By Mark Brasier
PARALLELS & PITFALLS WHAT LONGBOARDING CAN LEARN FROM THE SNOWBOARD INDUSTRY THE BEGINNINGS Outcasts The snowboard business was very small for a very long time. It was a tight group of outsiders. Only the pioneers and purists could relate to the essence and the spirit that kept driving it forward through the formation years. A lot of groundbreaking work and constant cheerleading went into its gaining acceptance. The appeal was deep and times were very simple. There were only a few in the business; nobody was making any serious money, but that was OK. Sound familiar? Then the market began to show signs of growth. Sales were ticking up, repeats were happening, price points were still premium, distribution was tight. A handful of new brands entered with fresh thinking, new technology was being introduced, and everyone was pushing the measure higher, faster, lighter and stronger. Everyone was getting along just fine and the monetary rewards were starting to flow in. Good times! Mr. Popularity Then everybody wanted to be in the snowboard business. Retailers, ski brands, factories, agents, pro riders, sales reps, new upstart brands – everyone wanted a piece. Consumers were attracted for all the right reasons. They were attracted by this lust for something different – something aspirational. The attraction from industry, both inside and out, was purely monetary. All that hard work and devotion at the purist level to building and promoting the sport had made it mainstream. The ski business was in the dumps and many of its management were out of touch and bitter. They did everything they could to protect their domain, and dismissed snowboarding as a fad. Ski kids converted to snowboard. They embraced the core snowboard brands while their parents continued to ski. The family roof racks had an equal number of these wide boards 3 2
AXS LONGBOARD RETAILER | WINTER 2011
heading to the resorts. Meanwhile skateboarders and skate shops were embracing snowboarding as their own. The formula seemed simple enough: Sign up a pro rider, come up with a catchy brand name, run a few ads, be super cool and sign a Japanese distributor and you were a full-bore snowboard brand operating as a snowboard company.
Nobody was getting along, but now everyone was making real money. The Perfect S—t Storm So what could possibly go wrong? So much growth so quickly made every company look good. The snowboard business lived off this for years. One market could sustain and finance global production and sales, and everyone wanted in. There was very little business acumen and even less planning. The mistakes being made were easily covered by the market growth. All the mistakes went away. Then it happened: In 1995 the snowboard business experienced a massive hit to the head, and the industry came crashing down. And almost nobody in the industry saw it coming. Analysts saw it coming. Rational business people saw the signs – but not those closest to it. They were so immersed in the day-to-day that the big picture was way out of focus. Inventory levels were at an all-time high, the gray-market goods going into Japan strangled the traditional distribution model there, and many companies simply went out of business as their golden egg in Japan went away.
This placed immediate downward pressure on price points. Inventory levels were so high that closeouts were being offered at 50% off from every brand in the business. This brought snowboard prices down by half at retail. At these prices, it was the perfect entrée for the large sporting goods retailers to enter the category. The existing distribution couldn’t handle the inventory levels and brands/factories were forced to sell knowing full well the short- and longterm implications. Brands in financial trouble needed to unload, and the only channel that could consume these units was the large-format sporting goods retailers like Sports Authority, SportMart and Gart Sports. Snowboarding had created a new channel of distribution that needed to be fed. Factories in North America and Europe were being pressured to lower prices and quality in order to fill this new channel that was clearly capable of consuming large units. For the first year or so, excess inventory from the glut of the hundreds of smaller brands that had lost their mojo satisfied these needs, but it was clear that another strategy was required for long-term sustainability. Enter China and the package business. Enter the Big Boys The business had been handed over to the large multi-brand corporations and large big-box retailers to benefit from all of the pioneers’ hard work. The big boys were dictating price points and brand-slapping to see which of their brands could extend into snowboard. A few good paint jobs and a good save story in the weekend flyer and they sold. As one of my favorite merchants once said, “We sell s—t to dopes.” Brands that were not being bought were then either sold to licensing houses or direct to retailers. This direct-to-retail license model is alive today, and brands that were once high-end and premium and are now relegated to a very opening price. Consolidation took place at such a rapid rate that all the foundation brands were left trying to figure out where they fit. Should they continue
for those who wish to learn about the business of selling and marketing longboards