Outdoor Products – Industry Forces, Predictions and Opportunities

The Outdoor Retailer Show just concluded last weekend at its new home in the Denver Convention Center with over 50,000 industry insiders attending. The largest conference of its kind in the US, the show providing some sobering insights on industry trends, while suggesting some bright growth opportunities for the future.

Industry Forces

Powerful forces are at work in the Outdoor Retail Industry that are testing the resolve of retail stores and the brands they sell.

The continued rationalization of brick-n-mortar stores versus online stores has hit outdoor retailers just like all retailers. The war with the “Amazon machine” rages on as a necessary evil.

Generational lifestyle shifts of Millennial and Gen Z consumers has given rise to the experience economy , bringing with it new requirements for more personalized consumer engagement.

According to the Outdoor Participation Report 2017 from the Outdoor Foundation, participation in all outdoor activities has remained relatively flat between 48% and 50% for the past decade. And, visits to America’s National Parks has steadily risen between 5-8% annually since 2013. Yet the industry has recently seen double-digit sales declines across many product categories, suggesting that consumer spending is shifting toward creating memories and away from buying things.

Outdoor Industry Performance for 2017

2017 was another tough year for outdoor retailers. According to The NPD Group, the $19 billion industry experienced an overall decline of about 6% with the following breakouts:

· Total $19.0B -6.0%

· Athletic Specialty / Sporting Goods $12.8B -9.0%

· Outdoor Specialty $4.0B 0%

· Sport Specialty Ecommerce $2.2B +2.4%

Predictions for 2018

Matt Powell from The NPD Group gave some sobering predictions for the industry from his latest research for 2018. Outdoor brands and retailers will likely experience the following trends this year.

1. Expect footwear to decline low to mid singles

2. Expect active wear to decline in low singles

3. Expect a continued promotional environment

4. Retail (brick-n-mortar) rationalization continues

5. Team equipment stays negative

6. Outdoor remains soft

7. Athleisure remains noisy

8. Not great year for sport

Powell explained how business is being forced to the internet and could go as high as 40% of retail sales for the outdoor industry in the next few years. There is a strong need to get back to the “fun” of getting outside since online sales have become so transactional. Consumer engagement, and the content to support it, should be at the top of executional priorities.

The Amazon Machine

Most conversations on the exhibit floor and from the podium included the war against the “Amazon machine”. It’s a big problem in the industry for both retailers and brands, primarily because they’ve lost control over pricing, combined with the “instant” expectations that consumers now have. While most industry participants feel their products must be represented on Amazon, few had any positive things to say about it – more of a short-term necessary evil that could be their downfall in the long run. Presentations around best-practices for doing business with Amazon primarily focused on how to go to battle against the algorithms in the machine, which can change without notice.

New Consumer Engagement Requirements

The dramatic shift to online sales is forcing retailers to quickly adapt new consumer engagement strategies. The NPD Group explained that retailers must be omnipresent, not omnichannel when it comes to their engagement strategies with four realities.

· The consumer is in charge and wants to shop whenever, wherever, and however they choose.

· The sports consumer often moves back and forth between brick-n-mortar and online.

· Brands don’t create trends, they feed trends that consumers create.

· Sports retail needs one view of pricing, marketing messages, and loyalty programs.

With the generational shifts to Millennials and Gen Z, online engagement through mobile devices has become paramount. These new customers crave engaging content about the outdoor experience which requires a fresh look at consumer value propositions in the industry. It’s not about products – it’s about experiences. There is a strong need for compelling content delivered through online channels surrounding new outdoor experiences for these powerful lifestyle consumers.

Opportunities With The New Consumer

While much of the trend data coming from the industry this year was negative, there are exciting areas of opportunity emerging for those brands and retailers that embrace the new realities of the outdoor industry and listen to their customers. Value propositions are shifting rapidly as Millennial and Gen Z consumers spend money on experiences rather than things. And when they do spend on things, they want them to be unique and authentic.

The Millennial generation has become very powerful since becoming the largest portion of the workforce. As NPD describes them, they are the first generation to grow up with the internet and more familiar with technology than boomers. They are changing the workplace by being attracted only to companies that embrace their lifestyle, and they are redefining how we communicate causing dramatic shifts from traditional media to personalized, online engagement.

Meanwhile, Gen Z consumers, who are all under 18 this year, were born with the internet and mobile phones are intrinsic to their very existence. They are much more diverse racially, sexually and politically than any previous generation, and are looking for authenticity and connection. They want unique products and are not brand conscious.

New growth opportunities are emerging, but you have to dig down inside the categories to find them. And, private label has now become the #1 brand in outdoor products, confirming the lack of brand loyalty among new generations. Brands and retailers need to have empathy for new participants with first-time experiences. They need to build emotion around products and the experiences they enable. And, they need to engage new consumers on how to comfortably embrace outdoor experiences.

Julia Clark Day of the NPD Group (and fishing fanatic) gave an insightful presentation about trending opportunities in the following areas…

Accessible Adventure

Helping people experience the outdoors in a more secure and comfortable way. E-mountain bikes represent a high-percentage growth category that helps people experience the thrill of mountain biking without the extreme exertion of pedaling up hills. New mini-trailers are enabling former tent-campers to get out more than ever, and helping new campers to experience national parks in a very comfortable way.

Nostalgia, Retro – Appeal of the Authentic

What’s old is new again, particularly when it comes to the tastes of the new generation of customers. The appeal of the authentic is very strong, particularly with Gen Z. Add to that the desire to be unique, and you’ve got a strong case for high-quality, retro designs.

Duluth Packs has done a very interesting pivot from rugged, high-quality portage packs to chic, expensive handbags that scream high fashion.

Stanley has done an outstanding job of bringing back the classic designs and colors from decades gone by in an expansive line of thermoses and coolers, but with advanced materials and performance.

Hults Bruk, a centuries old Swedish brand dating back to 1697, is the real deal in camp axes appealing directly to the authenticity new consumers crave.

Call of the Wild

National Park Attendance has been on the rise at 5-8% growth for the last several years, testimony to the desire to get outside and experience the call of the wild. Making these experiences accessible and comfortable through advances in gear design has opened the outdoors to larger audiences who would otherwise choose things closer to their comfort zones.

Closing Thoughts

Powerful forces in the industry are changing the landscape for outdoor retailers and brands forever. Still, exciting growth opportunities will continue to exist for those who embrace the changes and take meaningful action. To continue your transformation for growth, put some thought into these areas…

· Rethink the value propositon for the new customer generations who embrace outdoor experiences. Listen to customers, as they are the trend setters – not brands.

· Curate an assortment to enable outdoor experiences that are growing in participation. Seek authenticity and uniqueness in products.

· Do what Amazon can’t do. Humanize the relationship with the new customer through personalized engagement in digital marketing, using compelling content that helps people optimize their outdoor experience.

Most importantly, let’s all bring the “FUN” back into the outdoors!