For many decades, outdoor retail has proven to be a recession-resistant industry. Note that I said resistant, not recession-proof. The fact is certain activity segments of the industry will slow down during this recession while others will pick up. By understanding past industry trends, both retailers and brands can capitalize and actually grow during the most challenging of times.
During the recessions of the late 1980’s and early 1990’s, several retailers reported to Outdoor Industry Association (OIA) that sales slowed to single-digit growth. However, sales quickly rebounded and returned to double-digit growth before the rest of the economy recovered. Anecdotal evidence from long time industry leaders suggests that it was the mass shift to affordable and simple activities like family camping that helped fuel growth in tough times.
Fast forward to the economic slow down over the last eighteen months and we now have hard data to back these claims. According to the OIA Topline Retail Sales Report, U.S. outdoor industry retail sales grew 10% in 2007 and another healthy increase of 9% was posted in the first six months of 2008. At same time, the U.S Gross Domestic Product (GDP) slowed measurably and posted an average increase of only 2% over the same eighteen month period.
Why did the outdoor industry remain so strong through such a difficult time frame? In short, Americans returned to low-cost transportation and recreation activities. Cycling and camping sales shot up and the equipment, outerwear, footwear and accessories related to these activities realized strong growth. In addition, internet purchases shot up and the retailers and brands that closely monitored these trends and reacted quickly to take advantage of what has become a predictable consumer shift have reported their best seasons in years.
At the OIA Rendezvous, Marian Salzman, one of the nation’s leading trendspotters, shared a story of a recent keynote speech she gave to the leadership team at Accenture. While speaking to the investment executives, Ms. Salzman stated that the only businesses in which she would consider investing right now were soup and camping. Her reasoning was that Americans will be looking to escape the long-term economic turmoil and constant barrage of the media by returning to low-cost, simple activities that involve the entire family. If this prediction holds true, as it has in the past, businesses that support cycling, camping, hiking, fishing and paddling activities may be very well positioned for several years.
So what lies ahead? In the near future, the upcoming winter months are of great concern for many retailers and many are reacting by reducing their inventories. If winter brings cold weather across the country, apparel and equipment will certainly move off the shelves and we will all look smart. If not, it could be a challenging season due to the economic news and realities. Some retailers are planning to be 10% to 15% down this season while others argue that planning to be down creates a self-fulfilling prophecy.
One thing is for sure; as spring comes and Americans consider how they will spend time with their families and friends in the coming year, low-cost outdoor activities such as camping, hiking, paddling and fishing will be on the rise. Recent research from The Outdoor Foundation shows that 8 out of 10 Americans who are active in outdoor activities feel that they have less stress in their lives, have stronger family relationships and are happier as a result. The great outdoors truly is a natural and low-cost alternative to ensure happier, healthier families. These are wonderful themes and messages for any outdoor business to promote, now and in the future.
By reminding our customers that the outdoor community has been and will be here for them, we provide valuable benefits and necessary services in troubling times. Outdoor businesses help ensure the mental and physical health of our customers and, contrary to the daily news cycles, provide a great means for escape. We all hope that the present market challenges pass quickly. However, a lengthy recession may be another in a long line of great business opportunities for our industry, to introduce and remind more Americans that the great outdoors is a constant, proven and cost-effective alternative for them and their families to enjoy.
Throughout the next year, OIA will expand its offerings on economic, sales and profit related trends, research, Webinars and educational seminars and highlight them in the weekly WebNews, at the semi-annual Outdoor Retailer tradeshows and on our website. In addition, OIA has worked diligently with Outdoor Retailer to significantly increase the member exhibitor discounts at the trade show over the next several years. In 2009, OIA members in good standing will receive increased savings of 5% on exhibit fees and receive additional special discounts on GES.
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