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State of the Market Report: Outdoor Specialty Retailer Complacency and the Disappearance of Retailers as Experts (Outdoor Retailer Winter Market 2004)

A discussion of critical issues affecting the interactions between outdoor specialty retailers and their customers.

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by Ryan Jordan | 2004-01-27 03:00:00-07

State of the Market Report: Interactions Between Outdoor Specialty Retailers and Lightweight Backpacking Consumers

Overview

Lightweight backpacking is one of the fastest growing segments of an otherwise somewhat stagnant and product-saturated outdoor specialty market.

More and more manufacturers are jumping on the lightweight bandwagon for two reasons. First, and most obvious, it's a good marketing move - a chance for major manufacturers to distribute their revenue streams and leverage their brand in new territory. Secondarily, and far less obvious, it provides a new niche for cottage companies to differentiate themselves as leaders in the field.

Outdoor specialty retailers, however, are feeling a little less joy over the lightweight revolution. Merchandising lightweight gear is requiring them to adopt new merchandising strategies and invest new time in staff training and customer interaction. Niche, or "activity" merchandising, and staff training are low priorities for most specialty retailers, who are already struggling to squeeze a 2.5% profit margin.

Manufacturers are making high quality, saleable lightweight gear and apparel. Consumers are educating themselves and learning about their benefits enough to make the purchase. Retailers, on the other hand, typically tuck the "light" stuff back in a corner for their fringe customers, fearful that if they actually sell it, they are going to have to honor return policies and deal with dissatisfied customers demanding their money back.

Are retailer fears warranted? Or are they acting as the bottleneck (it wouldn't be the first time) in allowing this market segment to grow because of their failure to provide their floor staff and consumers the education they need to guide smart buying decisions? Let's examine this hypothesis more closely in an attempt to understand the current standard of retailer-consumer relationships.

The Way It Used To Be

Only twenty years ago, if you wanted to learn about a piece of specialty equipment, you visited your local retailer. Their staff was highly knowledgeable - these were men and women who lived, ate, and breathed backcountry. They spent more time in the mountains than in the shop. They actually used the gear. They were savvy, experienced, and often, poor sales people - because they had honest opinions about the gear they sold. They were not afraid to tell you not to buy a piece of gear you held in your hand. In fact, they were not afraid to send you down the street to their competition because they didn't stock a particular product! These were people you trusted to help you spend your money.

Fast Forward

Welcome to 2004. Your local retailer is more likely than not staffed predominantly by minimum wage part time college students who wear Vibram-soled boots to work but may have not actually tried them on a trail.

Retailer staff turnovers are measured in periods of months instead of years, so training investment on behalf of the retailer is limited primarily to sales rep clinics and browsing product catalogs - hardly the sort of training that best serves a customer. Sadly, today's retailer floor staff are trained how to sell a product, rather than how to use a product. As such, the level of trust between consumers and specialty retailers is fading.

In addition, most floor staff (and many owners, buyers, and store managers) are not even aware of the product breadth available on the market - they rely on visits from the most aggressive sales reps to let them know which products are simply "best sellers". In spite of the fact that VNU Expositions' Outdoor Retailer Markets are the largest conventions of their kind in the Outdoor Specialty Trade, most U.S. retail employees still do not attend. Why? Because the value of understanding the big market picture is not perceived to be useful to selling a product on the floor, i.e., the 'Markets are just a place for the bigger buyers. Never mind that understanding the big market picture is vital in order to properly guide customers to purchase the correct product for their needs!

A snowball effect is building from all of this of course (although there are arguments as to how steep the downhill incline may be). Consumers are turning to other, more reputable sources of information - other product users - for help in making their purchasing decisions. The Internet and the accessibility it provides to outdoor gear consumers, users, and review writers, is remarkable and is changing the process by which outdoor specialty goods are marketed and sold. While the Internet continues to evolve into a valuable resource for consumer information, specialty retailers are screaming - at the manufacturers for not doing enough public relations to drive customers to their store, at the sales reps for not protecting their brand turf, and the outdoor industry as a whole for not doing enough to protect the institution of the Outdoor Specialty Retail Store.

Why all the screaming?

The answer is pretty simple really. And, it's staring every specialty retailer in the country right in the face: the 21st Century. In other words, welcome to the here and now, Retailer: your steady diet of complacency, blameshifting, and turf protection mentality is not improving your profit margin, and you are losing customers. Times are changing. You need to change, too. And, the solution is remarkably old-fashioned: serve your customer, and they will serve you.

Lightweight Backpacking As a Market Niche

We've been monitoring market metrics for lightweight backpacking as an outdoor specialty niche for several years. Since that time, the market has literally exploded - with a corresponding increase in people who identify themselves as lightweight backpackers as well as the amount of gear and apparel marketed specifically to this niche. Further, although the total number of backpackers in the U.S. has not increased appreciably since 1999, the fraction who align themselves with the "lightweight backpacking" movement most certainly has.

Manufacturers recognize this and are not ignoring it - they are enjoying the benefits of selling light gear!

Consumers are recognizing this and are not ignoring it - they are enjoying the benefits of packing light!

Retailers are simply ignoring it, passively reaping some of the profits generated for them by their manufacturers' PR campaigns, sitting complacent and content to be the bottleneck rather than a solution provider in a struggling outdoor industry. As such, manufacturers are increasingly supplementing traditional retail channels by selling products direct via their own online e-commerce site, and are distributing their goods to smaller retailers with less concern about turf wars than serving their customers the right way.

In the past six months alone, the number of backpackers in the U.S. that call themselves "lightweight" or "ultralight" backpackers (those that carry less than twenty pounds of food and gear for a three-day weekend summer backpacking trip) has increased by 20%. Approximately one quarter (still, a very significant number) of those users are new to the sport - they were attracted to the proposition of backcountry hiking without struggling under a heavy load. The other three quarters were traditional backpackers who are "following the light" (pun intended).

What types of consumers make up this fast growing market niche?

The Lightweight Backpacker: A Profile

"Light-and-fast" adventure sports, including lightweight hiking and backpacking, fastpacking, ultra-running, adventure racing, and alpinism, are appealing to an increasingly wider demographic. However, there exists a significant trend within the (lightweight backpacking) demographic that does not necessarily exist in mainstream backpacking: the rapid growth within the demographic of people who like to spend a lot of money on gear.

Over the course of several recent surveys, we have polled several thousand lightweight backpackers about their income, education, spending behavior, outdoor gear buying habits, and relationship with retailers. We discovered trends that clearly differentiated them from the mainstream consumer of backpacking gear:

  1. Lightweight backpackers spend more money (62% > $1,000 per year) on outdoor gear than traditional backpackers (12%). They have higher average household incomes (58% > $70,000 per year). Lightweight backpackers shop for more members of their household (67% make purchasing decisions for two or more household members) than traditional backpackers (35%).
     
  2. Lightweight backpackers support outdoor specialty retailers. 82% of lightweight backpackers purchase less than 25% of their outdoor gear from big box, discount, and general sporting goods stores. Lightweight backpackers purchase a significant amount of gear online from outdoor specialty retailers with e-commerce sites. 41.3% of lightweight backpackers buy more than 50% of their gear online from outdoor specialty retailers, and 56% of lightweight backpackers buy less than 25% of their gear online from big box, discount, or general sporting goods stores with e-commerce sites.
     
  3. Lightweight backpackers are already product-savvy when they walk through a retail store's doors. They don't need to have a product's marketing copy regurgitated to them by a sales clerk - they want to hear about real-world use by a competent backcountry enthusiast and want to understand the in-depth technical specifications of a product and how it affects performance. 85.5% of lightweight backpackers identify product reviews in online outdoor specialty publications as their most important source of product information that guides their buying decisions. Price (68.1%), other reviews (63.3%), product availability (47.8%), and detailed product descriptions or point of purchase displays on a retailer Website or showroom floor (42.5%) were also important factors guiding buying decisions. The latter reason gets to the heart of why complacent walk-in retailers are frustrated with poor sales of lightweight gear - they simply don't understand how to (or, rather, why) merchandise it.
     
  4. In 1980, outdoor specialty retail sales staff were the most important link between the consumer and a product - the source of accurate consumer information that guided a buying decision - a champion of the sport, not necessarily the brand. In 2004, the stronghold of the retailer as an educator has slipped. Less than 20% of lightweight backpackers identify retail store or retail e-commerce site staff as "very knowledgeable" (i.e., the information provided by the sales person was valuable enough to guide a buying decision). More than 85% of lightweight backpackers perceive outdoor retailer specialty staff to be more concerned with pushing a brand than guiding a choice.
     
  5. Brand turf wars among outdoor specialty retailers are out of control. Local retailers will go to extensive lengths to ensure brand monopoly within a given geographic area. With the evolution of the Internet and an increasing number of e-commerce sites offering the convenience of free or reduced shipping rates, fighting turf wars is rapidly becoming a futile battle. Unlike intellectual property protection, where primary distribution of the protected property can be absolutely controlled, defending brand turf only feeds complacent retailers unwilling to spend the time, money, and effort to acquire and keep their customers. If a consumer is alienated from a particular store, they can just as easily buy the product from an Internet store. If retailers spent half the time educating consumers that they spend protecting their brand mix, they will gain customer loyalty that may lose them the occasional sale to their competition, but gain repeat business over the long run. Outdoor retailers have become so brand-conscious, focusing on the core brands that generate the most revenue for them (and rightly so, from a business perspective), and in protecting those brands with their sales reps through geographic monopolizing, that they have forgotten a very important aspect of being a local merchant: availability of cool stuff from the little guy. Lightweight backpackers, in particular, are well in tune with cottage brands, and 65.5% of them indicate that cottage brand availability is the most important factor that differentiates one retail store from another - not the availability of big name brands.
     
  6. Lightweight backpackers are key influencers. Not only do they spend more money on gear, they use it - a lot - and they talk about it. 50.7% of lightweight backpackers spend more than 50 calendar days per year engaged in human powered sports, and an astonishing 81.3% spend more than 11 nights in the backcountry per year. More than 20% share their perceptions of gear they purchase via the Internet.

Conclusion

Outdoor specialty retailers are not going to bond en masse and start catering to lightweight backpackers anytime soon. The market just isn't big enough. In fact, contrary to what the optimists like to believe, it may never be big enough to support the complacency that has infected outdoor specialty retailers. The bigger picture is that survival and success as an outdoor specialty retailer depends in large part on your ability to cater to niche markets, of which lightweight backpackers comprise a rapidly growing and influential one. This requires staff competency (train your staff and pay enough to retain experienced and knowledgeable backcountry users), an understanding of the niche markets on a broader scale than what you hear from your sales reps (take your staff to Outdoor Retailer!), and finally, less focus on protecting your brand turf and more on serving and growing your customer base by guiding their choices in the context of their need.

And for goodness sakes, guys, get a Website and leave our packages at the door so we can just drop in and pick them up.

Best of the Best

Of course, the problems with outdoor specialty retailers as outlined herein are only generalizations. It is of course, wise to recognize a good thing when you got it, and some retailers definitely 'got it! Keep up the great work, and we'll keep shopping from you.

Outdoor e-Tailers with an Online Presence Voted as "Best of the Best"
by Lightweight Backpackers During the Christmas 2003 Shopping Season:

BackcountryGear.com "One Click to Lightweight Gear"
Campmor.com "Coolest Print Catalog and Outstanding Product Selection"
ProLiteGEAR.com "Excellent Product Support, Lightweight Product Focus, and Small Brand Availability"
REI.com "Best Product Selection and Comparison Tables"
SierraTradingPost.com "Great Prices on Closeout Gear and Best Place to Pad Order with Gifts for Spouses"

Citation

"State of the Market Report: Outdoor Specialty Retailer Complacency and the Disappearance of Retailers as Experts (Outdoor Retailer Winter Market 2004)," by Ryan Jordan. BackpackingLight.com (ISSN 1537-0364).
http://backpackinglight.com/cgi-bin/backpackinglight/00291.html, 2004-01-27 03:00:00-07.

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