The Changing Marketplace: Part Three

Majority opinions are often wrong, but there’s little dissent among snowboard brands about how the snowboard market is heading toward the mainstream.

Mainstreaming means not only more oldsters, but more women, more kiddies, more beginners, and more crossover-skiers flocking to sideways sliding. The core youth market will continue to grow along its current trajectory, but proportionately, we’ll see more of everyone and their dog.

So, are brands altering their distribution channels to take advantage of this broadening consumer base? Are they expanding their product mix to entice a certain demographic group? Or does the broadening demographic of the market actually allow room for more diversity and brand nicheing?

Disagreement Is Good

When it comes to classifying the types of stores that must be included in a successful distribution strategy, there’s much debate among snowboard brands and manufacturers.

However, most would agree with the opinion of John Vance, vice president of winter sports for Quiksilver: “Specialty chains, national chain big-box stores, and ’core stores will all see snowboard sales grow at roughly the same percentage. But the higher volume of chain stores and boxes will mean that they’ll grow much faster in absolute dollar terms.”

But it’s a cause for celebration that agreement in the industry doesn’t go much further than that one truism. Diversification of the sport has led to diversification in the industry. Virtually every manufacturer has started taking a harder look at which bits of the market to target.

SNOWboarding Business’ own Jeff Harbaugh has often stressed in these pages the need to “find your niche.” Perhaps for the first time the snowboard industry is actually following his advice.

Divide And Conquer

Divide the snowboard-hardgoods industry into three loose groupings: snowboard-only brands, snowboard/ski brands, and snowboard/surf or skate brands. At first glance, you’d assume brands within each group would share the same viewpoint about consumers and where they shop.

After all, you’d imagine that a snowboard-only brand would easily find a home in a hardcore snowboard shop, and a ski brand wouldn’t. But this isn’t necessarily the case. Each brand, regardless of the category we place them in, has hopefully developed its own unique strategy and niche. However, because every brand must reach consumers through a limited selection of retailer types, these distribution strategies often reconverge.

For the most part, the snowboard industry is limited to the following types of retailers: hardcore snowboard/surf/skate shops, multi-sport outdoor/ski/bike stores, regional chains, and national chains.

The result is that brand volume is the prime determinate for where product is sold. For the most part, big companies have to sell everywhere, small companies usually can’t or won’t.

Snowboard-Only Brands

Small- to medium-sized brands built entirely of snowboard-related products usually have defined retail channels. Companies like Arbor and Joyride know who their retailers are.

Arbor Snowboards’ President Bob Carlson describes how his product is developed with one statistic firmly in mind: 207-percent projected growth this year in the number of riders aged 24 to 36 years old.

This adult consumer is assumed to shop at chains such as Sports Chalet and REI, and also selected hardcore snowboard/surskate shops, and multi-sport ski/bike/outdoor stores familiar in dealing with adult customers. Interestingly, Arbor emphasizes surf stores on the basis that surfing is a more adult and relatively technical pastime.

Joyride likewise remains committed to a single focus–its cadre of 300 retailers mostly fall into the hardcore snowboard/surf/skate classification. These stores are primarily individual retailers serving the younger market.

The company is attempting to gain market share through these accounts rather than by opening new dealers. This is a heavily competitive part of the market but Joyride believes its advantage with the youth market comes through rapid and personal customer response.

“If a kid calls asking a question, there’s a good chance they’ll speak to a senior person in the company, not some receptionist,” says Stephan Jeremias. “Being close to our market is what counts for us. We would rather get the feedback from the managers of 300 ’core stores and from our riders than from any amount of focus groups.”

Obviously, the wider the market you try to cover, the harder the retailing strategy becomes. The larger snowboard companies must use one brand to stretch across different types of retailer channels and appeal to different types of consumer groups.

These companies face a paradoxical problem: To retain brand credibility and to push sales into other retail categories, they have to remain “cool” in the ’core market, which means having a strong presence in ’core stores–a decreasing percentage of the total market. But these larger snowboard-only brands also need multi-sport stores and regional/national chains for sales volume.

Too many boards in these high-volume big-box stores will erode their credibility at the ’core.

Morrow Snowboards now believes that because new snowboarders will ride no more than six to ten days per year, they’ll want to lay out less on their boards. So under its new five-year plan, the company is cutting the number of boards in its middle range, and expects that during the ’99/00 season 40 percent of all Morrow boards sold will be entry-level models.

Many manufacturers assume entry-level snowboarders are more likely to shop regional or national chain stores than hardcore snowboard stores because these consumers are likely to be already familiar with the chains.

There’s also an assumption that entry-level riders who might prefer to shop at ’core stores are lured to chains with lower prices.

Morrow believes that by selling its entry-level boards to ’core stores and chains at similarly low prices, they’ll retain their brand credibility. “We are giving ammunition back to the ’core and specialty retailer and still letting them make a decent margin,” says Marketing Director Georell Bracelin, pointing out that high pricepoint Morrow boards are already also sold in selected chains such as REI.

Sims Snowboards agrees that new adult riders may ride less and want to spend less–but not much less. In direct contrast to Morrow, Sims is expanding the number of models in its mid range. Supposedly, these will then sell to the growing number of adults, crossovers, and the existing less-affluent ’core market of fourteen to seventeen year olds.

Moreover, Sims also agrees about the need to remain strong at the ‘core to push the sector where it’s seeing the greatest sell-through–the chain store.

Sims Marketing Manager Dave Wray admits that Sims has seen strong sales in big-box retailers–although only a limited number of models have been released to this market. He also points out that despite strong initial sell-through, these retailers are always sniffing for mid-season deep discounts, so are useless for reordering.

The Ski Brands

Like the larger snowboard-only companies, brands selling snowboards and skis agree that the only viable strategy for growing the sales to a variety of consumers groups entails a combination of staying strong in the small mom and pop stores, making sales in selected specialty chains like REI, but strictly rejecting most orders from large-format, deep-discount national chains.

With two brands under one roof, both Limited and Volant Snowboards have a greater degree of flexibility when it comes to distribution channels. Limited remains targeted on the ’core market, while the Volant/Limited hybrid brand appeals to Volant’s crossover skier and the adult market. This hybrid brand will utilize Volant’s distribution channels, and takes advantage of Limited’s freestyle brand appeal in non-’core shops.

Nitro also remains a brand that appeals to the ‘core market, even though Nitro USA is now one of 23 global sales divisions of Tecnica and will utilize a global marketing strategy that includes Dolomite hiking boots and Tecnica ski boots.

Nitro’s Marketing Manager Tim Weisser thinks the strength of the Nitro brand will keep it strong in the ‘core market while Tecnica’s strength will not only cut corporate costs but will push open a lot of “chain” doors for the brand. “We believe that there are many specialty chains that think of themselves as ‘wintersport’ retailers, and these are our target,” he says.

The Surf/Skate Brands

The tightly focused skate demographic of World Industries’ customers keeps retail distribution strategy simple. “Of our 400 dealers, 90 percent of them are ‘core skate stores,” says Marketing Manager Vince Krause. World focuses on the same youth section of the market that buys its skateboard products, and it’s those customers who account for 80 percent of snowboarding sales.

Quiksilver, on the other hand, sells products in retail shops that include storefronts most brands will never consider, or need to. This type of big surf company provides perhaps the best example of how a brand can broaden out to appeal to the mainstream while still appealing to its core constituency. Many surf brands can be found in stores such as Nordstrom and Macy’s, yet retain strong orders among specialty surf shops.

The hardgoods dynamics, however, is more difficult to master than softgoods. Rusty successfully entered the snowboard outerwear market on the strength of its sportswear line, yet decided to close its snowboard factory because of lack of sales.

The purchase of Mervin Manufacturing and the formation of Arcane allowed Quiksilver to become a multi-category lifestyle brand, while its own Pirate Surf label keeps even the largest big-box discounters satisfied.

The evolution of the snowboarding industry has yet to reach a point where the sport spawns its own similar multicategory “lifestyle” brands–although Burton might be on the cusp of doing so with its launch of Gravis footwear. But eventually even this will happen.

A combination of vision, luck, and totally unpredictable circumstances will knock some companies out and make world-beaters of others–changes in the consumer and retailer mix seems but one facet of this fight for survival.

Maybe the small ankle biters and today’s giants can address and adapt to ths have been released to this market. He also points out that despite strong initial sell-through, these retailers are always sniffing for mid-season deep discounts, so are useless for reordering.

The Ski Brands

Like the larger snowboard-only companies, brands selling snowboards and skis agree that the only viable strategy for growing the sales to a variety of consumers groups entails a combination of staying strong in the small mom and pop stores, making sales in selected specialty chains like REI, but strictly rejecting most orders from large-format, deep-discount national chains.

With two brands under one roof, both Limited and Volant Snowboards have a greater degree of flexibility when it comes to distribution channels. Limited remains targeted on the ’core market, while the Volant/Limited hybrid brand appeals to Volant’s crossover skier and the adult market. This hybrid brand will utilize Volant’s distribution channels, and takes advantage of Limited’s freestyle brand appeal in non-’core shops.

Nitro also remains a brand that appeals to the ‘core market, even though Nitro USA is now one of 23 global sales divisions of Tecnica and will utilize a global marketing strategy that includes Dolomite hiking boots and Tecnica ski boots.

Nitro’s Marketing Manager Tim Weisser thinks the strength of the Nitro brand will keep it strong in the ‘core market while Tecnica’s strength will not only cut corporate costs but will push open a lot of “chain” doors for the brand. “We believe that there are many specialty chains that think of themselves as ‘wintersport’ retailers, and these are our target,” he says.

The Surf/Skate Brands

The tightly focused skate demographic of World Industries’ customers keeps retail distribution strategy simple. “Of our 400 dealers, 90 percent of them are ‘core skate stores,” says Marketing Manager Vince Krause. World focuses on the same youth section of the market that buys its skateboard products, and it’s those customers who account for 80 percent of snowboarding sales.

Quiksilver, on the other hand, sells products in retail shops that include storefronts most brands will never consider, or need to. This type of big surf company provides perhaps the best example of how a brand can broaden out to appeal to the mainstream while still appealing to its core constituency. Many surf brands can be found in stores such as Nordstrom and Macy’s, yet retain strong orders among specialty surf shops.

The hardgoods dynamics, however, is more difficult to master than softgoods. Rusty successfully entered the snowboard outerwear market on the strength of its sportswear line, yet decided to close its snowboard factory because of lack of sales.

The purchase of Mervin Manufacturing and the formation of Arcane allowed Quiksilver to become a multi-category lifestyle brand, while its own Pirate Surf label keeps even the largest big-box discounters satisfied.

The evolution of the snowboarding industry has yet to reach a point where the sport spawns its own similar multicategory “lifestyle” brands–although Burton might be on the cusp of doing so with its launch of Gravis footwear. But eventually even this will happen.

A combination of vision, luck, and totally unpredictable circumstances will knock some companies out and make world-beaters of others–changes in the consumer and retailer mix seems but one facet of this fight for survival.

Maybe the small ankle biters and today’s giants can address and adapt to the changing marketplace. Who can guess were the market will head next year. It really is like evolution–let’s just hope we avoid any giant meteors.

o the changing marketplace. Who can guess were the market will head next year. It really is like evolution–let’s just hope we avoid any giant meteors.