The Changing Marketplace: Part Two

Conventional wisdom made popular on trade-show T-shirts and by the musings of armchair snowboard-industry analysts (such as ourselves) point to the chain-storeification of the snowboarding industry. More mainstream consumers entering snowboarding ergo more sales for the faceless, strip-mall big-boxes and more “going-out-of-business” signs for everyone else.

Nothing is ever that cut and dry.

Lost In the Spectrum

Ask any member of the snowboarding industry, and the answer will be much the same. At one end of the snowboard retailing spectrum stands the independent ’core store catering to the fashion-driven youth market. At the opposite end is the much-hated big-box store characterized not only by its sports-supermarket approach (cheap prices, poorly informed ex-MacDonalds staff, and generally crappy product lines).

In between fall the smaller chains. These can logically be divided into specialty multisports chains that cover a wide range of outdoor gear and those focused on a single category such as skiing.

These smaller chain stores are rooted in the schism that took place in the outdoor industry more than a decade ago, when technical products for hiking, climbing, and mountain biking diverged from the low-tech traditional camping/fishing/hunting market. These stores are expected to attract older, more affluent, and knowledgeable outdoor-sports enthusiasts who by extension are likely to be crossover skiers.

Lastly there is the regional chain with a handful or more stores. Whether these are specialty or multi-category is less important than the fact that they’re strong in a specific regional market and as a result get a boatload of customers.

These classifications are widely used in the industry. They also reflect the way the snowboard industry views itself and serve as the basis on which various brands are judged in the snowboarding industry.

But is this really the right road map to follow?

And The Swoosh Shall Point The Way

However you feel about Nike swooshing all over the snowboard market next season, you have to admire its retailing strategy. In selecting where to focus its distribution efforts, it chose to ignore most of the usually perceived differences between types of retailer.

“We looked at virtually every snowboard retailer in the country and determined the fifteen percent that we thought provided their customers with outstanding service,” says Sales Manager Kristy Roach. “We didn’t look too carefully at size, location, ownership, sales volume, or typical customer. Service was the only criteria.”

This sets them apart from most of the industry that–transfixed by predictions about the changing marketplace and armed with statistics or hunches about who will be snowboarding in the years to come–is trying to rationalize where the snowboarders who might buy their product are most likely to shop.

A total multicategory company such as Nike with roots in neither the ski nor skate/surf industry is in a position to take a more objective look at the retail marketplace (and let’s not underestimate the huge importance Nike has had in determining the way the world perceives sports and its sporting celebrities).

What Nike’s vast experience has told them is the more a sport grows the easier it is to define different demographic categories within that sport. However, the more it becomes mainstream the less actual difference there is between these categories.

The obvious conclusion is that the rl division in the snowboard retail world is between big-box stores and other stores. For all the other types of stores, the division comes down to those that are good at it and those that aren’t.

The Chain-Store Myth

And the so-called “changing marketplace” is simply not that big a factor. According to snowsports industry statistics guru Jim Spring, between August and November of 1998, big-boxes sold 22 percent of all snowboards–about the same as 1997. But in the same period in 1996 they only sold 11 percent of snowboards.

More big-boxes are selling snowboards, and sales in these stores are increasing in absolute numbers. However, since their percentage of sales is the same as last year, we may see sales growth in big-box stores merely mirroring the rate of all other retail categories.

But big-boxes are now a part of the snowboard landscape. And while their average pricepoint on a board is about 100-dollars lower than at other types of stores, this doesn’t necessarily differentiate them as much as you might expect.

Take Salty Peaks in Utah for an example. You don’t get much more real than the main independent snowboard destination store in Salt Lake City. But owner Dennis Nazari admits that not only are about 50 percent of all boards, boots, and bindings are closeouts, but that as a businessman he embraces the greater profit margins they give him.

“The current state of the industry has helped us become a stronger retailer because we’ve moved heavily into closeouts,” he says. “I can sell boards I bought for 40 dollars for 200 dollars. Or I can buy a jacket for twenty dollars, put it out for 260 dollars and then take 30-percent off. As a single outlet we get these prices because we write orders for up to 250,000 dollars.

“We get these terms because we are scrupulous about paying our bills,” he continues. “Missing out on a discount because of late payment is just bad management. Instead, we can buy in March and pay in November.

“The key to sales is still service and educating the consumer–and most consumers will happily buy a high-quality remaindered board for 200 dollars,” he says.

The Dwindling Number Of Snowboarding-Only Stores

The number of smaller, snowboard-driven independent stores (as opposed to mostly surf- or skate-driven stores) is on the decline.

Loads of stores opened in the early ’90s because their owners were enthusiasts who wanted to be around the sport. But that’s no longer enough to be successful.

Retail is a slog, and for an independent, it’s an even harder slog. Small retailers go out of business all the time either because they can never quite get ahead or they find it increasingly hard to compete against multi-store organizations that share overhead expenses and can buy in greater quantity.

Those independents who remain are first and foremost savvy business people. Aggressive youth-oriented overtones have long ago been jettisoned in favor of inclusiveness. Hours are spent fine-tuning product mix, working on marketing, and identifying a competitive advantage–usually service.

“Service at small stores is pretty much all we have to offer, and in a town with six other snowboard stores, we rank ourselves on top of the heap for service,” says Owner Jay Moore at World Boards in Bozeman, Montana. “We do repairs, have spare parts for everything, have the best tuning shop, and retain business by fixing the mistakes less knowledgeable stores make in setup.”

Moore is also reducing the number of lines he carries from large manufacturers in order to further differentiate World from other local stores.

According to Owner Mark Richards, Val Sports in Southern California was the world’s first snowboard store. The franchise is still going strong, with four outlets where service and technical expertise have become the competitive advantage. “These are the factors that allow us to sell to everyone,” he says.

It’s the fact that these stores are well-managed, service-oriented businesses which defines them–not their size, ownership, or specific customer base.

However reluctant Richards and Moore are to admit it, a growing number of specialty chain stores can offer much the same service to their customers while enjoying all the advantages being part of a chain brings.

“We live and breathe the sport,” says Snowboard Specialist Evan Josoloff of the Blades, Boards & Skate’s, a chain of seventeen stores spread out across the Northeast. “The kids who work here ride every weekend and skate every day. The staff, the competitions we sponsor, the literally thousands of people we bus up to the mountains each winter–as well as the emphasis on customer service and professionalism–defines us. Just because we have seventeen stores and sell all sorts of other sporting goods doesn’t mean we’re any less credible.”

Location, Location, Location

Market position can also be largely determined by local competition. Powder Tools, a chain owned by Christy Sports in Colorado, has both attached and stand-alone locations, and could fall into either the regional- or specialty-chain classifications.

As Manager Chuck Mason points out, in urban locations competition comes from the behemoth Garts Sports chain stores. This makes the Powder Tool outlets more “’core” and opinion-driving. At resort locations, there are often smaller independents to compete with–which makes Powder Tools the big boy on the block. Yet the stores and their product mix is effectively the same in all locations.

What The Changing Market Really Means

As snowboarding evolves it will not be the changing market that determines success, but the ability to effectively sell to all consumers. Financial reality stacks the deck firmly in favor of those with the greatest resources.

“I feel sympathy for the independents on a number of levels,” says Mason. “They spent years building brands that then turn around and shaft them by selling to their mass-market competition. And there is simply not enough product with decent margins out there. Of all the divisions in Christy Sports, our snowboard sales growth is fastest but our margins there are lowest. I can imagine how hard it would be without our shared overhead.”

#9;Moore is also reducing the number of lines he carries from large manufacturers in order to further differentiate World from other local stores.

According to Owner Mark Richards, Val Sports in Southern California was the world’s first snowboard store. The franchise is still going strong, with four outlets where service and technical expertise have become the competitive advantage. “These are the factors that allow us to sell to everyone,” he says.

It’s the fact that these stores are well-managed, service-oriented businesses which defines them–not their size, ownership, or specific customer base.

However reluctant Richards and Moore are to admit it, a growing number of specialty chain stores can offer much the same service to their customers while enjoying all the advantages being part of a chain brings.

“We live and breathe the sport,” says Snowboard Specialist Evan Josoloff of the Blades, Boards & Skate’s, a chain of seventeen stores spread out across the Northeast. “The kids who work here ride every weekend and skate every day. The staff, the competitions we sponsor, the literally thousands of people we bus up to the mountains each winter–as well as the emphasis on customer service and professionalism–defines us. Just because we have seventeen stores and sell all sorts of other sporting goods doesn’t mean we’re any less credible.”

Location, Location, Location

Market position can also be largely determined by local competition. Powder Tools, a chain owned by Christy Sports in Colorado, has both attached and stand-alone locations, and could fall into either the regional- or specialty-chain classifications.

As Manager Chuck Mason points out, in urban locations competition comes from the behemoth Garts Sports chain stores. This makes the Powder Tool outlets more “’core” and opinion-driving. At resort locations, there are often smaller independents to compete with–which makes Powder Tools the big boy on the block. Yet the stores and their product mix is effectively the same in all locations.

What The Changing Market Really Means

As snowboarding evolves it will not be the changing market that determines success, but the ability to effectively sell to all consumers. Financial reality stacks the deck firmly in favor of those with the greatest resources.

“I feel sympathy for the independents on a number of levels,” says Mason. “They spent years building brands that then turn around and shaft them by selling to their mass-market competition. And there is simply not enough product with decent margins out there. Of all the divisions in Christy Sports, our snowboard sales growth is fastest but our margins there are lowest. I can imagine how hard it would be without our shared overhead.”