Can Component Alternatives Compete?

For outdoor enthusiasts, the most important name on a shoe isn’t always the brand. According to retailers, third-party components ­— such as outsoles from Vibram, waterproofing from Gore-Tex and insulation from Polartec — have strong brand recognition at the consumer level. Shoes from many of the major manufacturers flaunt their branded partners to attract shoppers, with significant overlap as to who uses what.

But some brands are looking to do things differently.

Columbia Sportswear is taking its cue from the athletic market, said Mick McCormick, EVP of global sales and marketing for the Portland, Ore.-based brand, which is seeking to develop its own stable of proprietary technologies.

And Columbia is one of a number of companies that wants to create waterproofing, outsoles and insulation materials that reinforce their own branding and use their exclusivity as a selling point.

“Working together, for any industry, is the death of the industry. It stifles innovation,” said McCormick. “You will not see us in our brand portfolio use ingredient technologies that other brands have anymore.”

But retailers said that may be an uphill battle.

“A brand-specific tech story does not seem to impact our footwear customer’s purchase decision as much as a third-party technology. Many of our customers actively search for footwear with Gore-Tex, Vibram and Thinsulate,” said Chris Dunn, outdoor footwear buyer for Backcountry.com. “Footwear customers may be pleased with the performance of an in-house technology, and it may even outperform a third-party technology, but it’s not why they seek that brand’s product.”

Alan Page, manager of the Sam’s Outdoor Outfitters in Hadley, Mass., said he’s seen an increase in the number of customers who come into the store with a specific branded component in mind after doing research at home. “The customer has become more involved in their own purchases,” he said. “And they’re looking for specific traits.”

That consumer recognition is an advantage for Wolverine World Wide’s Outdoor Group, according to VP of product development Bill Dodge. “We do like to work with branded vendors because of the value they add [and] because of their expertise in their categories,” he said. “It’s hard to argue against that. That’s what they make their living on: producing the best possible pieces and parts that add value to the product.”

Dodge estimated that more than half of the product made by his firm’s Merrell, Patagonia and Chaco brands use technologies by Vibram, Gore-Tex, Primaloft, Polartec or another branded supplier. “I truly believe — and we see this all the time from our customer communications — that not only do [customers perceive that they] get the strength of our brand, they get the added value of the expertise from the other companies.”

But for Portland, Ore.-based Keen, using its own branded components is an important part of creating a reputation for innovation, said VP of product Kelly Wallrich. “We have the ability to create our own product, which is even better than what is out there,” she said. “You take [Gore-Tex]. We have our own waterproof technology, and we feel that it’s better than Gore.”

Keen had used third-party suppliers in past seasons, Wallrich said, but had no plans of doing so in the future. In fact, Wallrich added, the company would add two new patented technologies its stable for fall ’11, including one for the insulated footwear market and one for the casual market. “We’re Keen. We want to do things differently, and we pride ourselves on innovation and advance concepts,” she said.

And building a reputation for technological innovation is the backbone of Columbia’s strategy to grab more market share and regain momentum, McCormick said. “In all our brands, we are going to take the leadership position in innovation around footwear,” he said.

At last month’s Outdoor Retailer show, the company announced it had acquired OutDry, an Italian company that developed a patented laminating technique for waterproofing footwear, apparel, and accessories.

Building on the brand’s OmniHeat, OmniDry and OmniTech franchises and incorporating the OutDry techniques, McCormick said, gives retailers a point of differentiation on the shelf and gives consumers a reason to buy.

“We need to bring new innovations. You need to take your old stuff out and bring new stuff in; you need to [make] obsolete what’s in the closet,” he said. “There’s a reason why the athletic footwear business is so much bigger than the outdoor business. We’re using ingredient technologies that are 20 years old.”

Keen’s Wallrich said the brand hadn’t seen any sales impact after switching to its own technologies. “We’ve only gained [customers]; we haven’t lost. It’s given us permission to keep doing it,” she said.

But Columbia’s McCormick is taking a proactive approach as he talks to retailers. “We are not going to outspend the ingredient technologies,” he said. “So we’re going right to the source [at retail].” OutDry will be the main marketing story for next fall, McCormick said, and the company would first tell that story to the retail sales force before moving the message to consumer marketing.

And that could be the key, retailers said.

“The average consumer is still in a discovery phase [with] new brand-specific tech stories,” Dunn said. “And as well as we educate our Backcountry.com customers, we’re too early in the trend to have customers shopping with an assumption about brand-specific technology.”

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