Picture - 06/28/09 Park Silly - Park City , UT - Main Street

Events - June Ushers in Torrent of National Outdoor Events

If outdoor retail sales fail to pick up this month or next, it won’t be from lack of publicity about the great experiences awaiting American families in the great outdoors. From Secretary of Interior Ken Salazar to the marketing gurus at The North Face, outdoor advocates are taking the offensive to pitch camping and hiking as a great way to recreate this summer.

A host of events is generating publicity about outdoor excursions and opportunities this summer, which should help drive traffic into stores. Retailers can read some tips for preparing in this WebNews article published in April.

A partial list in chronological order includes:

Great Outdoors Month (June): President Barack Obama and more than half of America’s governors have proclaimed June Great Outdoors Month. The proclamations were urged by a coalition of dozens of recreation and conservation organizations, many of which coordinate special events held during June, including National Trails Day, National Fishing and Boating Week, National Get Outdoors Day and the Great American Backyard Campout.

TNF Launches National Camping Month (June): The North Face designated June National Camping Month and said its stores would offer free clinics to inspire customers to get outdoors. TNF partnered with Travelocity to present Explore Moab, a sweepstakes which gives people a chance to win a grand prize trip for two to Moab, including airfare, lodging, meals and guided hikes and tours and a $2,000 TNF gif card.

National Trails Day (June 6): The American Hiking Society expects participation to match last year, when partners organized 1,112 events that drew more than 100,000 participants, including 30,000 volunteers who donated 160,000 hours working on 421 trail projects. Press interest in the events seems to be on the rise, said Margie Cohen, director of marketing and development for the society. She said it’s unclear whether that is due to greater interest in the outdoors or new partnerships with the YMCA, the Boy Scouts of America and the Girls Scouts of America. The bulk of the events occurred June 6, but more are planned for the balance of the month.

National Get Outdoors Day (June 13): Saturday is National Get Outdoors Day, organized by the American Recreation Coalition, and targets outdoor neophytes, including urban families who rarely engage in outdoor activities. This year the event will hold more events in urban parks and work more closely with church youth groups and urban youth service organizations to attract kids. National sponsors include the U.S. Forest Service, Clif Bar and The Coleman Company. A full list of partners, including Bass Pro Shops, Cabela’s and REI, and a list of all 59 event locations for this year can be found at nationalgetoutdoorsday.org.

Fee-free Weekends in the National Parks (June – August): Last week Secretary of the Interior Ken Salazar announced that the National Park Service (NPS) will offer three fee-free weekends this summer to encourage Americans seeking affordable vacations to visit national parks. The 147 of 391 NPS Sites nationwide that charge fees for entry will waive them on June 20 through 21 (Father’s Day weekend), July 18 through 19 and August 15 through 16. For a list of those parks, click here. Many parks will be giving away free reusable shopping bags and offering free digital portraits during these weekends, while concessionaires will be offering discounts and promotions to generate traffic. At Glacier National Park, for instance, Swan Mountain Outfitters will offer $5 to $10 off certain horseback riding packages.

Great American Backyard Campout (June 27): The National Wildlife Foundation has designated June 27 for this annual event, which offers people organizing a camp out of 16 or more people to use organizing tools on its web site. The National Wildlife Federation encourages parents and kids alike to trade their website for a campsite and screen time for green time, according to a media advisory

Retail - NPD’s Economy Tracker Shows More Consumers Plan to Increase Purchasing

The latest information from leading market research company The NPD Group, Inc. shows a continued upward trend in consumer purchase intentions.

NPD’s Retail Response Indicator rose 4.5 points, from 39.5 points in April to 43.9 points in May. This is a continuation of the upward trend first seen from March to April. The Retail Response indicator measures consumer spending intentions on a 0 to 100 scale, with 0 representing “Reduce or Spend Less” and 100 representing “Spend More.”

“The continued increase suggests that stabilization is holding,” said Marshal Cohen, chief industry analyst, The NPD Group, Inc. “We are seeing consumers move toward replacement and replenishment purchasing and these are the kinds of purchases that would indicate we have taken the first step toward recovery.” Cohen added, “It is also important to note that the longer stabilization holds the more solid the foundation on which we can build a strong recovery.”

Survey respondents continued to show less concern about the security of their jobs. Once again, the percentage of those feeling “very concerned” about the security of their job or income dropped.

“While consumers are still registering concern about their jobs, overall their concerns are diminishing. And as concerns about job security diminish, retail sales continue to stabilize,” noted Cohen.

Retail - April Outdoor Sales Indicate Declines Easing,

Retail sales for all core outdoor stores combined (chain, internet, specialty)* grew 2% compared to last April, moving from $339M to $347M, according to the most recent edition of The Outdoor Industry Association (OIA) Outdoor Topline Report, produced for OIA by the Leisure Trends Group. Sales for the four months of the year totaled $1.4B, down 5% from the same period in 2008.

Outdoor Chain – Shoppers ReturnAccording to the OIA Outdoor Topline Report, chain stores saw sales surge 20% in units and 18% in dollars. Every major product category (equipment, equipment accessories, apparel and footwear) and most sub-categories gained. Products that appeal to families and car campers fared especially well. Recreation tent sales shot ahead of last April by 78% in units and 64% in dollars. Sun shelters were up 88% in units and three-season recreation tents, retailing for $124, jumped 71%. Synthetic fill rectangular bags, retailing for $32, increased 82% in units whereas the more technical synthetic mummy bags, at $99 retail, grew 31%.

Outdoor Specialty – Declines Slowing But Not Yet ReversingIn specialty stores, April declines were not as severe as in past months, as total sales fell 1% in units and 4% in dollars compared to April 2008. So far this year, all specialty unit sales declined 6% and dollars fell 10%. Each major product category (equipment, equipment accessories, apparel and footwear) saw single-digit declines compared to last April. There were bright spots this month, too, as synthetic sleeping bags, medium-sized packs, climbing gear, multisport shoes, hiking boots and various equipment accessory categories posted gains.

Outdoor Internet – Retail Prices Rise, Units Fall as Online Retailers Reign in Clearance ProductInternet sales totaled $54M this month, falling 20% in units, rising 4% in average retail-selling price and dropping 17% in dollars. All year, Internet sales have been sporadic, up 35% in January on huge carryover sales, down 9% in February, back up 14% in March and now down 17% in April. Higher retail-selling prices across many categories coupled with dramatically smaller carryover sales (defined as old and/or discontinued merchandise) point to either a lack of available merchandise and/or online retailers reigning in the amount of rock-bottom clearance priced product they are offering. If this is the case, total sales may have fallen but profit per turn might go up.

Hands-on Hydration Reaching Plateau?Hands-on hydration, consisting mostly of water bottles, is now an $89M category across all store channels in the current rolling year. However, the category seems to be reaching the height of its growth, after a meteoric rise. While still up 15% and 28% in specialty-store units and dollars so far this year, the hands-on hydration category dropped 10% in units and 2% in dollars in specialty stores compared to April 2008. The category plunged 54% in online units and 57% in dollars from last April, while still seeing growth in chains. Looking at all three store channels together, total units were flat in April and dollars grew 5% on a 5% increase in retail price. Still, with $6.9M in total April sales and $22M YTD, the category is a long way away from the 2006 totals of just $2M in April and $6M in the January – April YTD period.

Paddlesports – Canoes Bright Spot for AprilCore paddlesport stores (specialty, chain, internet) brought in $36M in April and $86M so far in 2009, dropping 1% and 3%, respectively, against the same period last year. While all boats, with $21M this month, dropped 2% in both units and dollars, both recreation kayaks and canoes gained steam compared to last April. Recreation kayaks with an average retail price of $769, up 7% from last April, gained 3% in overall dollars for an April total of $11.2M. Canoes gained 5% in units, 4% in retail price and 9% in total dollars this month.

SNEWS Special Report: A broken supply chain? The retail perspective

The quest to help facilitate the discussion around finding a solution to a badly flawed outdoor industry supply chain began with an email plea to SNEWS® in March from a number of retailers. The email called out a list of challenges to the way we buy and sell, from a retailer's perspective:

• too many trade shows, both regional and national exist, and yet we keep adding more;
  
• early preseason and pre-show buying deadlines keep moving forward at an alarming rate;
  
• rep line previews are taking longer, as is the amount of time required to write an order, sometimes as much as four days, for a single brand;
  
• minimum order amounts for best terms continue to escalate in price, making them unreasonable for most small specialty retailers;
  
• reps for larger brands demand time in stores from buyers and store owners often during the busiest selling seasons, right when owners and buyers need to be focused on managing their business, brands and staff;
  
• and the pressure from too many vendors -- each selling too much me-too product -- to buy multi-categories from each vendor, often leading to retailers taking on inventory they don't want or need to get best terms.

As SNEWS started to peel back the layers of the onion to work on better understanding the issues from all sides, we quickly realized there was going to be no simple answer to what has become a very complicated issue. We spent several months investigating, including visiting factories overseas, interviewing numerous manufacturers (CEOs, production managers and designers), talking with sales reps, trade show organizers and other retailers. Then we chatted with industry consultants to seek opinions, garner background information and decide how best to proceed. One common thread began to appear among the complexly woven tapestry: Everyone shares some responsibility for how we arrived at the current supply chain problem and everyone must act collectively to find a solution.

Somehow, in the headlong race over the last 15 years to chase the almighty sewing dollar, we have managed to create a production and sales cycle that is so complex even executives coming into our industry from far more seemingly complicated markets shake their heads in wonder. Few retailers and even fewer manufacturers from other industries are making buying and selling decisions a year in advance -- decisions that can make or break a season or even a year.

Order lead times have lengthened, necessitated in part because manufacturers insist they need 10 months or more lead time for greige goods (i.e., unbleached and undyed textiles). That means reps are showing up in key stores in November, asking buyers and store owners to make buying decisions for products that won't deliver until the following August, intended to sell during the months of September through December.

The problem with this, retailers told us, is they often have no real idea what will sell through this year in order to make an educated guess as to what colors and styles might sell well next year. Worse, few feel confident enough about their personal crystal balls to place orders when there is no way to gauge the economy, trends or consumer buying moods that far in advance. In the outdoor specialty market, with few exceptions, the strongest selling season for most retailers is November through January (on average, 25 percent to 30 percent of all sales are made during this time). The second most important selling season appears to be May through mid-July. With the current ordering cycle, reps are coming into stores during the busiest selling seasons, and buyers and storeowners, and often key floor sales staff, are having to spend significant off-the-floor time in meetings. Retailers also point out that once the rep has left, their scramble is not done, as most manufacturers now are demanding paper by December for the fall deliveries and paper by late June and early July for the following spring deliveries.

If it were only as simple as viewing product and placing an order, that might be one thing, but retailers also tell us that during those same peak sales times, they have to be in contact with their sales reps by phone or email, national sales managers by phone, and in some cases, even sales VPs or company owners to ensure turns and profits are maximized and the best terms are worked out. Since every retailer is doing much the same thing, and there are only so many reps and sales managers to go around, retailers tell us that this leads to a circus of voicemail messages, phone tag dances, and games of hide-and-seek that are enormous time wasters. Multiply that scenario by 100 brands all demanding essentially the same performance and one begins to wonder how any business is getting done at all, let alone good buying decisions are being made.

Most retailers we spoke with are responding to the shifting economic climate and consumer buying habits by modifying traditional preseason and fill-in strategies to align more closely with inventory need. The majority is now allotting only 55 percent to 60 percent of their dollars for preseasons with the rest kept in pocket for fill-ins and chasing bargains. But manufacturers still seem to want retailers to essentially super-size their orders to gain the most favorable terms, we were told. And that just doesn't seem healthy either.

Retailers further explained to us that manufacturers seem to be on the same path, despite the economy, of trying to push preseasons earlier and earlier. Retailers assert that manufacturers apparently want to tie up more of the retailers' dollars earlier, so they can garner a competitive advantage and, perhaps, ensure earlier production time on the factory floors in Asia.

Not one retailer we spoke with told us manufacturers were lowering thresholds to garner the best terms -- even in this challenged economy. In fact, most manufacturers appear, according to retailers, to be insisting retailers maintain flat to increased business to earn best terms -- often requiring they take on more SKUs and a broader product mix than a retailer might wish to carry from that particular vendor. Retailers told SNEWS that while they suspect manufacturers are doing this to prevent cherry-picking of lines, this kind of business approach is not only short-sighted, it is the kind of strategy that created the overstock scenario many retailers found themselves in when the market collapsed in late 2008. And, it is this approach to force-feeding a retailer that is the primary reason why so many preseason orders were cancelled this spring, leaving manufacturers stuck with spring/summer inventory that had landed, but wasn't selling.

Additional preseason trade shows, regional shows, rep shows and moving the dates on what is currently considered our national show, Outdoor Retailer, are of no help and do nothing, really, to address the overall issue of a broken selling cycle, retailers said. The earlier the shows move, they said, the earlier still the manufacturers continue to push their reps to get in to see key retailers, and round and round the merry-go-round goes.

Retailers acknowledged, somewhat wistfully, that the days of heading to an August or January national trade show for the inaugural "show and tell" of new product, followed by the buying decisions either at the show or a month later, are long gone. There are too many brands with expanding product lines and production spread all over the globe for that to ever work again. In fact, some argued, we have too many brands to begin with now…but that's a topic for another day.

So, from a retailer's perspective, what are the solutions?
1. Stop all the show madness -- pre-shows, manufacturer preview shows, regional show additions and trade show date dancing. Less is more here.

2. Reps are welcome (begged for and wanted a number of retailers told us) in the stores November through December and June through July as long as they are there to drive sales by supporting the sales staff and working the floor, not give a line presentation. If manufacturers are creating a scenario where reps feel they need to be in the stores giving line presentations -- sometimes lasting multiple days -- then the manufacturers need to shift the order and production timelines to eliminate this.

3. Manufacturers need to realize that retailers are going to order less in preseasons, and as a result, require more with fill-ins. For retailers, it is about turns, not about how much has been preseasoned. Core products should never be out of stock.

It is VERY important, however, that everyone reading this, realizes, as SNEWS does, that the above is but one view of a very complex situation -- it is how retailers are looking at the supply chain problems. Next up, SNEWS will take a look at the distribution challenges through the eyes of the rep.

Our goal with this series of editorials is to engage the industry in healthy discussion. Perhaps open a few eyes to seeing things through a new lens, and, hopefully, help us all arrive at a series of ideas and action items that will, in the long term, lead to a healthier and more profitable industry for us all. --Michael Hodgson

Time to get a workout in!

NPD’s Economy Tracker Shows Consumer Perceptions of the Economy Moving in a More Positive Direction

The latest information from leading market research company, The NPD Group, Inc.’s (NPD) Economy Tracker shows consumer sentiment is on the rise and concern regarding job security is decreasing.

NPD’s General Economic Perception Indicator rose from 36.5 points in March to 40.8 points in April. The indicator measures consumer concerns regarding the economy on a scale between 0 and 100, with 0 being “Very Concerned” and 100 being “Very Confident.”

“These results are encouraging and indicate that the consumer is feeling more positive about the state of our economy,” said Marshal Cohen, chief industry analyst, The NPD Group, Inc.

The survey also showed a 7% decline in the number of consumers who are “very concerned” about the security of their jobs. “How consumers feel about the security of their incomes has an impact on how they respond at retail,” noted Cohen.

This decreasing concern regarding job security may have been a factor in the up-tick of the Retail Response Indicator, which increased almost four points from 35.9 in March to 39.5 points in April. “Consumers are telling us they are still buying only what they need and that they are motivated to purchase by sales and special promotions.” said Cohen. The Retail Response indicator measures consumer spending intentions on a 0 to 100 scale, with 0 representing “Reduce or Spend Less” and 100 representing “Spend More.”

“As news of our economy continues to improve and reach the ears of consumers, we will see that they are starting to move beyond just purchasing necessities. This movement is critical as we begin to progress through this period of stabilization," concluded Cohen.

The Economy Tracker is based on online surveys completed by 1,000 respondents each month. The sample is nationally representative. Results are delivered in 12 monthly reports, quarterly summaries and a year-end analysis.

Economic downturn may have lasting effect on consumer behavior

The economic struggles of the last year that have taken a heavy toll on retail may have a lasting effect on how consumers shop and buy – one every retailer and supplier will have to deal with.

According to a new report from Information Resources Inc., research suggests that most shoppers will continue with their current mindset for a long time – even after the economy recovers. The IRI research compares the thinking to that of the children of the Depression and says it is a basic “rewiring of behavior (that) that will have long-term effects on shoppers’ bargain-hunting habits, where they get their information and the number and types of stores they will frequent.”

At the same time, Nielsen reported at its recent Consumer 360 Conference that the Dollar Store and similar stores are thriving, attracting new customers and are not just for low-income shoppers anymore.

“As consumers respond to the economic downturn by simplifying their lives, the dollar channel is providing convenience, value, and a new level of shopping consistency,” said Jeff Gregori, vice president of retail services for Nielsen in his presentation, "Rise of the Dollar Channel."

Nielsen research has shown consumers of all income levels are coming to the channel but that the most growth is among higher-income shoppers – up 10 percent compared to a year ago – and that the growth accelerated in the last half of 2008.

No matter whether you side with the forecasts that the economy will recover later this year or not until late in 2010, experts are taking a look at its effect on shoppers not only today, but in a decade or two. Experts are saying they think the American consumer has begun to rethink the so-called American Dream of buying a house that rises in value, an easy availability of credit, and a better future. Meanwhile they are willing to pay money for some items, such as “affordable indulgences,” but are looking to find more and more bargains too.

In addition, they are looking at such practices as pooling resources with friends and family, for example by sharing yard equipment.

In the study, 71 percent (up from 64 percent) said they would look at store flyers before going to a store or while at the store, and 82 percent (up from 63 percent) said they would bring coupons, while 44 percent (down from 48 percent) said they would make additional unplanned purchases in-store.

“The Downturn Generation will take significant convincing before they believe it is safe to open their wallets and purses again,” said research author IRI president of consulting and innovation, Thom Blischok. “This group has less long-term optimism and a much more cautious outlook for the future than their predecessors.”

The research, titled, “Dissecting the Downturn Generation: Recognizing and Leveraging Permanence In Today's Transformational Economy,”, also shared nine tips for consumer goods manufacturers and retailers:

Shift merchandising out of the store and into the home – Shoppers are doing more research about products at home where they also are downloading coupons.
Increase Emphasis on Online and Social Media Presence – Many are embracing less traditional media in favor of websites, blogs and social media sites, and research often becomes a viral, collaborative effort.
Recognize and Assist with Changing Rituals – Where applicable, manufacturers should try to make it easier for consumers to “stock up” on some items by offering larger quantities, and retailers can put them in special areas.
Focus on Familiar Products – Line extensions rather than new products may be more successful for the short-term.
Understand that "Good Enough" is Good Enough – Re-engineering an existing product to make it cost less compared to introducing or selling a higher-priced item may be more worthwhile.
Realize That Shoppers Will Travel for a Deal – A good deal will prompt consumers to drive farther while brand and retailer loyalty may erode.
Collaborate to Find Common Ground – Retailer margins may continue to erode so trading partner will need new strategies to collaborate effectively and successfully.
Adapt to the Rapid Pace of Change – If the recession continues, businesses should be prepared and ready for shoppers to cut more items out of their closets, houses, medicine cabinets and diets.
Prepare for the New Conservative Consumer – Optimism is not long-term and most of this generation will remain cautious about the future.

“Change creates opportunity,” Blischok wrote, “and today’s economic environment reflects more change than any time since the 1930s. While the opportunities are somewhat different,… ample opportunities exist to collaborate and improve product offerings, assortments and layouts, as well as pricing and promotions.”

The entire white paper can be downloaded from Retailwire by clicking here (registration is required)

Credit - Q&A: Mountain Hardwear’s Mike Wallenfels on the Evolving Business Model

For a look at what a new business model for the outdoor industry might look like, CEO Brief posed some questions to Mike Wallenfels, president of Mountain Hardwear and Chairman of the Outdoor Industry Association Board or Directors. Below are excerpts from his responses:
Q: How would you see vendors’ terms changing under a business model in which brands are breaking up business into four or five production runs and delivery periods throughout the year? A: There would be three tiers under what retailers would buy from. Continuous replenishment of year-round product that would carry 30-day terms at set prices providing reliable margin to the retailer, these transactions are not driven by discounts and dating. For seasonal product sold twice a year, we should operate on a moderate discount range with extended dating offered for appropriate categories such as ski apparel and equipment and offer the ability to reorder. For seasonal collections, I see higher discounts as an incentive for four or more product offerings a year that would liquidate after 60 to 90 days in store.

Q: How do you envision this affecting the brands’ and/or retailers’ ability to chase business when a popular style emerges? A: For 12-month and seasonal products there is no change and meeting demand should still be expected. For the 4x product assortments, this is truly collection selling and a rapid sell out is a win for everyone and any reorder would be unplanned. A wholesale brand could decide to offer a key mover again the next season or year. Hopefully we keep coming up with new winners each time. Again, this is the exception and not the rule.

Q: How would the hard goods business fit into this new model? A: Equipment should fit into the replenishment model with retailers picking their styles in the spring for camping and climbing gear. Initial orders are shipped with retailers supplying projections of sales with B2B systems used to keep product in stock. Wholesale brands benefit here when they get to see in season sell-through on their products and retailers manage lower inventories with faster turns. However, this does not work if there is not a mechanism in place to make it happen. Currently we rely on large shipments two times per year with reorder in between orders to stock retailers. Wholesale brands are willing to invest in the appropriate systems if the retailers can get up to speed.

Q: Why not just bring more apparel and/or footwear production back home to reduce lead times? A: The factory base in casual and performance apparel is NOT here. We can make T-shirts and smaller runs of knit products, but stylized apparel, rainwear, and technical equipment are out of the question. If there were factories available, we would have a rude awakening to the prices that we would see compared to Asia. I do believe that there will be growth in domestic production as time goes on, but it will take some time, investment, customs changes and price acceptance.

Q: Why change the model for a temporary financial crisis? Won't things just go back to normal when the financial crisis ends? A: Banks and brands will all require assurances that these issues cannot happen again. Currently, the retailer can cancel any product at any time, but the wholesaler cannot. This leaves a large amount of inventory that still has yet to find a home in 2009. Good business practice will show that we need to change on some level. I also believe what many say will be a lasting change in consumer buying habits. How extensive it will be is yet to be seen, but caution will be the rule in the supply chain going forward.

A Supply Chain in Crisis: Finding New Ways to Share Risk

The outdoor industry’s chances of emerging stronger than ever from the economic crisis are good if brands, manufacturers, dealers and their bankers can agree in coming months how to reapportion risk in a much faster moving, but slower growing economy.

Consensus is building among outdoor brands that they need to move production and wholesale deliveries closer to need. That will involve moving toward a fashion merchandising model of smaller, more frequent production runs. The goal is less inventory risk, less work in progress and less reliance on credit.

Retailers are already moving in this direction, according to consultants, retailers and industry suppliers.

“We’ve seen huge increases in the reorder side of the business,” said Peter O’Neil, VP of sales and marketing for CenterStone Technologies, which provides a B2B platform that allows reps and dealers to view brand’s inventories and place orders 24/7. “Retailers are loving the fact that they can chase inventory and order when they have one left on the rack. They no longer have to have ten on the rack and wait for them sell. That's driving our business.”

The onus appears to be on brands, their manufacturers and suppliers, who will need to negotiate new terms to ensure a smooth transition. Specifically, brands will have to negotiate with manufacturers and suppliers, such as fabric mills, to lower their minimum product runs or they will have to start paying and absorbing surcharges. That’s something that is also starting to happen with more frequency, according to sourcing experts.

Currently, brands that can’t meet minimum order requirements are assessed surcharges. Until now, brands dealt with the minimums by pressuring their dealers to place larger and larger preseason orders and then liquidating any unsold product at the end of season. But retailers began trimming back preseason orders in early 2008 and have since been canceling orders at an unprecedented rate. Traditional liquidation channels, meanwhile, are having difficulty moving surplus goods at traditional margins because department and chain stores are already selling so much apparel and footwear at up to 70% off retail.

Outdoor brands that can’t convince suppliers to reduce minimums will need to pay surcharges or find more willing suppliers willing to handle smaller runs. The latter has also begun to occur.

Longer term, some experts foresee a shift to a more regional production platform with smaller run/quick turn sportswear production for the North American market moving closer to home.

Horny Toad CEO Gordon Seabury said Zara, a vertically integrated global fashion brand owned by Spanish apparel giant Inditex, provides a glimpse of the future. On average, Zara can deliver goods to its European stores within 24 hours of receiving an order. Orders from America and Asia are fulfilled within 48 hours. The company’s designers receive input directly from buyers at more than 500 stores. Highly automated logistics centers ship product twice a week and each delivery includes new items so that stores are constantly refreshing their offer, according to Inditex’s annual report. In 2006, the company’s EBITDA rose 20% to 2.2 billion, or 22.8 percent of sales.

Despite the clamor from retailers for more domestic production, the bulk of manufacturing is likely to remain in Asia, and particularly China. Asian factories have simply gotten too good at what they do and provide too much value for the dollar, sourcing experts say. It's no longer just the labor differential but the work ethic and willingness to go the extra mile that is separating them from U.S. mills, contractors say.

After all, if Chinese factories can serve the quick turn-around times demanded by the ready-to-wear and fashion industries, they can surely meet the needs of the outdoor industry, experts say.

Horny Toad’s Lizard Lounge retail store in Portland is already moving toward this model. To keep things fresh, the store takes deliveries six times a year and remerchandizes every two weeks. It now turns inventory every six weeks, said Seabury.

“The whole industry is built on the old equipment model – stack it to the ceiling and sell it and then mark down whatever does not sell,” said Seabury. “There is tons of inventory stashed in the back tying up working capital. We need to increase frequency of replenishment to drive traffic through the stores. You are still developing product for two major seasons, but you are staging production and deliveries – phasing it to reduce duration of the cash float.”

Lizard Lounge has taught Horny Toad that in this economy more than ever, edgier more innovative product, rather than core product, is what drives retail traffic and sales. “Even if people are spending less,” he said, “you have to give them a reason to spend. “

Credit - A Supply Chain in Crisis: The Broken Two-Season Business Model

A scarcity of credit and shrinking sales is taking its toll on the outdoor industry’s two-season business model with its long lead times and reliance on credit.

Healthy growth rates have enabled the apparel and footwear industry to overlook the well known flaws of its business model for years. In that model – inherited largely from the snow sports industry – product managers would essentially order, manufacture and ship apparel and footwear to their dealers twice each season. The system tended to push inventory risk onto retailers, who were enticed by discounts to place up to 70% of their orders a full year in advance. In exchange, brands financed the inventory and offered preseason discounts of up to 10% plus dating of up to 120 days for some winter goods.

This system allowed brands to amass orders to meet the minimum production runs of Asian mills. It also gave them time to shop sourcing for the best price. The downside was that the extended lead times meant brands would tie up valuable cash in greige goods and working capital for up to ten months. Conversely, many retailers got in the habit of relying on lines of credit to finance their preseason orders and take advantage of discounts.
The model functioned as long as the market grew and credit was cheap, but that ended in September when consumer spending dropped off a cliff and banks tightened credit. Often under the guidance of consultants, retailers quickly shifted the ratio of their business from 70/30 percent preseason to 60/40 to become more liquid and nimble.

With banks cutting back their credit and sales plummeting, dealers wisely shifted toward buying closer to need. Many have since learned the tremendous power of placing more, but smaller orders. Some are even reporting their best margins in years on significantly less sales.

Outdoor brands, however, could not respond as quickly, since they order goods a year in advance. They are now scrambling to liquidate spring/summer merchandise landed since January, which has further rewarded retailers who have kept their open-to-buy money ready. Reps report the amount of merchandise available at close-out appears to have grown by 25% this year.

“We’ve been managing it by giving up discounts,” said Lisa Hollenbeck, VP and merchandise manager for the Alpine Shop Ltd. in St. Louis, MO. “With cost of money so low, it’s not really worth it.”

This year Alpine Shop has shifted from ordering $2,500 to $3,000 in sportswear every two to three months to bringing in $500 orders every four to six weeks. This lessens the chance of sitting on dozens of tank tops when there is still snow on the ground and also lowers the need for cash. “We are intentionally buying smaller amounts more frequently to keep the stores fresh,” said Hollenbeck.

Last fall, Alpine Shop still bought core product on a preseason basis, but staged deliveries of new colors for late November and early December. Like many outdoor retailers, Hollenbeck said she disregarded warnings that the colors might not be available, figuring she could always find product elsewhere. Besides, she said, there was no guarantee the brand would ship the items on time anyway.

Retailers who have not cut back significantly on preseason orders, meanwhile, are now struggling to pay their bills. At one rapidly growing brand, the number of wholesale accounts 60 days or more past due has tripled from a year ago. Banks typically will not lend against such aged A/Rs.
One brand executive said bank due diligence is now much more thorough. They are scrutinizing the quality of A/R, future orders and inventory more thoroughly. They are analyzing the health of retailers the brand sells to and are also examining retailers’ trade credits to identify what brands might be vulnerable in case of a retail bankruptcy. In some instances, bankers are calling retailers to confirm future orders. That has prompted some executives to tell their reps to stop faking orders. “We are cleaning up that file right now,” said one executive.

Even the most successful retailers, meanwhile, are bracing for higher credit costs. One said he is hearing that while his bank will likely renew his line of credit, it will raise the interest rate by 200 points. He may have to raise prices to preserve margin – a dicey proposition in the middle of the biggest downturn in consumer spending in decades.

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Did you hear?...Economy negatively affecting vacation plans but silver lining for outdoor

According to a recent BIGresearch American Pulse Survey, conducted in April 2009, just under 59 percent of Americans say the economy has affected their vacation plans this summer. Many are making changes to their travel behaviors this summer, the survey indicated. Most frequently cited as a cost-cutting measure was reducing the number of days spent in a hotel (30.5 percent), while cutting back on the quality of a hotel registered just over 20 percent. Just over 27 percent said that the solution to save money on travel was to look for a local getaway that did not require long drives or air travel.

The survey question asked, "As a way of coping with the current economic environment, are you making any of the following changes to your vacation travel behaviors?" The survey had 4,023 respondents.

BIGresearch's blog provides a bit more insight and reason for optimism for the outdoor community. One response stated, "My husband and I are trying to regain money we lost in the stock market, so we definitely will not be going on vacation. We plan to take a few days for hiking in the Smokies where we live." Another stated, "The only vacation plan I have will be a picnic at the local park!" Yet another responded, "We are hoping to plan a camping trip to the UP of MI sometime, but that is as far as we are going to get unless the economy picks up."

Retail - Retail Import Volume Hits Lowest Level in Seven Years As Number of Cargo Containers Drops Below 1 Million Mark

WASHINGTON, April 15, 2009 – Import cargo volume at the nation’s major retail container ports hit its lowest level in seven years in February as the number of containers dropped below the 1 million mark for the first time in half a decade, according to the monthly Port Tracker report released today by the National Retail Federation and IHS Global Insight. Numbers began climbing again in March and April, but the 1 million mark won’t be seen again before May, and imports will continue to see significant declines compared with last year at least through the summer.

“These numbers come during the slowest part of the annual shipping cycle, so they’re expected to be low, but they nonetheless show the severity of the current recession and its impact on the retail industry,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said. “The good news is that we’ve already seen the bottom for the year, and month-to-month numbers are already starting to climb. We’re still going to see double-digit declines compared with last year, but the size of the gap is starting to narrow.”

U.S. ports surveyed handled only 847,832 Twenty-Foot Equivalent Units in February, the most recent month for which actual numbers are available. That was down 20.6 percent from January’s 1.07 million TEU and 31.3 percent from February 2008’s 1.23 million TEU. One TEU is one 20-foot container or its equivalent.

The number for February, traditionally the slowest month of the year, was the lowest since 818,342 TEU in March 2002. It was also the first time the total has fallen below the 1 million mark since February 2004, when ports in the survey handled 901,497 TEU, and marked the 20th month in a row to see a year-over-year decline. The last year-over-year increase was in July 2007, when the 1.44 million TEU handled was up 3.4 percent from July 2006.

Volume for March was estimated at 930,142 TEU, down 19.7 percent from a year earlier, and April is forecast at 987,371 TEU, down 22 percent. The numbers are expected to rise above the 1 million mark again in May, but will nonetheless remain well below last year’s levels. May is forecast at 1.02 million TEU, down 21.5 percent from last year; June at 1.06 million TEU, down 18.3 percent; July at 1.11 million TEU, down 15.6 percent; and August at 1.15 million TEU, down 16 percent.

The first half of 2009 is now forecast at 5.9 million TEU, down 21 percent from the 7.5 million TEU seen in the first half of 2008. Total volume for 2008 was 15.2 million TEU, down 7.9 percent from 2007’s 16.5 million TEU and the lowest level since 2004’s 14 million TEU.

“The weak port cargo volumes have left port trucking with excess capacity, and cargo is moving without congestion either at the ports or through the inland system,” IHS Global Insight Economist Paul Bingham said. “Rail operations were affected by flooding in the northern states in March and April but disruptions were not sustained enough to cause significant delays.”

All U.S. ports covered by Port Tracker – Los Angeles/Long Beach, Oakland, Seattle and Tacoma on the West Coast; New York/New Jersey, Hampton Roads, Charleston and Savannah on the East Coast, and Houston on the Gulf Coast – are rated “low” for congestion, the same as last month.

Port Tracker, which is produced by the economic research, forecasting and analysis firm IHS Global Insight for NRF, looks at inbound container volume, the availability of trucks and railroad cars to move cargo out of the ports, labor conditions and other factors that affect cargo movement and congestion. The report is free to NRF retail members. Subscription information is available at www.nrf.com/PortTracker or by calling (202) 783-7971.

Non-NRF members can contact IHS Global Insight Director of Business Development Diana Wyman at (202) 481-9265.The National Retail Federation is the world's largest retail trade association, with membership that comprises all retail formats and channels of distribution including department, specialty, discount, catalog, Internet, independent stores, chain restaurants, drug stores and grocery stores as well as the industry's key trading partners of retail goods and services. NRF represents an industry with more than 1.6 million U.S. retail establishments, more than 24 million employees - about one in five American workers - and 2008 sales of $4.6 trillion. As the industry umbrella group, NRF also represents more than 100 state, national and international retail associations. www.nrf.com.

IHS Global Insight (www.globalinsight.com) provides the most comprehensive economic and financial information available on countries, regions and industries, using a unique combination of expertise, models, data and software within a common analytical framework to support planning and decision-making. Through the world's first same-day analysis and risk assessment service, IHS Global Insight provides immediate insightful analysis of market conditions and key events around the world, covering economic, political, and operational factors. IHS (NYSE: IHS, www.ihs.com) is a leading global source of critical information and insight that enables innovative and successful decision-making for customers ranging from governments and multinational companies to smaller companies and technical professionals. IHS employs approximately 3,800 people in 20 countries.

Retail - March Retail Sales Disappoint as Retailers Wrap up First Quarter, According to NRF

Washington – Several months of stronger-than-expected retail sales provided hope that the industry was poised to bounce back, but March retail sales demonstrate that the industry is continuing to struggle. According to the National Retail Federation, retail industry sales for March (which exclude automobiles, gas stations, and restaurants) decreased 0.6 percent seasonally adjusted from February and dropped 3.7 percent unadjusted over last year.

March retail sales released today by the U.S. Commerce Department show total retail sales (which include non-general merchandise categories such as autos, gasoline stations and restaurants) decreased 1.1 percent seasonally adjusted over February and decreased 10.6 percent unadjusted year-over-year. Retail industry sales for February were revised upward, increasing 0.3% instead of dipping 0.1% as originally reported.

“A chilly start to spring and a late Easter combined for dreary March sales,” said Rosalind Wells, Chief Economist for NRF. “To compensate for the Easter shift, retailers typically look at March and April together to get a better look at how their stores performed. Easter should give a much-needed boost to April sales.”

One of the only bright spots in March came from health and personal care stores, whose sales increased 0.4 percent seasonally adjusted over last month and 3.5 percent unadjusted over last year. Food and beverage stores sales also increased 0.5 percent seasonally adjusted month-to-month but decreased 1.8 percent unadjusted year-over-year.

The shift in Easter sales also played a role in consumer purchases of clothing and clothing accessories. Sales at those stores decreased 1.8 percent seasonally adjusted from February and decreased 8.7 percent unadjusted over March 2008. Electronics and appliance stores sales decreased 5.9 percent seasonally adjusted month-to-month and decreased 10.0 percent unadjusted year-over-year. Sales at sporting goods, hobby, book and music stores also decreased 0.9 percent seasonally adjusted over last month and decreased 3.0 percent unadjusted over last year.

The National Retail Federation is the world's largest retail trade association, with membership that comprises all retail formats and channels of distribution including department, specialty, discount, catalog, Internet, independent stores, chain restaurants, drug stores and grocery stores as well as the industry's key trading partners of retail goods and services. NRF represents an industry with more than 1.6 million U.S. retail establishments, more than 24 million employees - about one in five American workers - and 2008 sales of $4.6 trillion. As the industry umbrella group, NRF also represents more than 100 state, national and international retail associations. www.nrf.com.

Consumer - Confused about the economic forecast? Yeah, so are the forecasters

One day it's all doom and gloom, and the next seems to forecast the worst may be over. Only to be followed by more "oh no, the sky is falling" news.

Confused? Yup. Who isn't. Since the news of late seems to feel a bit schizophrenic, we thought we'd take a quick look at recent forecasts and reports so we can see in one place what the gurus are saying and seeing.

SNEWS® knows the current economic state is important for your business. This is one look at different ways it's affecting our industries and your business in a periodic and ongoing series of stories in SNEWS. This time around we take a look at forecasts about the future of the economy, sizing up statistics and surveys from research groups. Stay tuned for more in-depth reporting on the current situation as it develops and changes, from interviews with experts, closer looks at small businesses and how they are coping, to economic statistics, breaking news and how it affects consumers.

Usually April is all about the 15th, the day taxes are due for most Americans but this year that seemed to blow right past us. Instead, on April 15, more reports about the economy took the headlines, especially the monthly release from the Federal Reserve Board summarizing the state of the economy overall and in 12 U.S. districts.

Overall, the report noted a continued downturn with the forecast for more bad news in manufacturing, employment and commercial real estate in particular. Look between the lines, however, and you'll find even the Feds reported that five of the 12 districts were seeing some kind of moderation in the pace of the decline or, even better, actually a stabilization.

Geographically disparate
On the bad news front, the districts of Boston, Philadelphia, Cleveland, Richmond, Atlanta, St. Louis, and Minneapolis were still slowing in economic activity that covers retail, manufacturing, business services, commercial and residential real estate.

But others saw a glimmer of light: New York was moving at a "subdued pace;" Chicago was declining more slowly; Kansas City showed "tentative signs of stabilization;" Dallas demonstrated "signs of stabilization at low levels;" and San Francisco had a "slower rate of decline in some sectors." (To see a large map of the districts similar to the one to the right, click here; to see the full report from the Federal Reserve, click here.)

In addition, that and the mixed bag of reports offered on the same day by the Treasury Department in its monthly survey of lending by the 21 biggest recipients of bank bailout money caused Wall Street to nearly party in the streets. On April 15, the Dow Jones Industrial Average closed up at 8029.62, and on April 17 continued the trend, closing at 8131.33; the S&P 500 closed up at 852.06 and on April 17 logged another small jump to 869.60; and the Nasdaq closed up at 1626.80, also ticking upward at the close of the week to 1673.07.

But wait, not so fast… In the same mid-month flood of reports, we saw unemployment go up, consumer prices dropping another 0.1 percent, unexpected drops in retail sales (Click here to see that April 15, 2009, SNEWS News Release), import levels hitting their lowest level in seven years (Click here to see that April 15, 2009, SNEWS News Release) and home prices and construction still declining. Those add to evidence we are still locked tightly in a recession.

Business leaders don't agree
So how positive are people? A week earlier the Conference Board, which regularly measures "CEO Confidence," noted the top bosses in the country were still dragging their chins. Indeed, the level of confidence was up to 30 from a lowly 24 last quarter (a reading of more than 50 means more positive than negative results), but that's still a long way from being in the black when it comes to confidence.

But despite lagging confidence, more of the CEOs surveyed, when asked to look six months ahead, were reporting they expected improved business conditions: 7 percent said they expected things to get better compared to only 11 percent last quarter; and when asked about expected improvements in their own sectors, 26 percent said things would look up in six months, which is way up from only 12 percent last quarter. Of course, this was the same bunch that in February 2008 reported that a recession was unlikely.

In another recent survey of business leaders released on April 7, the Business Roundtable index -- which tracks the outlook of CEOs of some of the country's biggest companies -- dropped to its lowest level since the survey began in 2002. This group was basically glum, glum about today, glum about yesterday, and glum about tomorrow, noting they expected their companies' sales and spending to drop in the next six months.

A month earlier in early March, advisors polled for Charles Schwab's Independent Advisor Outlook Study were split on whether the economy would pick up by year's end or not. Just over half (53 percent) who were polled in late January said they thought the S&P 500 would rise in the next six months. (We'll have to wait and see if the rise this week is going to stick.) When asked in January to predict how long the recession would last, 44 percent said they estimated it would be wrapping up by December 2009, while 41 percent gave it another year -- to December 2010.

In a February 2009 statement, the government said the economic contraction for the fourth quarter of 2008, which had been estimated at 3.8 percent, was actually 6.2 percent. That was the economy's worse showing in a quarter-century. But others have along the way warned the public as well as the economists to not freak out since a recession is a lot different than a depression. Speaking in January, economist Chris Thornberg, reportedly one of the first to predict the recession, said Americans are wont to overreact and although he has been known to predict doom and gloom, he said this has gotten out of hand.

"Whoa, time out…deep, deep breath," he told a group of appraisers gathered in the Sacramento, Calif., area, as reported in the Sacramento Bee. "We're in the midst of what I would call a nasty recession. Like a bad cold, you'll get over it."

At that time, he said he expected this recession to end up like the last large downturn in the early 1980s, which drove national unemployment to 10.8 percent. When he spoke in January, the rate was 7.2 percent. The Bureau of Labor Statistics just reported this week unemployment as of March 2009 had risen to 8.5 percent -- the highest level in more than a quarter of a century but still off the 1980s figure.

Consumers more depressed
But what about consumers? BIGresearch reported in January that consumers weren't so glum as they had been: Nearly a quarter (24.7 percent) reported they were confident or very confident in the chances for a strong economy reappearing, rising from the one in five rating (20 percent) at the end of 2008. January's 24.7 percent figure was the highest reading since September 2008 when it was 28.3 percent.

Times change, though, and sometimes quickly. Only two months later, in its March report, BIG found the confidence in chances for a strong economy had again plummeted -- to 19.5 percent, down more than five points from a year ago and trailing a reading from two years ago by more than half (down from 46.9 percent).

No, the worst isn't over although hints of some dim light are there. Yes, forecasters don't agree. And the statistics and forecasts are at best unpredictable. Wish SNEWS had a crystal ball. --Therese Iknoian

Social Media - SNEWS Mini-Survey provides look at how industry folk are utilizing social media

The SNEWS® Mini Survey that ended April 20, 2009, asked, "Have you found social networking sites to be beneficial to your business?" A reflection of the times, a whopping 65 percent answered yes, with 35 percent indicating it had no benefit to them.

In our follow-up question to those who answered yes, we asked respondents to select all of the social networking sites they used. Not surprisingly, Facebook led the pack with 50 percent of the responses, followed closely by Twitter with 45 percent. We would surmise, given the recent explosion of Twitter, that if we asked this same question in another six months, those that tweet and twitter among peers and associates for business would be significantly higher, perhaps even surpassing Facebook.

LinkedIn and Plaxo garnered 40 percent and 25 percent, respectively, with the "other" selection earning a 30 percent response. MySpace garnered a paltry 5 percent nod, equal to those who selected "Your own social networking site" as a response.

Our new survey question, "Where do you get most of your business or industry news?" is now live and awaiting your feedback.

To make your vote count, simply go to the SNEWS Reader Poll section in the right navigation bar of every web page in SNEWS or click here. --SNEWS® Editors

2009 trade shows still draw a buying and selling crowd, albeit smaller ones

The outdoor, fitness and sports industries are not alone in commiserating about trade shows and declining attendance and exhibiting. In 2008, the exhibition industry, including all types of trade shows and conventions, declined 3.1 percent, marking the first annual decrease in business since 2002, according to the Center for Exhibition Industry Research (www.ceir.org).

Overall, four key industry metrics saw declines in 2008, with net square footage for shows dropping 2 percent, the number of exhibitors dropping 2.6 percent, attendance decreasing by 4 percent and revenue slipping 3.5 percent.

"Most trade show sectors are down," Michael Hart, editor in chief of Tradeshow Week Magazine, told SNEWS®. "The most significant problem has been attendance. It's not that companies aren't going, but where they used to send 10 people, they're now sending two or three." Hart added that smaller exhibitors are withdrawing from shows, while larger exhibitors are using smaller booths.

Hart said that the recession has hit some types of shows more than others. For market segments with multiple shows, the main shows are faring well, while smaller shows serving that particular market are hurting. "Some smaller shows have to cancel completely," he said. This holds true for trade shows serving certain sports markets.

"The shows that are annual and service a niche market, such as Interbike, have been affected less than a show that runs multiple times a year and is in a more competitive landscape, like ASR," said Andy Tompkins, group show director for the Action Sports, Interbike and Health & Fitness Business shows within the Nielsen Sports Group (www.nielsensportsgroup.com). ASR (Action Sports Retailer) not only has multiple shows, but also competes with Surf Expo and non-sports-specific shows such as MAGIC.

Smaller, niche shows suffering more
Tompkins said manufacturers and retailers are making hard choices and participating in fewer events for their particular market. While this has had a negative effect on ASR, large shows that occur once a year, such as SIA and Interbike, he said, are doing relatively well because they offer buyers the sole opportunity to reach their respective channels. What 2009 will hold has only begun to see a preview in shows in the first quarter of the year. For example:

>> Snowsports Industries America (SIA) reported buyer attendance dropped 5 percent for this year's January 2009 SIA show in Las Vegas. (Click here to see a Feb. 9, 2009, SNEWS story.)

>> Nielsen reported attendance at the 2009 Outdoor Retailer Winter Market show in Salt Lake City in January dropped about 10 percent (Click here to see a Jan. 29, 2009, SNEWS story, "Outdoor Retailer Winter Market light on traffic, big on smiles.")

>> WSA, a twice-annual shoe show, saw declines at its February show of 18 percent in overall attendance, which covers all attendees from retailers to exhibitors to media.

>> Also suffering, the January 2009 ASR show in San Diego was noticeably smaller this year, with 100,000 net square feet, compared to 131,000 net square feet in 2008, or down about 24 percent. Also, this year the show included 100 fewer brands than the previous year or about a 20-percent drop from 500 to 400 brands.

>> Not as bad as some nor as good as others, the IHRSA commercial fitness show in mid-March reported declines in attendance of about 15 percent, and in exhibitors and in the show's square footage about 20 percent. (Click here to see a March 23, 2009, SNEWS story on IHRSA and here to see a March 30, 2009, story on IHRSA, reporting square footage.)

>> Shows outside the boundaries of North America weren't immune although fared better. At the winter ispo sporting goods show in Munich, Germany, in late January, early attendance figures showed a drop of about 5 percent and exhibitor numbers were down less than 4 percent. (Click here to see a Feb. 5, 2009, story.)

Some of the declines began last year, with the niche FlyFishing Retailer Expo in Denver in September seeing attendance drop 10 percent, and the 2008 Health & Fitness Business seeing lower numbers of attendees by about 16 percent. In this case, the really striking figure out of HFB was in booth space, drayage and staff -- places where exhibitors may try to slice and dice when they still feel they have to be at a show. At HFB in July 2008, even with two additional exhibitors, the show dropped by nearly 13 percent in square footage, but exhibitors also sent 220 fewer staff members, and drayage declined significantly. Some show pundits feel this type of trend may continue across many shows.

Quality vs. quantity
Even when attendance drops, it does not always mean that the show is suddenly a waste of a company's time and attention. Experts agree that exhibitors and attendees remain happy as long as the show continues to draw a quality crowd. As long as exhibitors can interact with influential buyers and fewer tire-kickers, they find real value in the gathering. This was the case for the Eastern Outdoor Reps Association regional show held in February in Greenville, S.C.

"Morale was really good despite the drop in attendance," said EORA Executive Director Debbie Motz. This year the show drew 60 fewer buyers than last year (for a total of 588 buyers), but 291 stores were represented, which was four more than last year.

While the recession is impacting the trade show industry, there is evidence that it will not completely kill attendance and erode the quality of shows.

"Over the last six recessions, we've trended key performance indicators like the buying influences of attendees," said Joe Federbush, vice president of sales and marketing for Exhibit Surveys (www.exhibitsurveys.com). "We've found that the amount of square footage and number of attendees goes down, but the quality of the audience remains pretty strong." He said companies may be sending fewer people, but they're sending more of the final decision makers. "The value of the trade shows is still there for the attendees and the exhibitors."

Nevertheless, Federbush said that these days exhibitors and attendees are demanding more detailed information on their ROI -- the return they get from investing in a show.

"The show organizers really have to be proving the value to attendees and exhibitors," said Federbush. "More now than ever they need to be leveraging their registration data to come out with some more solid numbers. They need to be surveying the quality and quantity of attendees."

Tompkins said that trade show operators within the Nielsen Sports Group are working harder to better understand the buyers who attend the shows, how they utilize the shows and what impact exhibit presentations have on their purchasing decisions. "We've done a series of surveys about buyer behavior," said Tompkins, adding that more reports are generated to show things such as how much a buyer purchases and how many storefronts they are buying for. "Illustrating buying power and storefronts is becoming increasingly important to show producers because retail channels are consolidating," said Tompkins. "Fewer people are doing the buying. Whereas 10 years ago there were 100 specialty shops servicing an area, now there may be 50."

Outdoor Retailer recently sent a 38-question survey to 18,000 retailers and received 1,500 replies, including some surprising information. "Seventy-two percent of the retailers said they wrote orders at the show. That's much higher than we thought," said show director Kenji Haroutunian. "The results were really helpful, and we need to do these surveys every year."

While show producers are generating more data to satisfy customer demand, he and most other trade show managers have not had to offer deep discounts to exhibitors and attendees to draw them to shows. While ASR dropped its exhibiting space rates by 25 percent, other shows such as Outdoor Retailer, Interbike and HFB have for the most part maintained their pricing, meaning no price increases for inflation either.

"That has been possible because the cost of travel has gone down quickly," said Hart of Tradeshow Week. "The cost of hotel rooms in most cities and the cost of plane tickets have dropped in the last six months."

Also, many show producers were well-prepared to weather an economic storm.

"The last recession in 2002 really impacted the exhibitions industry, because people were afraid to travel (due to the 9/11 terrorist attacks)," said Hart. "A lot of the lessons the exhibitions industry learned then they have not forgotten. They've learned how to get lean very quickly."

What's next?
While the trade show industry is doing OK now, the big question is what things will look like later this year or next year. Hart said that many trade shows did not change in size and scope because exhibitors were locked into binding contracts made the previous year. Many of those exhibitors are likely scrutinizing their budgets and considering whether or not they will attend in 2010, or to what extent they will participate. "If your business is having trouble, you might not make a commitment to go next year," said Hart. "Of course, that could change if the overall economy picks up in the third and fourth quarters."

In any case, Hart and others do not think we're going to see the death of trade shows anytime soon. "Even if business is bad," said Hart, "trade show producers are not flipping out."--Marcus Woolf

Sourcing - Eager to Limit Inventory Risk, Brands Push Lead Times Lower

Eager to Limit Inventory Risk,Brands Push Lead Times Lower
Some outdoor brands are pushing back their orders for final orders and greige goods for Fall 2009 and Spring 2010 and pressuring suppliers to shorten lead times and give up margin as a contraction in retail sales works its way up the supply chain, according to textile and contracting sources. “People are trying to trim the lead times,” noted Chris Parkes, national sales manager for Concept III International, which develops sources and produces apparel for a variety of outdoor brands. “No one wants to get stuck with product.”

Parkes cited one example where a client who normally commits to ordering 70% of the prior year’s goods by December had only committed to 40%. Still, he noted that Concept III recently got an unanticipated order for 9,000 square yards of technical fabric. “There still seems to be orders out there for fall/winter,” he said.

Some brands and retailers want to wait until after spring retail sales data comes in to adjust their final orders for Spring 2010, said one textile executive. “Brands are holding on as long as they can,” he said. “There is a trend for greige goods to be forecast later. That makes it more difficult for us to deliver on time.”

This in turn has shortened lead times for textile mills, according to Roger Berrier, EVP for sales, marketing and Asian operations at Unifi, which makes recycled polyester Repreve yarns used by outdoor apparel brands. “Today, mills will not give us a soft order until they have an order themselves,” said Berrier. “Instead of giving us six weeks notice, we are getting an order within two weeks of delivery.”

Unifi is shortening production runs, which raises its machine change over costs. That’s better, though, than being stuck with inventory “because some of these programs just get canceled with no warning.”

Sources also report that brands have pushed back plans to introduce new product figuring that neither retailers nor consumers would gamble on it in Fall 2009 and Spring 2010. Many, however, are pushing for innovations for Fall 2010 on the assumption the economy will improve by then.

Brands are also pushing for price cuts of 3 to 15%. But with Asian mills earning operating margins of 12 to 18 points compared to 40 to 60 once enjoyed by U.S. mills, such concession are hard to come by, said Parkes. The environment has incentivized apparel mills to cut costs. This has lead more intense quality control by U.S. brands, which have rejected fabric they would have accepted a year ago.

For retailers, all this could result in later deliveries on top of already light pre-season orders. That raises the likelihood that they will run out of stock on some items. That’s a risk many retailers favor over being stuck with inventory.

“Everyone is walking on egg shells,” said Parkes. “The Asian mills don't understand what's happening. They've never seen this before.”

Still, Parkes urged brands to push their suppliers to continue innovating and be flexible. “As you are closing down Fall 2010 and things change at retail, don't be afraid to go back to your suppliers and tell them this or that change has to be made,” he said. “Don't accept 10 weeks to develop. You will have to find suppliers who will work with you and turn things in four to six. In the past, brands could say ‘we will do that next season,’ but you can’t do that in this market. If you miss it, the consumer will buy it from someone else.”

Business Plan - Did you hear?...Global retail sales of organic cotton products up 63 percent in '08

Thanks to global brands and retailers, such as Nike and Pottery Barn, retail sales around the world of organic cotton apparel and home textile products shot up 63 percent in 2008, according to a recently released report from Organic Exchange.

That year, sales reached $3.2 billion compared to $1.9 billion a year earlier, as reported in the non-profit’s "Organic Cotton Market Report 2007-2008."

Contributing to that leap are also outdoor industry brands like Patagonia, a pioneer in using organic cotton in the early 1990s, even switching to it exclusively in 1996 for all its cotton apparel. In 2005 and 2006, Patagonia was on the Organic Exchange’s top five list of programs, but has been bumped down the list as larger, more mainstream players have entered the market.

Now, among the top 10 organic cotton-using brands and retailers globally were five U.S. companies: Wal-Mart, Nike, Anvil, Pottery Barn and Greensource. Elsewhere, they included C&A in Belgium, H&M in Sweden, Zara in Spain, Coop Switzerland and Hess Natur in Germany."

The most important news surrounding this figure is the fact that organic is no longer a novelty. With Volcom, Billabong, Nike, Marks and Spencer, H&M and others all selling organic now, the general public is learning the benefits of organic, the perils of traditionally grown cotton, and making the connection between health, the environment and their wallets," Jen Rapp, a spokeswoman for Patagonia, told SNEWS®.

Rapp noted that Patagonia believes 2008's massive sales growth is a result of widely known brands, such as Wal-Mart, selling organic to their large customer bases.

"The beauty is that with brands such as Wal-Mart on the organic cotton bandwagon, and the number of farmers that are switching to organic farming, the cost of organic is going to continue to become more and more affordable, allowing this growth to continue in the current economy," she said.

The Organic Exchange found in its research that most brands and retailers selling organic cotton products remain committed to their sustainability plans and upbeat about market growth. They reported they have plans to expand their product lines 24 percent and 33 percent in 2009 and 2010, respectively. It estimates that the segment will be a $4 billion market in 2009 and a $5.3 billion market in 2010.

Additionally, the organization's "Organic Cotton Farm and Fiber Report 2008" reported that the number of organic cotton farmers grew worldwide by 152 percent in 2007/2008. Organic cotton production hit 145,872 metric tons, which is equivalent to 668,581 bales (a bale is 480 pounds). It was grown on 400,000 acres in 22 countries worldwide.

During 2008, the report noted, certified organic cotton fiber supplies grew by 95 percent, significantly higher than annual growth rates of 45 percent in 2006 and 53 percent in 2007.

"Farmers who planted on speculation or expanded without market partners may have shifted the market into a state of oversupply in 2009," said LaRhea Pepper, Organic Exchange's senior director, in a statement, noting that the non-profit strongly discourages farmers from taking this kind of risk.

"Brands may want to explore opportunities for expanding their organic programs with their business partners, as for the first time in many years, supplies of organic fiber, yarns, and fabrics are more available than in previous years," Pepper added.

Founded in 2002, Organic Exchange (www.organicexchange.org) facilitates expansion of the organic cotton fiber supply by working with the entire chain of supply, from farmers to retailers, to help develop organic cotton programs.--Wendy Geister

Surge in Campground Reservations Creates Opportunities for Outdoor Businesses

More evidence is emerging that Americans are turning to the outdoors for a respite from tough economic times, or perhaps because of them. Advance reservations for nearly 89,000 campgrounds on federal lands were up 26.1% for the period of January 1 to March 22 compared to the same period last year, according to data from the National Recreation Reservation Service. The overwhelming majority of the reservations came in online via reserveamerica.com.

The spike in reservations prompted a report by CNN, entitled “In a Slump, Camping Comes Into Vogue.” The article reports that reservations to state parks in California are also trending up. Of course it’s still too early to say whether media reports will translate into stronger sales of camping gear this spring.

Regardless, marketing gurus are urging outdoor retailers to start promoting close-to-home adventures now to both core outdoor enthusiasts and their more casual shoppers while both groups are planning their summer vacations.

A survey of Leisure Trends Group’s Most Active American Panel conducted between February 15 and March 10 found that 78% plan their summer vacation one or more months ahead of time. More than 50% plan three to five months out, in large part because they are hunting for deals. Among this group, 11 percent said they are considering doing more camping. Skiers, by contrast, often booked their trips this winter only one or two weeks out in hopes of getting the best airline and resort promotions as the economy weakened.

“If I was a specialty retailer, I would institute a program that would show people what they could do within 50 miles,” said Leisure Trend Group’s Julia Day Clark. “People are thinking about this. They are planning and what if retailers could show them something really cool?”

With that in mind, here are some ideas for luring folks into your store:

Blog: If you don’t already have one, you could start by publishing the top 25 local adventures for the spring and summer on your web site. If you have time, post directions, advisories, photos, maps, suggested provisions, GPS coordinates, etc. For an example, check out Dave Baker’s blog for Tucson’s Summit Hut.

Build community: Offer to post customers’ own photos and observations of their experiences on the blog. Contributors can become eligible for a $150 gift card drawing.

Point of sale: Print your top 25 list with a link to your website on fliers for your store. Laminate a few for your sales staff, who can use them on the floor to show customers just how easy it is to hike, climb, cycle, paddle and camp nearby.

Map room: Set up a trip planning area in your store where customers can browse maps, books and maybe even cruise the Internet. Blow up a map of the area and stick push pins into the sites on your list.

Newsletter: E-mail your top 25 list out to your customers as soon as possible with a link to your site. Or break up the list for a series of newsletters.

Events: Feel free to fold your store events into the list. Outside Hilton Head will celebrate “30 Weekends of Adventure” as part of its 30-year anniversary starting this summer. The events will include demo days, speakers and other community events. It’s all part of the outfitter and retailer’s expanded marketing this year despite a double-digit drop in sales. “I think you’ve got to really work harder for customers, but I also think there is a real opportunity for when things get better to get more market share,” said owner Mike Overton

Q&A: Retail Consultant Dan Mann Discusses

Retailers say forecasting sales has become much more difficult in today’s uncertain economy, a condition that might not improve for many months. “Our crystal ball is shattered,” said one merchandizing executive. With that in mind, OIA WebNews asked The Mann Group’s Dan Mann to talk about what retailers can do to adjust to the uncertainty. Mann will deliver the last of a Webinar series on Financial Management for retailers this afternoon. Excerpts from the discussion are below:

Q: What is your outlook for specialty outdoor retail sales? A: There are some encouraging signs, but I don't think we in this industry can tell how good or bad it's going to be, because we are not in our season yet. You operate from the best information you have and I would hope the “staycation” trend will come. But right now, frankly, it's too hard to know and hope is not a strategy. If the crystal ball is broken we will have to do a little more work in order to gather the information we need to make buying decisions.

Q: What can retailers do if their forecasts are way off? A: Whether in good times or bad, they need to operate with some discipline. When times are tough like this, discipline is especially important for the retailer, who tends to go on fear or on gut. You have those who say, “We have open-to-buy money, but I don't care what the plan says – which is buy more – I'm not going to buy because of the economy.” Discipline requires a conversation between the open-to-buy team, who is hopefully working from some open-to-buy spreadsheet, and the sales floor. You can't do this from the back room anymore. You need to go to the floor and see where you need to fill in. Are your inventory numbers correct? Look at your displays. See what's moving rapidly and what items are not. Don't just retreat and say, “We are not buying anything now.” Combine your gut and the sales floor versus what your open-to-buy sheet is telling you to buy. The point is we can’t just buy from a spreadsheet anymore. We have to have a more thorough open dialog between the sales floor and the buying office – even if that’s the same person!

Q: What else is required? A: Diligence. Checking and double-checking the spreadsheet versus the shelves. You need to ask what does my display tell me is selling? If it’s rainwear and my spreadsheet tells me I have plenty, but it's raining this week and I have not sold a single one, then I need to go check the sales floor and back room and find out where it is.

Q: What key ratios should they focus on? A: Inventory-to-sale ratio. You have to ask yourself, if I sell at the current rate of turn, when will I be out of product. You will see in this economy some of these numbers will slow down and some will speed up. You may want to look at that daily and against what you have on hand. My concern is that so many people are not operating on clean data. A high percentage of the retailers we work with don't do an annual inventory. Just because my point-of-sale tells me I have it, does not mean that I do.

RETAIL - HOW TO COUNTER THE EFFECTS OF THE ECONOMY: DELIVER REAL

HOW TO COUNTER THE EFFECTS OF THE ECONOMY: DELIVER REAL

I pick up my pro form BD Havoc's and Revelation backpack - a sweet setup for next season, but I still need a pair of DynaFit bindings - light and fast. Next season??!! This season is unbelievable - late March/Early April and it is dumping!!!!

Picking up my gear, I meet with Kurli, a rep for BD and we talk about the current state of the economy - his optimisim, love for life, passion for the industry, his company is uplifting.

He mentions, REAL. I am awed as I read this article this morning - Marty Weening from Gramicci, talking about "delivering real"

Must be the snow!

Be environmentally Cool,

Head Local and Local Artist

Retail - SNEWS Mini-Survey provides look at how retailers are adjusting to the new economic climate

The SNEWS® Mini-Survey that ended March 26, 2009 asked, “What are you doing differently to help your retail business survive the current economy?” It was refreshing to read that more than seven of 10 (71 percent) of our respondents indicated they were emphasizing more customer service and follow-up. Not surprisingly, more than two-thirds or 68 percent responded that they were “keeping their inventories leaner” while 53 percent indicated they were carrying fewer SKUs in their stores.

As a bit of a wake-up call to suppliers and manufacturers, nearly half of respondents or 47 percent stated they were cutting out “marginal suppliers.” It was also interesting to note that 44 percent were relying on holding special in-store events with the goal of attracting new customers.

What did surprise us a bit in the results is that only 29 percent of our retail respondents indicated they were seeking to negotiate rent decreases or moving to cheaper space. Several reports in our ongoing economic series, which can be found by clicking here, point out that renegotiating leases is a valuable retail survival tool during this economic downturn, and we do know from conversations with some retailers who have done this that savings have been substantial.

And as for seeking to match prices with competitors, including big box, we were pleasantly surprised to see only 17 percent of our survey respondents indicated this was one of their strategies. Indeed price competition is a course of action that retail experts have also noted is not the way to win the war.

Our new survey question, “Have you found social networking sites to be beneficial to your business?” is now live and awaiting your feedback. We look forward to hearing if you use these sites as a part of your business and, if so, which ones.

To make your vote count, simply go to the SNEWS Reader Poll section in the right navigation bar of every web page in SNEWS or, click here.
--SNEWS® Editors

New digital eFitBiz by SNEWS now out: Don’t miss annual state-of-retail report, ’08 top retailer lists

Always a frontrunner when it comes to delivery of news and information, with this issue of eFitBiz, SNEWS® will start to deliver news to you in a dynamic, interactive fashion like no other industry publication has -- in a virtual magazine format where you live the content.

Debuting in this sixth-annual eFitBiz by SNEWS – our annual look at the state of the previous year’s retail and

retailers – the virtual magazine will help you, our readers, truly live our stories and information, experience our ads and learn from the material presented. It’s not just passive, but an active adventure in reading and education. Be sure you have the volume turned on and up on your computer.

While our much-awaited report on the state of retail and our top retailer lists are all still here, they are presented with many enhancements in this virtual magazine: When you “flip” the pages with a click, you’ll find links directly in the stories and charts that will take you to SNEWS stories so you can read up on things you missed or have forgotten – mouse over and around the pages to discover embedded links and features. You’ll experience product videos in ads that demonstrate and show you the equipment, with the video also allowing you to play and replay as needed, stopping where you want to take a closer look.

This is of course only the beginning: The SNEWS fitness magazine, out as usual in mid-summer, will also be virtual and you’ll see all of the above features – and much more as we incorporate more experiences into our mutual adventure into the future of information delivery.

Certainly the virtual content isn’t all there is to talk about, though. The state-of-retail report isn’t unfortunately a rosy picture but when you take a look at the information about past recessions and who’s doing what, you’ll see some optimism still exists. The list of “top retailers” – again using black-and-white store numbers since we know they are factual and not fudged – has changed quite a bit. You may be surprised to realize what did happen between January and December 2008, uttering, “Gosh, that was only a year ago?”

You’ll also be a bit surprised to see how many more changes have taken place since 2009 – businesses are listed where they wouldn’t be now -- since we don’t represent 2009 news on the list. For ongoing information you’ll need to turn to SNEWS online (www.snewsnet.com).

Meanwhile, you won't want to miss this newest release. This 2009 edition of eFitBiz by SNEWS is brought to you by SNEWS (of course!), Afterburner Fitness, BodyCraft, Fitness Master, Health & Fitness Business Expo, Lifecore Fitness and the American College of Sports Medicine.

Our SNEWS subscribers are also first in line to see eFitBiz when it's released. You can also view past editions by clicking here and scrolling down to the eFitBiz editions you choose. Of course, you must be a subscriber to see magazines and magazine archives, but we do offer a Freebie SNEWS subscription that’ll do the trick. Just click here to get one of those if you don’t already have one.

Missed the link to eFitBiz? Click here to get to your copy of the latest edition. Enjoy the new virtual format; pass it around, and please tell us what you think. You can reach us either by emailing snewsbox@snewsnet.com or giving a ring, 530-268-8295.

Note: Retailers, the annual SNEWS® Retailer Survey is kicking into gear soon. Let your vote and voice count. Our 7th-annual survey will open in April. If you have not been surveyed in the past or want to make sure you are included this year, send an email to survey@snewsnet.com with your store name and contact information (including email, phone and fax), as well as the name of the best single person to be in charge of responding to the survey for your business, if it’s not yourself. Don't let you or your suppliers be left out.

HUGE LANDS PACKAGE CLEARS CONGRESS, AWAITS OBAMA’S SIGNATURE

Bend, Ore., – the House of Representatives voted today to pass the Omnibus Public Land Management Act. The final vote in the House was 285-140. The bill passed the Senate 77-21 last week. The lands package now goes to President Obama for his signature, possibly as early as next Monday.

The legislation protects two million acres of Wilderness and 1000 miles of rivers, and prohibits new oil and gas development on 1.2 million acres in Wyoming. It also legislatively affirms the 26-million-acre National Landscape Conservation System.

“This is a major conservation victory that preserves wild places throughout the US forever,” said John Sterling, Executive Director of The Conservation Alliance.

Every conservation provision included in the legislation started at the local level where grassroots organizations led the charge to build public support to protect a special landscape or waterway. The Conservation Alliance supported the local organizations that led the efforts behind 12 of the 16 Wilderness provisions included in the package. The Alliance also funded the groups leading the efforts behind protecting the Snake River Headwaters, and closing the Wyoming Range to new oil and gas development.

In total, The Conservation Alliance contributed more than $700,000 to ten different organizations whose good work eventually wound up in the package. The Alliance also worked in close partnership with Outdoor Industry Association to demonstrate that the outdoor industry stood uniformly behind the provisions in this package.

“This is a big victory, and we did everything within the limits of our lean staff capacity and financial resources to ensure it crossed the finish line,” said Sterling.

Click here http://conservationalliance.com/UserFiles/File/OPLMA08.pdf to view a summary of the conservation provisions in the bill.

About the Conservation Alliance:
The Conservation Alliance is an organization of outdoor businesses whose collective contributions support grassroots environmental organizations and their efforts to protect wild places where outdoor enthusiasts recreate. Alliance funds have played a key role in protecting rivers, trails, wildlands and climbing areas.

Membership in the Alliance is open to companies representing all aspects of the outdoor industry, including manufacturers, retailers, publishers, mills and sales representatives. The result is a diverse group of businesses whose livelihood depends on protecting our natural environment.

Since its inception in 1989, the Alliance has contributed more than $7.4 million to grassroots environmental groups. Alliance funding has helped save over 40 million acres of wildlands; 26 dams have either been stopped or removed; and the group helped preserve access to more than 17,000 miles of waterways and several climbing areas. For complete information on the Conservation Alliance, see www.conservationalliance.com

Retail - Trading Down Phenomena has Outdoor Retailers Shopping Lower Price Points

Some outdoor specialty retailers are beginning to follow their customers down market. “I think people are scaling back on the number of $400 shells they are bringing in and buying more $100 shells,” said Dave Matz, president of Grassroots Outdoor Alliance. “There is a movement to bring in a lower price point.”

While fashion and luxury brands are much more vulnerable to the trend, average retail prices have declined in specialty outdoor channels thanks to a surge in sales of carry over product and a rise in sales of accessories, according to retail sales data for January released last week by Outdoor Industry Association (OIA) and Snowsports Industries America (SIA). SIA reported that while consumers snapped up accessories like hats, gloves, goggles, wax, parkas, fleece tops, sweaters and winter boots, they backed away from buying skis, boots, boards, and bindings.

In outdoor channels, the share of product sold in the fourth quarter that was priced under $25 grew to 17.5% in 2008 from 16.7% in 2007 and 16.0% in 2006, according to data compiled by Leisure Trends Group for the OIA Outdoor Topline Report. The share of product priced over $100, meanwhile, fell to 38.0% from 40.0% and 39.1% respectively. The trend became more pronounced in January, when sales of sub-$25 product grew to 22.7% of total outdoor sales from 18.7% in the same month a year earlier. Sales of $100-plus product fell to 33.0% of total sales from 38.0% a year earlier. The share of footwear sales priced under $25 nearly doubled to the 10% range.

While analysts warn against reading too much into January sales figures, consumer surveys are detecting the shift down market, particularly in apparel. In one survey published last month, 90.7% of Americans designated specialty shopping for apparel as expendable.

Even specialty retailers catering to a more affluent clientele are introducing lower price points. Their thinking is a shift in consumer buying habits toward value and will continue long after the recession ends. In Charlotte, NC, Jesse Brown’s Outdoors is bringing Columbia Sportswear apparel back into their shop for the first time in years. Owner Bill Bartee stopped buying Columbia years ago after deciding his future lay with brands not carried by big-box retailers. With consumer anxiety over the economy rising, Bartee will add product from Columbia’s PFG and Titanium lines to complement his assortment of Arc’teryx, Ex Officio, Patagonia, Mountain Hardwear and The North Face.

“We will still sell $500 Gore-Tex shells,” said Bartee, “But we will sell less of them. Columbia will bring a price-point to Jesse Brown’s that to a large extent is not available right now. We anticipate a backlash against luxury.”

Some retailers see the recession accelerating a long-term trend away from brand loyalty that was already being driven by the millennial generation (born 1978 - 2001). That generation is much less inclined to define themselves by conspicuous consumption of specific brands, said Ted Manning, VP of merchandising for Eastern Mountain Sports (EMS).

“The customer is coming back to the concept of minimalism and core functionality and not excess,” said Manning, “There will be less brand loyalty.”

Still, national brands will continue to play a major role at EMS, which continues to grow its own brand of apparel. “We have not headed into recession by throwing out national brands,” Manning said.

Below are examples of how retailers are adapting to consumers’ new frugality:

Loading up on basics and accessories that are priced below $25.

Shifting down within a brand. Rather than cut premium brands, buyers are bringing in more of their entry-level product. The good-better-best mix is shifting more toward better.

Bundling product on the equipment side to lower the cost of entry for your core sports. For instance, bundle a boat, PFD and paddle to show entry-level paddlers how inexpensively they can getting into paddle sports.

Bringing in new brands. Specialty retailers are giving more widely distributed value brands another look.

Expanding and/or promoting private label offerings.

Buying overstock and close-out deals. Many retailers who cut back their pre-season orders are aggressively buying overstock and closeouts to ensure a steady flow of deals.