Is Outdoor Still on Top?

Is Outdoor Still on Top?
Consumers looking to escape their economic woes have traditionally helped the outdoor channel in recessions.

As the credit crunch and slower consumer spending drag down all channels, retailers and vendors are bracing for a challenging 2009. The anecdotal wisdom is that in times of recession, consumers turn to the simple (and comparatively inexpensive) pleasures of close-to-home hikes, camping trips and other outdoor activities — making the outdoor category recession-resistant, if not recession-proof.

Indeed, years of sales increases attest to a growing popularity for outdoor sports and activities, and while sales for outdoor footwear as a whole aren’t finalized, the category does seems better positioned than many others. But industry players caution that that doesn’t mean it’s time to break out the champagne.

According to a recent report from the Outdoor Industy Association, the sales pressures affecting the overall retail environment also have been felt across core outdoor chains, independents and e-tailers. Sales across all three channels fell 11 percent to $407.4 million in November 2008, compared with the previous year — the first drop since the recession started in December 2007.

But there are bright spots. Winter boot sales in November rose 6 percent, the OIA reported, and some retailers are seeing successes. Lauren Barra, who oversees footwear buying for Salt Lake City-based, said footwear sales for the outdoor Website were on track for a 30 percent increase for 2008, led by 132 percent growth in the women’s après-ski boot category. “We finished the year up, and we like to attribute that to being aggressive in the market. We have [a variety of] colors and sizes, and that contributed to our success,” she said, noting that the site even had limited promotional activity during the holidays.

Going into this week’s Outdoor Retailer show, she said, the company would be looking for new styles and new brands. “We have budgets, of course, but we’re always looking to buy.” With sales up, Barra said the e-tailer was feeling optimistic about the seasons to come. “Right now, we’re planning for growth and trying to stay consistent.”

At Eastern Mountain Sports, President and CEO Will Manzer said he expected the 66-store chain to be ahead for the year, even after October “dropped huge” for 10 days before sales normalized going into the “slightly more promotional” holiday period. But Manzer, who is also the strategic planning and finance chair for the OIA, said the retailer was taking aggressive steps to position itself for the next several periods. “We’re planning for the worst — and we’ve not come close to the worst,” he said.

Citing tough January conditions and predictions for further job losses across the country, Manzer said Eastern Mountain Sports had largely put store initiatives on hold. “We’re reorganizing our cost structure and just laying low so we can continue to fight another day,” he said. [For more on the company’s plans, see “EMS: Turnaround on Track,” page 4.] Manzer added that he hopes others in the business are doing the same. “Even the outdoor industry, the so-called recession-resistant industry, is not [immune]. I hope my friends [in the business] are not in denial because this is going to be brutal.”

On the vendor side, outdoor firms said they are feeling cautious, but are planning for a post-recession future. At Rockford, Mich.-based Wolverine World Wide, outdoor is a strength. The Wolverine brand of workboots and rugged footwear will be exhibiting this week for the first time at OR, and the Merrell and Patagonia footwear brands saw sales increase 9 percent and earnings rise by double-digits in the third quarter.

According to Merrell VP and GM Seth Cobb, the company sees the outdoor consumer remaining fairly consistent. “We don’t get the sense in the outdoor space that there’s as much trading down as in some retail businesses. What we’re seeing is that moderate to premium offerings are just as important as they’ve been in the past,” he said. “People are considering their purchases more carefully, but they’re still willing to pay for performance, style, durability and color. I don’t expect that to change.”

Sam Poser, an analyst for Sterne Agee, said he agrees there will still be a market for outdoor customers — but that outdoor stores shouldn’t expect immunity from current conditions. “There are [shoppers] who are going to try to get out there, but are they going out and buying the newest, best stuff to do it?” he said. “That customer isn’t going to buy the stuff they want, they’re going to buy the stuff they need.”

And Eastern Mountain Sports’ Manzer said industry players need to take care. “[The outdoor market] will still prevail. But for us as an industry, that is just the wrong way to think,” he said. “We need to be proactive and take care more than ever.”

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