A profound love for the outdoors emerged from COVID-19, and with it, the market for adventure-appropriate footwear experienced a boost. With nature’s moment here, Columbia Sportswear Co. is confident it can capitalize.
“I’ve been saying since the company went public in 1998 that footwear should be the company’s largest product category,” Columbia chairman, president and CEO Tim Boyle told FN last month. “We haven’t grown our footwear business as much as we want, and even though it’s [developing] nicely, our apparel business is growing at the same time, so it’s a race. The shoe business is [about] making sure we’ve got products that can earn their way onto a footwear wall because they’re different and they are compelling for consumers.”
And it appears the firm is moving in the right direction. To start the year, Columbia Sportswear — the home of the Columbia and Sorel brands, among others — experienced a 35% hike in footwear sales across its banners. And it saw a 20% increase in revenue from direct-to-consumer channels. (Yesterday, the company reported a net sales increase of 79% to $566.4 million for Q2 2021.)
The company’s recent wins in footwear have also been thanks to some big hires in recent years, according to Matt Powell, senior sports industry adviser with The NPD Group Inc. Specifically, Powell cited the impact of Peter Ruppe, who joined the Columbia brand in 2018 as VP of footwear after stints with Under Armour, Nike and Jordan Brand.
Sorel’s trajectory at Columbia Sportswear has been notable as well.
“The Sorel acquisition [in 2000] showed Columbia the importance of fashion and being trend-right, even if it’s aimed at a more middle-of-the-road consumer,” Powell explained. “Sorel was transformative to the company and showed them that they could inject fashion into all of their categories and have it be successful.”
With momentum on its side, Columbia could be poised to gain even more ground on the competition, according to Powell.
“We’re in a period where hiking footwear is doing well,” he said. “Columbia is taking a bold fashion approach, blurring the lines between athletic and outdoor with lighter-weight product, more-versatile product and then injecting fashion. That’s the story of what’s making Columbia footwear work.”
For the back half of 2021, the Columbia brand is banking on the success of its Omni-Heat Infinity thermal-reflective technology — an innovation it is calling “the new gold standard in warmth” and that will debut this month. Aside from its apparel applications, this tech will be featured in select footwear, including the brand’s Bugaboot Celsius and women’s Slopeside Peak Luxe winter boot launches.
Although Columbia Sportswear has its plan mapped out, the company is confronting several challenges that could make the road ahead bumpy. Most notably, the firm is facing the industry-wide issues of supply chain concerns and port congestion, which are having ripple effects throughout the broader market.
“We’re a global business, we’ve got merchandise going all over the world all the time, and we’re not excluded from the impact,” Boyle said.
Post-COVID participation trends are also concerning — raising concern about whether the outdoor boom will continue once people return to normal activities and go back to the gym.
The 2021 Outdoor Participation Trends report, released by the Outdoor Industry Association in June, revealed one-quarter of new participants don’t want to continue their outdoor activities.
Also, diversity remains a top issue for the industry, as Asian or Pacific Islanders accounted for just 6% of participants, 9% were African American or Black and 11% were Hispanic. From a gender perspective, women accounted for 46% of participants, even though 51% of Americans are female.
Below, Boyle discusses how Columbia Sportswear is addressing the most pressing issues and reveals insights into investments that will define the back half of the year.
How have supply chain pressures and congestion at the ports impacted your business?
TIM BOYLE: “When you have a whole year where much of the economy gets shut down, you’ve got global buildup of demand, and that’s what we’re seeing right now. My assumption is that over time, this bulge moderates and goes back to a level that was more like 2019. Within a finite period of time, we should see some moderation in these logistic impacts. The world has been focused on inventory management, so when you have a disruption like what we had, it’s going to be exacerbated.”
What has Columbia done to address these supply chain challenges?
TB: “We’re doing all the standard stuff, including container utilization maximization. We’re focusing on getting merchandise that’s destined for certain areas prioritized to the extent we can. We’re getting much more granular in terms of how we approach the topic.”
How will Columbia capitalize on its e-commerce momentum?
TB: “You’re never done with digital investments because improvements keep happening across platforms, and new concepts are developed. We’ll have to continue to make sure that we’re investing properly, not only at the right rate, but in the right areas. We added [former Nike executive] Skip Potter to our team [in January] to run the entire digital operation because we know that over time we’re going to continue to make investments digitally and want a strong leader. He’s helping us analyze our level of acumen digitally in certain areas, and in those areas where we’re less adept, we’re going to make further investments. Last year when COVID hit, we shut down everything with the exception of an e-commerce platform enhancement, which we called X1. That was literally the only capital project we allowed to continue at its original funding level.”
Many big brands are upping DTC and scaling back wholesale partners to control their own destiny. What is your strategy here?
TB: “We’ve always said we’re primarily a wholesale company, and that philosophy continues to be enhanced as it relates to shoes — footwear is so reliant on people going into a store, trying merchandise on and getting the right fit. That’s critical. We’ve continued to increase our DTC business in all commodities and categories, but my expectation is that our business is going to be based on a wholesale model, especially for footwear.”
Where will brick-and-mortar versus e-commerce settle out?
TB: “The rebound in brick-and-mortar retail globally — where stores are open — has been more surprising than people thought. As comfortable as consumers got with e-commerce over the past 15-18 months, there’s something about physical retail that people like because they’re going to these places and buying stuff. What the ultimate percentage between brick-and-mortar and digital retail ends up being over time is still to be determined, but it’s certainly not going to be 100% digital, that’s for sure.
Footwear has been a big sales driver for you in 2021. How do you ensure the growth continues?
TB: “This is basically a creative process converted to a commercial activity. A slot on the wall in a footwear store or in a footwear department is owned by some brand, some item. For a company like ourselves to bump somebody’s product off the wall, there has to be a significant point of differentiation, one that’s meaningful to consumers. We’re focusing all of our time and effort on trying to find these white spaces where we don’t have competition on a particular product category. The most notable one has been our [Columbia] PFG footwear. We have a strong business in fishing apparel, and we believe there’s an opportunity for fishing footwear. That’s where we’ve been having our creative teams work tirelessly, finding those specific kinds of shoes that are reflective of somebody’s passion about fishing, and at the same time, meaningful to consumers who just like the product and find it interesting and different. The white spaces with Sorel are all about design and harvesting the investment in the Sorel brand when it’s not winter. It’s been more challenging from a theoretical approach to marketing, but it’s been very well received. Consumers who have Sorel boots have been happy to buy Sorel products that are for the summer, and it’s been quite meaningful to the brand.”
Creating buzz and awareness is something you have spoken about for years and recently said is a priority for 2021. How has your strategy changed?
TB: “We’ve been efficient with the marketing spend historically, but we just haven’t spent enough. The athletic companies — which are based in our city of Portland, Ore. — would spend north of 10% [of sales] on their marketing. Columbia generally averages around half of that or less. Our points of differentiation are being noticed by consumers, but they’re not being noticed enough, and that’s going to require a larger investment in the voice to tell these stories and have our brands recognized more frequently. We’re going to be focusing our efforts — which are larger than they’ve been in the past — across the spectrum of home, TV, digital or whatever medium we’re using to get these messages out. They’re going to be focused on our Omni-Heat Infinity launch, which is the next generation of lining materials, and it’s quite distinctive. We have a full set of marketing materials that are going to be used across the globe to emphasize this new innovation. In addition to that, we’re going to continue to invest in our relationships with Bubba Wallace, the NASCAR driver, and country singer Luke Combs. And we have another Disney product launching as well.”
In the outdoor market, there’s a broad gender divide that favors men. How can the industry be better for women?
TB: “About half of our business is women’s, and as we look across the company, we’re very diverse as it relates to gender. Virtually all of our design teams are women, and they’re not only focused on making men’s apparel that’s high quality and fit for purpose, but they also know what they like to wear. Even our PFG product, which you would think is really focused on men, is high percentage women. If we are going to be a big company, we have to be going to big markets and those that are dominated by women.”
What trends that emerged from the pandemic will remain?
TB: “Utilization of brick-and-mortar shopping. That’s likely to continue. Whether or not the percentage changes, or if [shoppers] go to stores and then buy online, I don’t know. But I know there will be more people going to stores, and I can see that globally. Also, the trend of casual apparel. There’s no question that it will have a significant impact on the future of work apparel. Those are two trends that should dominate.”
How can Columbia help ensure people stay committed to the outdoors post-COVID?
TB: “The ease of the outdoors has brought people into the outdoors who hadn’t been in the past, and the expectation is not that 100% of them stick around. But if a portion of them stick around, it’s much better than what we had in the past. We have to approach those consumers the way we’ve approached the more committed historical consumers, which is: Let’s solve your problem in a way that makes our products accessible and perform as they should.”
How do you problem solve for those consumers?
TB: “Using the same method we’ve used for 50 years, which is to use our imagination to understand what the problems are, and use the science that we’ve developed to approach those questions. And then, once you’ve come up with a product that resonates, that’s where the demand-creation investment becomes critical because some of these concepts and products we put together are complicated and require an investment to tell people about them and why they’re different.”