Dipatch from Denver: Outdoor Retailer Summer Market Takeaways
Plenty of change came to this year’s Outdoor Retailer Summer Market, which was held at Colorado Convention Center in Denver, CO, for only the second time. The event moved back to its rightful calendar spot in June, shrank to three days from four and featured a new demo day location.
But the spirit of the outdoor world’s premier B2B extravaganza remained the same—uniting the industry tribe under one roof.
Another constant from recent years is SGB Executive’s wrap-up of show takeaways, specifically business trends as opposed to product reviews. With that in mind, here are a few themes culled from this reporter’s notebook after three days walking the show floor. Look for more reflection on OR and more details on some of these stories in the coming weeks.
Good Vibes Across The Floor
The dozens of exhibitors and retailers that spoke with SGB during the show gave mostly positive reviews of the event. Certainly, the stoke appeared high on the first and second days, with steady traffic in the aisles and booths overflowing with dealers. But the crowds thinned by midday Thursday and brands started breaking down their booths well before closing time.
One area with traffic from start to finish was Venture Out. The popularity and intimacy of the street level hall delighted numerous exhibitors, including Portland, ME-based outdoor accessories brand Flowfold.
“There was a lot of a lot of energy, a lot of excitement around new products, new ideas and new initiatives,” said James Morin, the company’s COO and vice president of sales.
And while Morin was, of course, happy to meet with current dealers and woo new ones, he said Outdoor Retailer is about much more than signing new accounts. If that’s a brand’s only purpose, it’s impossible to achieve a financial ROI on the show. Instead, finding success during the grind of OR demands a different mindset.
“For us, the goal of the show is not to pay for the booth through writing orders,” Morin said. “There are local and regional shows for that. This show is about celebrating the industry, meeting with buyers that I don’t have a chance to meet with unless I come here. It’s a community, and you’re surrounded by people who just want to be outdoors and enjoy the world around them as much as you do. And it’s revitalizing. If nothing else, I walk away with more energy than I came here with.”
Black Diamond Equipment (and Clarus Corp.) President John Walbrecht echoed the comments about the importance of the outdoor community.
In stark contrast to Venture Out inhabitants, the BD booth was among the biggest—if not the biggest—at the show. It was continually packed with attendees grabbing a cup of coffee in the morning, sharing a beer at happy hour, listening to live music, or lining up to get a poster signed by outdoor rock stars Chris Burkard and Alex Honnold.
The booth was designed to not only showcase new product offering but also foster that community feel—especially for its specialty dealers, Walbrecht said.
“Our retailers are our constituents,” he said. “If our retailers are coming to the show, we need to be there to help them. They come from around the country to be at this show and engage with the brand. We should make sure that when they leave, they say, ‘You know what, I feel better about my retail store, I feel better about the community, I feel better about the brands I buy because of my engagement with those brands.’”
Tariffs Still Top Of Mind
On the first day of the show, in conjunction with a panel discussion about the ongoing trade war, the Outdoor Industry Association released a report stating the monetary impact of increased tariffs on Chinese-made goods. The numbers were staggering, to say the least.
According to the report, outdoor companies and consumers paid an extra $1.1 billion due to new tariffs in the period from September 2018, when tariffs on all manner of outdoor equipment went into effect, and April 2019, when the most recent government data is available. The data also found that increases on existing tariffs and additional threatened tariffs will cost the outdoor industry an additional $1.5 billion every month.
In addition to abhorring any added costs, brands are frustrated with the unpredictability of when tariff increases go into effect, which products are impacted and which countries of origin are affected, said Tony Post, CEO, Topo Athletic.
“You can deal with anything if it’s a little bit more predictable,” he said. “But it’s almost like I dread reading the news now.”
As Post pointed out, companies with manufacturing facilities in both Mexico and China might have decided in recent months to shift some or all of their production to Mexico, only to find out that the U.S. would threaten to raise tariffs on Mexican-made products too. Now, even the ABC (“anywhere but China”) mitigation strategy isn’t a sure bet.
“There has to be a little more stability,” Post said. “People can’t run businesses like this. In one sense, you could say it’s been a conversation for nine months now, so we’ve all known that this is a possible thing, but what if something happens with Vietnam now that everybody’s moving their manufacturing there? We’re trying to figure out how to hedge our bets, but there’s just very little stability or predictability to this. It makes it hard to plan.”
Even “Made in the USA” brands are dealing with retaliatory tariffs, giving headaches to companies’ sales managers in the APAC (Asia Pacific) regions importing those U.S.-made goods to China.
While brands are looking for all kinds of ways to mitigate the potential impact that tariffs will have on their production, what’s important is working with all of their supply chain partners in that effort, said Melissa Ziegler, director of marketing, OluKai.
“It’s all about just being creative and having really great relationships with your suppliers and your partners,” she said. “We’re working with them now because we’ve known that this was going to be coming down the pipeline for a while. You just need the business foresight to understand what’s coming.”
Read more about this issue in SGB Executive’s new report, The Hidden Costs Of Tariffs.
Just One Word: Plastics
Plastic was clearly a hot topic at this year’s show. On display at many booths were the single-use plastic bottles that went into producing a shoe or jacket or even another water bottle (CamelBak). Brands like Icebreaker touted how the natural fibers it uses doesn’t pollute oceans with plastic beads. And the roughly 200 brands that signed the Plastic Impact Alliance prominently displayed signs in their booths highlighting their commitment.
Meanwhile, thousands of attendees carried their Nalgene bottles that the company and Outdoor Retailer provided, refilling them in one of 170 water stations around Colorado Convention Center.
“We all knew the industry was going to get behind this whole initiative because everybody is on the same page,” said Eric Hansen, marketing director, Nalgene Outdoor. “The outdoor community is seen as the leader in this area so it was time to do something and make a change.”
Elissa McGee, general manager, Nalgene Outdoor, who spoke with SGB leading up to the show about the partnership with OR, said the move to eliminate single-use plastic at Outdoor Retailer and instead give everyone a reusable bottle was the culmination of brands and other industry organizations uniting in this key sustainability effort.
“It’s been gaining traction with all of us at the same time just pushing forward together,” McGee said, adding that many brands were giving out metal pint cups or reusable coffee mugs. “It feels like we’re all in it together. And that makes sense with the whole vibe of this show, which seems so open and welcoming.”
Hydro Flask was one of the brands to commit to the Plastic Impact Alliance. A few days before OR, the drinkware company said it would provide 1,992 of its hydration and drinkware products, a retail value of over $53,564, “to eliminate plastic waste during this year’s show.”
Lucas Alberg, PR and communications manager, Hydro Flask, also noted another important environmental effort at Summer Market—the decision to not place carpet in the aisles. “Kudos to Outdoor Retailer to for pulling up the carpets,” he said. “I don’t think too many people, including myself, realized that the carpet is just thrown away after the show.”
That’s not to say there isn’t more work to do, as plenty of single-use cups were handed out during booth happy hours and many of the landfill, recycle and compost bins had wrong items tossed in. Read more about the plastic problem—and some solutions—at SGB Today by clicking here.
Business Environment Mostly Positive
Industry analysts and investment bankers walked the show floor this week too, and they shared some of their thoughts about the industry—both on and off the record.
According to one investment banker, look for market-shifting consolidation to continue in this space in 2019 and beyond, perhaps driven by a large (and newly Denver-based) company targeting some additional outdoor assets. Without a doubt, he added, both strategic and financial buyers are on the lookout for companies of all sizes that meet one of a few criteria including proprietary technology, disruptive business model or a large following of brand enthusiasts.
Meanwhile, some of the analysts who covered the show lauded the mood as upbeat and buoyant even amid a mixed sales environment.
According to NPD, athletic footwear and apparel are down while outdoor is flat, driven by a host of factors, including unfavorable spring weather. However, “sport leisure footwear, sweatshirts and plus size remain strong with trail running also showing an interesting surge,” and “equality and sustainability remain important secular themes for brands courting outdoor consumers,” wrote Jonathan Komp of Baird.
Komp also wrote in his note to investors: “While industry data points have been volatile year-to-date (hurt by a variety of factors including weather) and brands/retailers noticeably are unsettled by tariff uncertainties, we still detected good overall buzz on the show floor and sense seasonal sales (i.e., June-to-date) have recovered recently. From our product tours/interactions, we came away incrementally positive on CROX and with continued confidence for Merrell, HOKA/Teva, and Under Armour.”
And the three takeaways for Michael Kawamoto of D.A. Davidson after walking the show were:
Sustainability was increasingly highlighted as a selling point for brands.
Lifestyle offerings remain a key focus in addition to core performance products.
Tariff situation continues to put pressure on the industry; will intensify if List 4 round goes into effect.
Overland Experience Draws Big Crowds
There was no shortage of traffic at the Overland Experience section of the show floor, where serious dealers and casual onlookers alike squeezed past each other to glimpse the latest in rooftop tents and overland accessories (along with the seriously rad vehicles that helped showcase the latest and greatest products).
Even the absence of one particular brand from the show floor hinted at this category’s explosive growth. Thule Group AB needed a larger off-site space to exhibit its new line of rooftop tents co-branded with Tepui. Read more about that news by clicking here.
The growth is indeed impressive, noted Antonio Martins, sales manager for the rooftop tent maker James Baroud, a Portuguese brand that has been selling in the U.S. for the last five years. He said when the company first came here there was hardly a presence of rooftop tents at trade show floors. But the rise of overlanding and van life has made those products the event’s hottest draw.
“Now it’s growing and growing,” he said. “We sell all over the world, but at this moment, the U.S. is one of the best markets we have.”
The grouping of the overland companies in a back corner of the hall made for some tight aisles, but that signified the continued trend of overlanding and van life, according to Nathan Hendrix, managing director, iKamper.
“We’ve grown a whole lot in the last four years, but a lot of other rooftop companies have grown as well and it was nice to have leaders from those other brands here,” Hendrix said. “Obviously, we’re competitors, but we’re all together making the industry grow. And it was just good to be immersed in this.”
But the overlanding category isn’t just about rooftop tents. Hendrix said iKamper, for example, found success talking to buyers about its premium cooler, and Matt DuVall, vice president of military and hunt for Exxel Outdoor Performance Group (Kelty Tactical and Slumberjack), said the overlanding and van life boom has helped drive sales of tactical gear and apparel, especially with its Slumberjack line.
“We have some items specifically for overlanding,” DuVall said. “We have done some promotions specifically geared toward overlanding and found that the category has continued to increase not only in sales but in traffic as well.”
Other Takeaways From SGB’s Notebook
Here are a few other nuggets from this week’s show.
VF Corp. doesn’t move into its new downtown Denver headquarters until 2020, but many employees of both the parent company and its portfolio of brands (including The North Face, Altra, Eagle Creek, JanSport and Smartwool) are relocating to the metro area. Most are working in temporary digs at the Denver Tech Center until the Wewatta Street buildout is complete.
More and more brands are increasing the space they dedicate to tactical gear, including Kelty Tactical, which went from a booth the size of a closet in 2018 to a full-sized one this year. Look for a story on this trend soon.
After last year’s disappointing Demo Experience that featured booths at Confluence and Commons Parks and “paddling” (wading?) the Platte River, Outdoor Retailer heard brands’ concerns about the lack of decent water and moved the event to Chatfield State Park in nearby Littleton, CO.
The show was expected to draw more than 1,400 exhibitors and more than 25,000 attendees, but OR won’t have the final numbers until next week.
More than a few people told this reporter that opening the show to the public on the final day (or the afternoon of the final day) for a nominal fee would not only bring additional revenue but could add some needed buzz to the event.
The ninth annual Outdoor Retailer Inspiration Awards were held Tuesday night. Click here to see who was honored.
Much More to Come…
Look for additional coverage from Outdoor Retailer Summer Market in future editions of SGB Executive, including Q&As with brand leaders, emerging category trends, company features and more insight into the outdoor industry’s future. And feel free to send your brand’s business news to firstname.lastname@example.org.
Photo: SGB Executive