting needs and expectations of future outdoor consumers.

“The rapid changes in business are creating both challenges and opportunities in the outdoor industry. The disruption in business models is not a trend, it’s a reality,” said Frank Hugelmeyer, president and CEO of OIA.

The challenges outdoor specialty retailers are facing are well known. Growing urbanization, margin compression from online competitors, changing shopping habits and even weather-related stressors have threatened traditional retail business operations. Most troubling may be declining youth participation in core outdoor activities. OIA research has consistently shown that many members of the millennial generation do not share the industry’s hard-core image of the outdoors. Research conducted by IDEO for the Outdoor Retail of the Future Project found that many young people view the outdoors as something that starts at their front door, is part of everyday life and is best experienced with friends and family.

Now is the time for the outdoor industry to take a good hard look at what it’s doing right and where there is room for improvement. One thing is certain: change is inevitable, and outdoor companies need to adapt and deliver retail experiences that resonate with future outdoor consumers, both core and non-core. With this in mind, OIA picked the brains of ORSM attendees and collected ideas on sticky notes to identify areas of promise and concern for the outdoor industry.

Strengths

The outdoor industry has a proven record of stable innovation and growth. More than 140 million Americans engage in outdoor activities each year. OIA’s “The Outdoor Recreation Economy” report found that the outdoor industry contributes $646 billion to the American economy and supports 6.1 million domestic jobs.

Manufacturers and retailers share a commitment to core business values, such as helping people to discover the wonder of outdoor recreation, conserving natural areas and championing sustainable business practices. Business executives from outside the outdoor industry have commented on the congenial nature of industry gatherings. Its common to hear people refer to the industry and the larger outdoor community as “the tribe.”

Weaknesses

An unintended consequence of this “tribal” community culture is that outdoor specialty shops can be intimidating to people who are uncertain about outdoor activities that require equipment and skill sets. Retail salespeople, although enthusiastic in answering questions, may overwhelm beginners with too much industry jargon and technical product details. The gearhead culture can intimidate or even alienate prospective customers. In addition, the image of the industry might not resonate with broader popular culture.

“Fashion is not a dirty word,” said Will Manzer, past OIA chairman and former CEO for Eastern Mountain Sports. “You look around the Outdoor Retailer exhibit hall and all you see is plaid. That’s not exactly the hot new look on Main Street.”

Timbuk2 CEO Mike Wallenfels noted that outdoor retailers don’t leverage their buyers skill sets as effectively as they could.

“Buyers are underappreciated, underpaid or understaffed,” said Wallenfels. “They often are not treated as professionals. A good buyer can build margin and keep inventory clean, but retail is very dynamic and they should also be tracking emerging trends rather than just restocking.”

Operationally, independent specialty retailers have been reluctant to embrace technology or lack the resources to do so. Many have not adapted to rapid changes in smartphone and tablet applications and have failed to optimize their store websites for mobile applications. Manufacturer sales representatives report that it’s not uncommon to find storeowners or managers who cannot generate routine reports from their point-of-sale systems or accurately analyze customer purchasing data. The lack of technical sophistication puts these retailers at a tremendous disadvantage in competing for millennials, who have grown up in the era of one-on-one digital marketing.

“Over the next decade, victory will go to those retailers who do the best job harnessing and analyzing customer data,” said Ted Manning, CEO for Ibex and the former GMM for Eastern Mountain Sports. “Retailers who don’t use data to get to know their customers will quickly fall behind.”

Opportunities

Specialty outdoor retailers can appeal to a broader demographic audience by softening their marketing communications with images and messages that emphasize the outdoors as a great place to have fun and relax with friends and family. Non-core consumers often find images of a kayaker plunging over a 40-foot waterfall, a hiker nursing a nasty blister or a rock climber sleeping in a hammock suspended halfway up a cliff as not only inaccessible, but intimidating.

“This is the New Outdoors,” explained Jill Levinsohn, IDEO’s team leader for the Outdoor Retail of the Future Project. “You have to meet them where they are. Think of it as going from ‘Outdoorsy’ to ‘Outsidesy.’ We are not suggesting you have to reach everyone. But there is a big pool of people you could invite in. There is a huge, huge opportunity to bring these people into the fold.”

Specialty retailers who are strategically embracing new audiences are seeing measurable success.

Playmakers, a running and outdoor apparel store in Okemo, Mich., has used new marketing strategies to reach new audiences. Earlier this year, Playmakers hosted its first Color Run, which uses the tagline “The Happiest 5K on the Planet.” Participants are not timed, but get dusted with a new color every time they reach a kilometer marker. The event drove more than 10,000 people through the store and provided a documented increase in women’s apparel sales.

“People don’t want times next to their name or to show up in the local paper as the second to last in their division,” said Bob Burgess, co-owner of Playmakers. “At The North Face trail running event we do, three generations show up and we roast hot dogs and hang out. It’s very relaxed. The success of these events has given us some perspective on where the market is going.”

The outdoor industry is also taking advantage of social media buzz and news reporting surrounding new forms of outdoor recreation. Obstacle-themed running races, yoga and stand-up paddleboarding are important examples. Paddlesports retailers report increased interest in stand-up paddling coming from fitness-oriented customers with little previous paddling experience. Since stand-up paddling doesn’t require a high level of technical skill to enjoy, retailers find consumers are more open to learning about the activity. Although boards can be purchased online, concerns about proper product selection and shipping costs serve as an incentive for potential buyers to visit a local specialty retailer.

Outdoor specialty retailers play an important role in championing new outdoor activities like standup paddling. Knowledgeable sales people can introduce, educate and inspire new consumer groups to embrace new activities more effectively than e-commerce sales channels.

“We need to find ways to grow the pie, instead of competing against each other for market share,” said Darren Bush, owner of Rutabaga Paddlesports in Wisconsin.

Threats

The competitive business landscape demands that outdoor specialty retailers change their business practices. Online retailers are steadily gaining a larger share of outdoor products sales, and — in many instances — have become the preferred source for purchasing outdoor-related equipment, apparel and footwear. These disruptive competitors are here to stay, and their consumer data mining prowess and fulfillment capabilities are only growing stronger.

“Specialty retailing is going to be a very difficult business for the next 10 to 20 years,” said Jared Johnson of Parallel Investment Partners, which owns a majority stake in Moosejaw.com. “They are under tremendous pressure and that’s not going away.”

2 Comments to Outdoor Industry Association Takes the Pulse of Outdoor Retail at Outdoor Retailer

  1. It is clear that the idea of “adapt or die” is true for all industries. The outdoor industry has proven resilient through the economic pressures. It will be important to work together to reach the millennials on their own level. What worked years ago, will not necessarily work in the future.

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