The Changing Marketplace: Part One

With strong economic conditions in the United States and little inflationary pressure, U.S. retail sales have steadily grown through the 1990s. Consumers spent 2.5-trillion dollars at retail stores in 1997, says the National Retail Federation. This represents a 28-percent increase from the 1.95-trillion dollars spent in 1992.

Nevertheless, this strong national growth trend didn’t keep pace with the snowsports industry. According to the 1998 SnowSports Industries of America (SIA) Retail Audit, retail spending on snowsports equipment grew from 1.08-billion dollars during the ’92/93 season to 1.66-billion dollars in ’97/98–an increase of 48 percent. Snowboard hardgood sales jumped from 91-million dollars in ’94/95 to 135-million dollars in ’97/98–another 48-percent increase.

With sales continuing to grow, the snowboard industry has firmly established itself as an important segment of the sporting-goods business, and has undergone some of the inevitable changes associated with this mainstream credibility. “The snowboard business has evolved over the last three to five years from being almost exclusively image-driven to one that’s beginning to resemble every other consumer-goods industry, where product quality and brand marketing reign supreme,” reads the Dain Bosworth 1997 Snowboard Industry Report

American Sports Data (ASD) studies show that between 1988 and 1997 the number of snowboarders in the United States more than tripled. This increase–from 1,277,000 snowboarders to 4,189,000–represents a growth rate of 228 percent. The snowboarding population is now 34 percent the size of the skiing population. Whereas in 1988, it was just eight percent the size of skiing’s.

Of the snowboarders polled in the 1997 SIA National Skier/Boarder Opinion Survey, 82.7-percent owned their own equipment. Combine this with the American Sports Data report that the average mean household income of snowboarders tops 56,000 dollars, and you’re left with the fact that retail snowboard sales should remain healthy.

“By the year 2000, the number of snowboarders is forecasted to reach five-million, and worldwide sales of hard- and softgoods could grow to exceed two-billion dollars,” reads the August 1996 Ladenburg, Thalmann & Co. Inc. Investment Research Report.

But a few cautionary opinions shouldn’t be ignored, and although the snowboard market has continued to expand in leaps and bounds, a leveling off of double-digit sales and participation growth seems imminent.

Joy Spring, vice president of Leisure Trends Group in Boulder, Colorado, says the snowboard market might be poised to encounter a rapid slowdown in growth: “For the last four years, we’ve seen a 50-percent or more increase in the number of people who say they’re snowboarders–but this year those numbers hit a wall. I think our days of doubling numbers are over, and if we’re not seeing terrific growth, we’ll see a drop in retail sales as well.”

So, what type of consumers will continue to buy snowboard equipment and will the demographic groups who have historically been the driving forces of the industry contine to thrive?

We’ve segmented snowboard-product consumers into five different groups: kids, core, the employed, women, and beginners. Our goal was to uncover the purchasing strengths of each of these groups, and then give a broad overview of the growth prospects these individual groups offer snowboarding.

The Kids

Boys and girls aged seven to eleven.

Growth trendline: modest

“Tre are more girls getting into snowboarding, and it seems younger boys are, too,” says Casey Steenman, snowboard buyer for Kahuna Surf Shop in Ontario, Canada. “We’ve seen a little increase in eleven, twelve, and thirteen year olds–while everyone else stayed the same.”

According to the National Sporting Goods Association, seven to eleven year olds made up about seventeen percent of the snowboard population in 1997, compared to XX percent in the skiing population.

The size of this snowboarding demographic segment has increased approximately 94.6 percent since 1988. While this sounds impressive at first, it’s a relatively modest growth rate in comparison to the overall 228-percent increase. However, the growth rate of skiers aged seven to eleven years old was only 10.3 percent between 1988 and 1997, so the category is hardly a wholesale disaster.

SIA estimates this group exercised a buying power of 3.47-million dollars in the snowboard industry during 1997–compared to only 2.27-million dollars for skiing kids.

The Core

Men fourteen to 24 years old

Growth trendline: substantial

“Teens normally live with their parents and don’t generally contribute to rent, utilities, insurance, tuition, or food,” says Ladenburg, Thalmann & Co. (LTC), a demographic research firm. “They spend most of their money on having fun and making an impression. And because many Xers live with their parents well into their twenties or otherwise share housing expenses, they have more money to spend on themselves and their leisure activities.”

On a nationwide level, the twelve- to nineteen-year-old age demographic will continue to grow until the year 2010, accroding to Teenage Research Unlimited. This group had a spending power of 122-billion dollars in 1997–much of which is discretionary income.

By the end of 1998, this spending power is expected to reach 141-billion dollars, arguably rendering teenagers the most coveted group in marketing.

The Ladenburg, Thalmann & Co. report has a similar finding: “We estimate teenagers control nearly 80-billion dollars of discretionary spending power and influence many times this amount in purchases by their parents each year.”

According to the LTC survey, 54 percent of the fourteen to seventeen year olds said they were frequent shoppers at retail stores, compared to 43 percent of eighteen to 24 year olds, and 39 percent of the general population.

These numbers directly relate to snowboarding–especially when you factor in the eighteen- to 24-year-old crowd (which is expected to grow through 2015). According to the SIA, the snowboard-related sales contribution of men aged twelve to 24 is nearly 9.5-million dollars–more than twice the 4.18-million-dollar figure for skiers in the same age group.

Teenagers and young adults up to age 24 represent the highest participation rate in snowboarding, and an NSGA participation survey asserts twelve to seventeen year olds comprised 37.8 percent of the snowboarding population in 1997, and eighteen to 24 year olds an additional 18.7 percent. Since 1988, the twelve-to-seventeen age group grew 129.8 percent; the eighteen to 24 segement a whopping 587.5 percent.

The Employed

Snowboarders more than 24 years old

Growth trendline: substantial

College-age or recently graduated males between twenty and 25 years old remain the dominant customers at Darkside Snowboards in Killington, Vermont. “We’re getting a lot of crossovers, professional guys in their thirties who have been skiers their whole lives, and have maybe been dabbling in snowboarding the last two or three years, and have tried a step-in or two,” says Buyer Doug Letendre. “Now their snowboarding is catching up with their skiing ability and they’re really fired up, coming in with a lot of questions and wanting to know what all the hot kids are snowboarding on.”

Alfred Raciti, owner of Elite Snowboards in Philadelphia, Pennsylvania has seen the same trend: “When we first started a few years ago, it was high school and college kids. Now the big customer base is the twenties-to-thirties crowd; they come in and buy stuff every year. The step-in market has probably doubled in a year.”

The over-24 crowd represents a large sector of the “Generation 2000” demographic group, which is comprised of those between the ages of fifteen and 34.

With a U.S. population 78-million strong and a spending power of roughly 600-billion dollars per year, everyone seems to concur that, going into the next decade, Gen 2000 will be a key–if not the key–consumer group.

According to Statisitcs Canada, the three largest population groups in Canada are those from 35 to 39 years old, then 40 to 44, and then 30 to 34 years old. The upshot is that more than 25 percent of the Canadian population is between 30 and 44 years old. This trendline also holds true with Canadian snowboarding. According to a Canadian Ski Council survey, 64 percent of Canadian snowboarders are now older than eighteen; 31 percent are more than 25 years old.

According to Ladenburg, Thalmann & Co., census reports estimate the total income of 25 to 34 year olds exceeds 872-billion dollars, and about 50 percent of this is used for discretionary spending.

In snowboarding terms, the NSGA found 25 to 34 year olds represented 19.6 percent of all snowboarders in 1997. SIA says 30 percent of all snowboarders were over 25 during the same period (compared to 60 percent in the ski population).

Since 1988, this group has grown 240.1 percent. In ’96/97, growth was 206.7 percent, a higher percentage than any other age group.

Potential buying power for snowboarding men and women over age 25 is roughly 6.6-million dollars, versus 1.32-billion dollars for skiers, according to SIA.

Women

Growth trendline: modest

Despite the dramatic increase in overall snowboarder population, American Sports Data says the female snowboard demographic has grown only half as fast as males–133 percent compared to 267 percent–between 1988 and 1997

Nevertheless, women still control significant buying power in the snowsports industry. According to SIA, women made approximately 37 percent of the 2.2-billion dollars worth of snowsport purchases in ’97/98.

“Females between the age of twelve and 24 represent a group of motivated new consumers who are ready to shop,” states Ladenburg, Thalmann & Co.

Hansen’s in Encinitas, California, has attracted its female skiing clientele for years with a vast women’s ski-clothing department, but recently slightly decreased its open-to-buy in this category.

However, Store Manager/Buyer Ken Rodgers notes a significant increase in the past few years in the women’s snowboard hard- and softgoods purchases. “The female snowboarders are a whole new group of consumers who have emerged–not necessarily crossovers,” he says.

Beginners

Growth trendcrossovers, professional guys in their thirties who have been skiers their whole lives, and have maybe been dabbling in snowboarding the last two or three years, and have tried a step-in or two,” says Buyer Doug Letendre. “Now their snowboarding is catching up with their skiing ability and they’re really fired up, coming in with a lot of questions and wanting to know what all the hot kids are snowboarding on.”

Alfred Raciti, owner of Elite Snowboards in Philadelphia, Pennsylvania has seen the same trend: “When we first started a few years ago, it was high school and college kids. Now the big customer base is the twenties-to-thirties crowd; they come in and buy stuff every year. The step-in market has probably doubled in a year.”

The over-24 crowd represents a large sector of the “Generation 2000” demographic group, which is comprised of those between the ages of fifteen and 34.

With a U.S. population 78-million strong and a spending power of roughly 600-billion dollars per year, everyone seems to concur that, going into the next decade, Gen 2000 will be a key–if not the key–consumer group.

According to Statisitcs Canada, the three largest population groups in Canada are those from 35 to 39 years old, then 40 to 44, and then 30 to 34 years old. The upshot is that more than 25 percent of the Canadian population is between 30 and 44 years old. This trendline also holds true with Canadian snowboarding. According to a Canadian Ski Council survey, 64 percent of Canadian snowboarders are now older than eighteen; 31 percent are more than 25 years old.

According to Ladenburg, Thalmann & Co., census reports estimate the total income of 25 to 34 year olds exceeds 872-billion dollars, and about 50 percent of this is used for discretionary spending.

In snowboarding terms, the NSGA found 25 to 34 year olds represented 19.6 percent of all snowboarders in 1997. SIA says 30 percent of all snowboarders were over 25 during the same period (compared to 60 percent in the ski population).

Since 1988, this group has grown 240.1 percent. In ’96/97, growth was 206.7 percent, a higher percentage than any other age group.

Potential buying power for snowboarding men and women over age 25 is roughly 6.6-million dollars, versus 1.32-billion dollars for skiers, according to SIA.

Women

Growth trendline: modest

Despite the dramatic increase in overall snowboarder population, American Sports Data says the female snowboard demographic has grown only half as fast as males–133 percent compared to 267 percent–between 1988 and 1997

Nevertheless, women still control significant buying power in the snowsports industry. According to SIA, women made approximately 37 percent of the 2.2-billion dollars worth of snowsport purchases in ’97/98.

“Females between the age of twelve and 24 represent a group of motivated new consumers who are ready to shop,” states Ladenburg, Thalmann & Co.

Hansen’s in Encinitas, California, has attracted its female skiing clientele for years with a vast women’s ski-clothing department, but recently slightly decreased its open-to-buy in this category.

However, Store Manager/Buyer Ken Rodgers notes a significant increase in the past few years in the women’s snowboard hard- and softgoods purchases. “The female snowboarders are a whole new group of consumers who have emerged–not necessarily crossovers,” he says.

Beginners

Growth trendline: moderate

According to Manager Todd Grey of Ski Market in Braintree, Massachusetts: “Even though we’ve had consumers anywhere from eight to 80, with an average age of twenty to 30, we’ve seen a lot of older yuppie types. It used to be a lot of kids crossing over from skateboarding. Now it’s a lot more guys driving BMWs who once said they’d never pick up a board.”

Ladenburg, Thalmann & Co. estimates the crossover rate of skiers to snowboarding is 30 percent. According to the 1997 SIA National Skier/Boarder Opinion Survey Report, 36.7 percent of the non-snowboarders polled expect to try the sport in the next few years.

New snowboarders were up three percent in 1997 compared to 1996, reports ASD, and the total number of new snowboarders has risen 224.9 percent since 1987.

Unfortunately, no studies based on the potential buying power of beginners were found, although it’s evident from shop feedback that first-timers often come back after renting equipment and put the rental price toward new boards.

In other cases, shops without rental programs are also experiencing many first-timers. Dean Lacain, manager of Burning Boards in Dover, New Hampshire, says, “We get endless amounts of kids buying their first boards–using mom and dad’s money for the most part–every year. Probably 50 percent of our sales were first-timers last season, and 50 percent of them used their parents’ pocketbook.”

rendline: moderate

According to Manager Todd Grey of Ski Market in Braintree, Massachusetts: “Even though we’ve had consumers anywhere from eight to 80, with an average age of twenty to 30, we’ve seen a lot of older yuppie types. It used to be a lot of kids crossing over from skateboarding. Now it’s a lot more guys driving BMWs who once said they’d never pick up a board.”

Ladenburg, Thalmann & Co. estimates the crossover rate of skiers to snowboarding is 30 percent. According to the 1997 SIA National Skier/Boarder Opinion Survey Report, 36.7 percent of the non-snowboarders polled expect to try the sport in the next few years.

New snowboarders were up three percent in 1997 compared to 1996, reports ASD, and the total number of new snowboarders has risen 224.9 percent since 1987.

Unfortunately, no studies based on the potential buying power of beginners were found, although it’s evident from shop feedback that first-timers often come back after renting equipment and put the rental price toward new boards.

In other cases, shops without rental programs are also experiencing many first-timers. Dean Lacain, manager of Burning Boards in Dover, New Hampshire, says, “We get endless amounts of kids buying their first boards–using mom and dad’s money for the most part–every year. Probably 50 percent of our sales were first-timers last season, and 50 percent of them used their parents’ pocketbook.”