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January 24, 2011

A Weekly Web Magazine for the Sporting Goods Industry


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Group Publisher / Editor–in–Chief James Hartford james@sportsonesource.com

January 24, 2011 Senior Business Editor Thomas J. Ryan (917.375.4699) tryan@sportsonesource.com Associate Editor Kyle J. Conrad (704.987.3450 x111) kconrad@sportsonesource.com

A Weekly Web Magazine for the Sporting Goods Industry

Contributing Editors Charlie Lunan Creative Director Teresa Hartford Graphic Designer Camila Amortegui VP Business Development Bill Bratton (409.392.5029) bill@sportsonesource.com

Photo courtesy of Salomon

VP/GM Specialty Businesses Paul Gagner (720.272.9787) pgagner@sportsonesource.com VP Business Development Barry Gauthier (774.553.5312) barry@sportsonesource.com Business Development Manager Katie O’Donohue (704.987.3450 x110) katieo@sportsonesource.com Senior Ad Sales Manager Susan Tauster (630.858.1558) stauster@sportsonesource.com Circulation & Subscriptions subs@sportsonesource.com

FEATURE

Technology Chief Information Officer, Mark Fine VP Research & Development, Gerry Axelrod Manager Database Operations, Cathy Badalamenti SportsOneSource Publications SGB TEAM Business Sportsman’s Business The B.O.S.S. Report Sports Executive Weekly SGB Update Footwear Business Update PSR Update

page

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NEWS 4 5 6

ZAPPOS, REI, AND W.L. GORE Again Get Nod For Fortune Magazine’s “Best Places To Work” THE WALKING COMPANY Coming Back After Chapter 11 JILL LAYFIELD Takes Over As Backcountry.com's CEO NBS NAMES ATOMIC USA Winter Sports Vendor Of The Year ADAMS GOLF Acquires Yes! Golf At Bankruptcy Auction

8 PAUL GAGNER TO LEAD Specialty Business For The Sportsonesource Group THE WALKING CO. Posts 3.6 Percent Comp Gain In 2010

Sportsman’s Business Update Team Business Update SGB Weekly Team Business Weekly Sportsman’s Busness Weekly Footwear Business Weekly Outdoor Business Weekly

FEATURES 10 E-VOLVING MARKETPLACE For Specialty Retailers, The Challenge From The Web Expands As Better Brands Open Distribution 14 BOOTS REGAIN THEIR MOJO The Lightweight Trend And Added Fashion Touches Are Helping Drive Sales

DEPARTMENTS SportsOneSource, LLC 2151 Hawkins Street • Suite 200 • Charlotte • NC • 28203 t. 704-987-3450 • f. 704-987-3455 www.SportsOneSource.com

18 CALENDAR Cover photography courtesy of Salomon

Copyright 2011 SportsOneSource, LLC. All rights reserved. The opinions expressed by writers & contributors to SGB WEEKLY are not necessarily those of the editors or publishers. SGB WEEKLY is not responsible for unsolicited manuscripts, photographs or artwork. Articles appearing in SGB WEEKLY may not be reproduced in whole or in part without the express permission of the publisher. SGB WEEKLY is published weekly by SportsOneSource, LLC, 2151 Hawkins Street, Suite 200, Charlotte, NC 28203; 704.987.3450. Send address changes to SGB WEEKLY, 2151 HAWKINS STREET, SUITE 200, CHARLOTTE, NC 28203; 704.987.3450.

WEEK 1104 | SGBweekly.com

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ZAPPOS, REI, AND W.L. GORE AGAIN GET NOD FOR FORTUNE MAGAZINE’S “BEST PLACES TO WORK” Zappos.com, which is owned by Amazon and rapidly building its outdoor business, moved up the list to No.6 from No.15 in 2010. The Hendersonville, NV e-tailer was recognized for providing employees free lunch, no-charge vending machines, a fulltime life coach and its stated mission of creating fun and a little weirdness at work.  REI also improved its standing, moving up to No.9 on the 2011 list from No.14 in 2010. It is now one of only five organizations to make the list every year since its inception in 1998.  It also is the highest ranked company on the 2011 list from Washington State, which includes five others. The company was again recognized for providing employees with four four-week paid sabbaticals on their 15th anniversary and every five years thereafter. A separate Challenge Grant program provides up to $300 worth of gear to employees who participate in a challenging outdoor adventure.  W.L. Gore & Associates fell to No.31 in 2011 from its No.13 rank in 2010, but remains widely admired for its lack of hierarchy, group interviewing process and emphasis on innovation.  Fortune said company job applicants are “interviewed by five to eight associates, who look for ‘people with a high tolerance for ambiguity.’”   Other companies related to the sporting goods industry that made the list include RW Baird (No.14), an investment bank that has executed a number of M&A deals in the industry, Whole Foods Market (No.24) and Nordstrom (No.74). 4

SGB WEEKLY l JAN 24, 2011

THE WALKING COMPANY COMING BACK AFTER CHAPTER 11 The Walking Company announced 2010 revenues grew 4.2 percent to $187.4 million with a comparative sales increase of 3.6 percent for the year.   "We are pleased with this year's revenue results," said Andrew Feshbach, CEO of The Walking Company. "We look forward to 2011."   The Walking Co. also said it opened nine stores in 2010 to finish the year with 212 locations. In 2010 new stores opened in Deer Park, IL; San Francisco, CA; Paramus, NJ; Geneva, IL; Philadelphia, PA; Charlottesville, VA; Arlington, TX; Omaha, NE; and Chattanooga, TN.  The comfort footwear chain emerged from Chapter 11 bankruptcy proceedings in May 2010.


NEWS

JILL LAYFIELD ASSUMES CEO POST AT BACKCOUNTRY.COM

Jill Layfield, CEO backcountry.com

Backcountry.com said that Jill Layfield, currently COO, will be promoted to CEO of the outdoor e-tailer, effective Feb. 11.  After 14 years at the helm, co-founder and CEO Jim Holland will become executive chairman of the board.  Co-founder John Bresee will take on an advisory role and provide strategic insight for the company and management team.  "Over the course of the past 14 years, Jim and John have built an industry-leading company, with the performance to match," said Michael Zeisser, Senior Vice President of Liberty Media Corporation, which acquired Backcountry.com in 2007. "They have succeeded in creating a culture in which talented people thrive, and where Job No.1 is to earn and keep the trust of the customer. In his new role as executive chairman, Jim will ensure that the values that have been the bedrock of Backcountry's success will endure and continue to guide the company. We can think of no better steward than Jill to take the company forward. She has earned the organization's trust through her passion and many years of accomplishments at the company. The Backcountry team is the best in the industry, and we are excited about the future."  With nine years of consumer Internet experience at Shutterfly.com, Cisco Systems, and two tech startups under her belt, Layfield joined Backcountry.com in 2004. As director of customer marketing, she was responsible for 75 percent of Backcountry's revenue, which grew over seven-fold from the year she joined to the year she moved up to take on more responsibility as the VP of product management in 2009.  She became COO in March 2010.  "We have an incredible team at Backcountry.com and we've had an amazing year," said Layfield. "I'm incredibly proud of this company, and I'm excited to keep it moving in the direction we're headed.  I'm in an enviable position among newly appointed CEOs.  I'm inheriting a company that is thriving."  Holland, a former Olympic ski jumper, and Bresee, a self-proclaimed ski bum, started Backcountry.com in 1996. The two pooled together $2,000 and operated the business in a small, non-descript garage in a one-stoplight mountain town. Their first order: a PIEPS avalanche beacon. The online retailer now runs nine e-commerce stores, has more than 700 employees, and maintains a state-of-the-art distribution center to house nearly 1,000 brands.  "As I reflect back on the past 14 years, I'm most proud of having brought together some of the absolute best people in specialty outdoor, action sports retail, and ecommerce," said Holland. "It's this incredibly unique collection of talented people that makes Backcountry the success that it is today and Jill stands out among them. Jill's energy and contagious optimism combined with her intuitive gut sense and her deep understanding of our business make her the right choice to lead this passionate team. She's widely respected and I know she'll leverage the collective wisdom of our people while keeping them sharply focused on our path ahead. We have some powerful momentum at Backcountry and we see some enormous opportunities in front of us. I am excited to remain plugged in and to continue to work closely with Jill and the Executive Team to guide us forward while also finding a bit more time to subject the gear we sell to some rigorous field testing on some adventures yet to come." For Breaking Trade News Every Business Day Go To SGBUPDATE.com

WEEK 1104 | SGBweekly.com

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NEWS

ADAMS GOLF ACQUIRES YES! GOLF AT BANKRUPTCY AUCTION

Jim Chandley, President NBS & Mike Adams, GM Atomic USA

NBS NAMES ATOMIC USA WINTER SPORTS VENDOR OF THE YEAR  NBS (Nations Best Sports) awarded Atomic USA as the recipient of its 2011 Winter Sports Vendor of the year.   Atomic was selected for this award due to their long standing support of the NBS members, and for their continued product innovation.  Mike Adams, General Manager for Atomic USA accepted the award presented by Jim Chandley, President of NBS.   "Atomic has always been a leader in winter sports.  Their heritage and continued commitment to the industry speaks for itself.  Over the last few years they've really turned the corner in offering snow sports retailers some great tools to succeed, with the products to back it up.  NBS is pleased to present our Winter Sports Vendor Of The Year Award to Atomic," said Chandley.

Adams Golf was the winner at a Jan. 18, 2011 U.S. Bankruptcy Court auction for the bulk sale offering of Denver-based Progear Holdings dba Yes! Golf and its related assets. The winning bid was $1.5 million, with a total purchase cost of $1.65 million, inclusive of administration costs. The purchase includes acquisition of all of Yes! Golf's patented putter technology designs (including C-Groove Putters), the company's registered trademarks and all existing inventory and capital equipment. Yes! Golf will be integrated into the Adams Golf operations in Plano, Texas. The purchase is subject to funding that is expected to occur this week. Historical financials prepared by Yes! Golf indicate that its revenues were approximately $10.2 million in 2007 and approximately $2.4 million in 2010. "We have been looking for an attractive avenue into the putter market for some time and believe the Yes! Golf brand and technology platform provides us just such an opportunity," said Chip Brewer, president and CEO of Adams Golf. "Yes! Golf provides Adams Golf compelling putter technology and a positive brand image, including ongoing tour usage based on the performance of the product alone. The Yes! Golf brand will likely benefit from the inclusion into our operational infrastructure and we intend for it to serve as a source of future growth for our company."

NEWS • ANALYSIS • INSIGHT For more in-depth coverage, analysis and insight into the news of the week look for the latest issue of Sports Executive Weekly and The B.O.S.S. Report, the most widelyread executive-level newsletter serving the sporting goods industry. Contact subs@SportsOneSource.com about a complimentary trial subscription or go to www.SportsOneSource.com to learn more. SportsOneSource reporting retail partners are eligible for complimentary subscriptions to all SportsOneSource media properties. Retailers contact Katie O’Donohue at 704.987.3450 x110 or e-mail retailers@SportsOneSource.com. • 2151

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SGB WEEKLY l JAN 24, 2011

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NEWS

PAUL GAGNER TO LEAD SPECIALTY BUSINESS FOR THE SPORTSONESOURCE GROUP The SportsOneSource Group continues to commit resources to its specialty business and to the  OIA VantagePoint™ platform, The Official Research of the Outdoor Industry™.  The company has tapped long-time outdoor industry veteran Paul Gagner as Vice President and General Manager of its specialty businesses.  Mr. Gagner, who has been working as an  independent consultant with the company for several months, was most  recently president of Sierra Designs and Ultimate Direction, and a former OIA Board member.  Mr. Gagner will have overall responsibility for the OIA VantagePoint™ system, including business development, retailer acquisition, system performance, product development, and data integrity.  “We are thrilled to welcome Paul to The SportsOneSource Group, and are excited to have someone of his caliber and market experience

The Walking Co. Posts 3.6 Percent Comp Gain in 2010 The Walking Co., which emerged from Chapter 11 bankruptcy proceedings in May 2010, said 2010 revenues grew 4.2% to $187.4 million with a comparative sales increase of 3.6%. The comfort footwear chain opened nine stores in 2010 to finish the year with 212 locations. New stores opened in Deer Park, IL; San Francisco, CA; Paramus, NJ; Geneva, IL; Philadelphia, PA; Charlottesville, VA; Arlington, TX; Omaha, NE; and Chattanooga, TN.   Walking Co. also said it introduced two brands: the Sierra West outdoor inspired casual shoes and boots line and the Thad Stuart men's dress line. Finally, the company moved into the social media with the launch of Facebook, Twitter and a blog sharing posts about foot health, walking and exercise, travel, fashion and products.   "Our customers are passionate about health and intelligent footwear choices," said Michael Walker, VP of marketing and ecommerce for The Walking Co. "Our blog, Facebook page and Twitter account provide more opportunities for us to dialog with our customers, enabling us to better hear their feedback, their stories and personally address their questions." 8

SGB WEEKLY l JAN 24, 2011

on our leadership team”, commented James Hartford, president and CEO of The SportsOneSource Group.  “Paul has 30 years of experience in the outdoor gear and apparel sectors, and while serving on the OIA Board, was integral to their early market research efforts.”  “I am very pleased and excited to join The SportsOneSource Group”, commented Paul Gagner. “My industry experience, along with my longtime position as a user of research, and an advocate for actionable market information makes this a great fit.  In addition, the company’s specialty businesses are growing rapidly and I’m pleased to have a role in further accelerating the opportunities in this area.  My intent is to work closely with retailers, vendors, and others to build on the platform’s twelve-year legacy, and to ensure that our product accurately reflects the outdoor industry’s sales and trends.”  SportsOneSource is establishing an office in Boulder, CO to more effectively service its specialty clients, including Outdoor Industry Association.  

JOHN COOK, NSGA PAST CHAIRMAN John Cook, Sr., who served as chairman of the National Sporting Goods  Association (NSGA) from 1987-1988, passed away on Saturday, January 15. He was 82 years old.  Cook was the former president and owner of The Athletic House Sporting Goods in Knoxville, TN, a team dealer business established in 1922 that currently sells merchandise for 11 sports. One of the top sales generating businesses in East Tennessee, Athletic House's current president is Cook's son, John Cook, Jr., who is the third Cook to run the business. Cook, Sr. began his career in 1954 as a salesman at The Athletic House after graduating from the University of Tennessee, becoming a manager of the store's school department in 1967. He became president of the company in 1974.   In 1982, he was elected to NSGA's Board of Directors, where he served as treasurer in 1985-86 and as chairman in 1987-88. He also served on the association's education and trade show advisory committees while on the Board.  For one term he was chairman of The Sports Foundation, Inc. following his time as NSGA's chairman.  Last year, Cook was inducted into the Knoxville Sports Hall of Fame in recognition of his many contributions to the community through the years.  Mr. Cook was a graduate of the University of Tennessee and served in the Navy during World War II.  He is survived by his wife of 57 years, Harriett Callaway Cook, and daughters and sons-in-law, Marion and Beau Hannifin and Karen and Joe Reed; son and daughter-in-law, John and Cathy Cook; and daughter, Carrie Cook. He is also survived by nine grandchildren and one great grandchild. For Breaking Trade News Every Business Day Go To SGBUPDATE.com


N O M I N ATI O N S A R E N O W O P E N! Do you know someone under 40 ready to become – or already is – a leader in the industry? Please nominate individual(s) you think deserve to be singled out for their achievements. Nominees must be a sporting goods industry professional born on or after January 1, 1971 who are actively working in the industry including footwear, apparel, outdoor, snow sports, hunting and fishing, action sports, tennis, golf and all retailers. Candidates can also hold positions as executives, buyers, store managers, sales reps, agency heads or work for vendors, distributors, wholesalers and trade associations.

NOMINATIONS CLOSE FEBRUARY 11, 2011 THREE WAYS TO NOMINATE! FAX - 704.987.3455 / EMAIL - UNDER40@SPORTSONESOURCE.COM / ONLINE - WWW.SGB40UNDER40.COM For more information please email under40@SportsOneSource.com or contact Katie O’Donohue 704.987.3450 (x110)


“E”- VOLVING MARKETPLACE FOR SPECIALTY RETAILERS, THE CHALLENGE FROM THE WEB EXPANDS AS BETTER BRANDS OPEN DISTRIBUTION By Charlie Lunan

From what Greg Mason can tell, as much as 25 to 35 percent of all performance racquets, or those priced $100 or more, are sold online. That’s probably up from about 15 percent in 2006 and after stalling in 2009, online performance racquet sales likely began gaining market share again last year. What may surprise some, however, is that the online market has come to be dominated not by big box retailers or Amazon.com, but by four local pro shops that moved online relatively early and have now built a formidable lead. And they did that despite the fact that three quarters of tennis players say they prefer to demo a racquet before buying it. Tennis balls, on the other hand, remain the domain of the mass/discount channel and sporting goods retailers because margins are tight and shipping is expensive. “For us, there used to be three channels; mass, chain and pro specialty and now there are four plus the Internet,” says Mason, VP of sales and marketing at Head Penn Racquet Sports. “They have become large enough and important enough that they are a factor you have to look at and think about with launching programs, especially advertising and marketing programs.” In a word, the impact of the Internet on the sporting goods business has been “variable.” In some segments or categories, fast moving specialty dealers have harnessed e-commerce to dramatically grow their business. In the human-powered outdoor recreation business, Zappos.com is making big strides, even as overall online shares of apparel and footwear sales appear to have hit a wall. Golfers, meanwhile, have moved on-line in a big way in the last year to buy their 10

SGB WEEKLY l JAN 24, 2011

balls at deeper discounts. In team sports, meanwhile, the logistics of measuring athletes, designing uniforms, getting purchase orders and servicing teams seems to have insulated both the youth and institutional market from the Internet juggernaut. The only sweeping statements that can be made are that e-commerce remains a relatively small part of the industry’s overall retail sales and is destined to resume growing four to five times faster than other channels and the barriers to entry are rising fast. 2011 will likely mark an important milestone as industry leaders such as The Sports Authority and Dick’s Sporting Goods take back control of their online businesses from GSI Commerce in an acknowledgement that today’s consumers want a seamless experience and the same prices no matter where they shop. Finally, the proliferation of smartphones increases the urgency for “mom and pop” retailers to develop a robust online presence through Facebook, Twitter, Flickr, YouTube and other free social media sites even if they don’t sell online or risk becoming irrelevant.

SELLING GOLF BALLS IN A DOWN ECONOMY In the golf ball business, category killer sites like cheapgolfballs. com, which never actually takes ownership of inventory, have come on strong in the last year as golfers have moved online in search of bargains, saysJohn Glynn, a spokesman for Dixon Golf, which makes recyclable golf balls and other eco-friendly golf products. “What you see now are fewer online retailers holding merchandise and its all being drop shipped through a vendor,” says Glynn.


The advantage of this approach is that it allows both the vendor and the web site to put a vendor’s entire catalogue online with little risk. The model has flourished as more golfers - particularly fixed-income elderly golfers - move online to find the best deals for golf balls, which are relatively inexpensive to ship. “Everyone right now is looking to sell balls however they can in a down economy and the way to increase sales is no longer traditional ties to a retailer and advertising but to tie to a website ” says Dixon. “You put your entire inventory on a site and it costs nothing. They hold no inventory and have no skin in the game. If it does not sell, it does not matter. It’s a picture. You are not getting the same margins, but it’s a way for everyone to minimize their inventory exposure.” Glynn says the shift online favors a young company like Dixon, which only started shipping in 2009. While its balls are available at PGA Tour Superstore, Edwin Watts and Golfsmith, Dixon does not have the broad distribution of the mega brands. Online, however, Dixon can be just as prominent as Titleist or Callaway. E-commerce has pretty much eliminated pro shops at racquet ball clubs, says Penn’s Mason. The golf industry’s green grass retailers could be next. “The stronger pro specialty shops have continued to do really well, but it’s hurt the weaker pro specialty shops that do not have as wide a selection of product or some of the guys in smaller markets that don’t have the volume,” says Mason. “I think there will be a thinning of the herd,” Mason says. “Nobody will be immune.”

In the outdoor business, online sales of outdoor apparel, footwear and hardgoods have surged both in dollars and units sold, but also as a percentage of total outdoor product sold at retail, according to retail POS data tracked by OIA VantagePoint™. The VantagePoint data, which tracks retail point-of-sale data from over 10,000 retail rooftop and websites indicates that the Internet channel comprised 16% of outdoor product sales for hte 11-month fiscal year-to-date period through December across the channels tracked by OIA VantagePoint, versus 13.5% for the channel in the year-ago comparable period. Outdoor hardgoods saw the biggest jump in Internet sales as a percent of total sales for the YTD period, increasing 380 basis points to 18.8% of total outdoor hardgoods sales in the channels trakced by the system. Outdoor footwear and apparel have also both increased more than 200 basis points as a percentage of the total sales across the OIA VantagePoint channels, with the Internet now representing 13% of outdoor footwear sales and more thean 15.5% of outdoor apparel sales. Some of those gains may reflect conservative ordering by independent specialty retailers, who backed away from pre-season orders for 2010 after taking big losses in the wake of a precipitous fall in retail spending in late 2008. “Online retailers in 2010 were the only ones who stepped out and took inventory risk and they won in a big way,” says Topher Gaylord, president of Mountain Hardwear, the mountain sports unit of Columbia Sportswear. “They took the most amount of risk with the most payback and they are winning at the moment.” WEEK 1104 | SGBweekly.com

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ZAPPOS TARGETS OUTDOOR MARKET One of those winners was clearly Zappos.com, which opened its Outdoor Shop in 2007 and revamped it in September of last year with a wide selection of sleeping bags, tents and other gear ten months after being acquired by Amazon.com. “The category has grown immensely,” says Chris Peake, director of performance for Zappos. “It’s actually one of the fastest growing segments of our total business. Between adults and kids, increased consumer awareness of the outdoors, great brands telling great stories and the technical (necessity) and trend (lifestyle) appeal of the category, we’ve seen tremendous growth of product, brands and sales.” Zappos now carries 25 outdoor apparel brands and has been carrying gear, like tents, sleeping bags and stoves since late-2007. That number is likely to grow given Zappos’ reputation for offering some of the best customer service on the Internet. “Historically, a number of brands have protected their retailers by not selling through Zappos,” notes Sam Orme, a securities analyst who follows active lifestyle brands and stocks for D.A. Davidson & Co. “However, this is now changing and - slowly, but surely - premium brands are coming on. In fairness to the brands, if you are not on Zappos you do not exist. If you are not on Zappos now you will be on in the next year.”

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SGB WEEKLY l JAN 24, 2011

One segment of sporting goods that seems less vulnerable to e-commerce is team sports. Serving schools, leagues and clubs still requires taking measurements and then writing up a purchase order and that’s something most athletic directors and coaches look to dealers to do. “Fit works in their favor,” says Rey Corpuz, director of marketing for McDavid, Inc. At Rawlings, team dealers who backed off pre-season orders in 2008, came roaring back in 2010, says President and General Manager Robert Parish. “In 2009 team dealers made some smart decisions not to get strapped by inventory and we’ve seen that all made up plus some in 2010,” Parish says. “So what was true in 2009 did not have any long term impact.” Parish says the best team dealers will adapt to the Internet just as they did to mass retailers and catalogue companies. He sees the big online opportunity for team sports involving further customization. Baseball players already spend $300 to $400 to design and buy custom gloves from Rawlings and other brands online at websites like customglove.com. Allowing coaches and athletic directors to design uniforms online could be a significant business. Even team brand executives, however, concede that the Internet is destined to play a bigger role in their industry as broadband and smartphones become more available and a younger generation of team dealers ascends. With that in mind and an eye toward individual consumers, team brands are generating more digital collateral for their dealers and beefing up their own e-commerce sites. McDavid’s online sales will hit $1 million this year, up fourfold in as many years. Louisville Slugger is producing more videos for dealers to use on their sites showing product and the technology behind them. Sport Supply Inc., meanwhile, continues to integrate its catalogue and team dealer network with SAP-driven e-commerce sites under the names of some of the dealers it has acquired. “We won’t bust the trend,” says Parish of growing online sales. “These things are going to take place. E-commerce will continue to be a major factor.”


A WHOLE NEW GAME The problem for many mom and pop retailers, of course, is e-commerce is a whole new game. Online retailers feel they are succeeding if they convert two to three percent of the people that visit their site. That’s less than one tenth the conversion rate of many brick-and-mortar stores. Succeeding online requires a different skill set and even temperament that may not appeal to many of the enthusiasts running independent specialty shops. Competing with best-of-class online means constantly upgrading the customer experience with fresh content and the latest technology, including customer reviews, instant chat, 360-degree zoom product imaging and local availability. Building a fulfillment capability means further investment or partnering with Amazon.com, GSI Commerce or some other third party that may be competing against you online. For many sporting goods dealers, the opportunity to build a successful e-commerce business is closing fast. Selling online is selling in a market with total price transparency. That means you can’t hide from the big box retailers, the catalogue companies, the category killers and the guy selling used gear on eBay. They are all just one click or mobile app away. The cost

of marketing a site is dramatically higher than it was even five years ago. The outdoor industry is well served by Altrec, Backcountry. com, Eastern Mountain Sports, L.L. Bean, Moosejaw, Mountain Gear, REI and Sierra Trading Post. The hook-and-bullet market has Cabela’s, Dick’s Sporting Goods, Walmart and Bass Pro Shops. In the team and full-line sporting goods space, Dick’s Sporting Goods and The Sports Authority will be asserting even more influence in 2011 as they take more control over their online businesses back from GSI Commerce. “The barriers to entry have become higher,” says Penn’s Mason of the performance tennis racquet niche. “Now you have three or four super retailers already doing a good job.” This year could be the year specialty retailers have to decide what their e-commerce strategy will be, says Darren Bush, owner of Rutabaga, a Wisconsin paddlesports dealer which recently decided to upgrade its online store so it could load all its SKUs and provide customers with more search options. “You may decide that you don’t want to sell online and rather focus on being a local business and that’s a perfectly valid business model,” says Bush. “But you will have to decide.” ■ WEEK 1104 | SGBweekly.com

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BOOTS REGAIN THEIR

MOJO THE LIGHTWEIGHT TREND AND ADDED FASHION TOUCHES ARE HELPING DRIVE SALES By Thomas J. Ryan

Following the overall resurgence last year in the footwear category, the boot category reawakened in 2010. While the serious user continues to look for sturdier options for winter excursions and backpacking, lightweight continues to drive the performance side along with the weather. The real action appears to be more pronounced in the casual and fashion business with leather and après styles driving a new customer to the category. Mike Massey, owner of Massey's Professional Outfitters in New Orleans, LA, says that sales performance of boots for his store has been "pretty solid" following overall strength in the footwear category. "The only thing holding it back is vendor inventory," says Massey. Leading the gains at Massey's has been winter product and casual women's boots. Among brands, Ugg, Patagonia, Merrell and Keen are stand-outs. He says Massey's is riding a two-year trend toward women's boots, possibly kicked off by when Ugg first started gaining momentum four to six years ago. A more sophisticated look is happening versus prior years, he adds. "Ugg continues to grow even with classic product in the channel," says Massey. "We’re seeing customers move beyond the older looks and picking up new casual models. Our other brands are succeeding in the boot space because they have identified trends and built good product." Also seeing strength has been light hiking, likely influenced by the trend for lighter overall performance footwear and the buzz around trail running and pure running. "Men's is trending more athletic and women's more casual," suggests Massey. "I think there is a lot of room for women's 14

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to trend better in performance, but we just aren’t seeing very inspirational products." At Backwoods, which operates nine stores in the Central U.S., the Keen Targhee II is the top selling boot in both men's and women's, with particular strength in mid-hikers. Vasque and Asolo round out its top three boot brand sellers. "Light hikers with some street appeal are performing the best for us in both men’s and women’s," offers Kristin McLean, footwear buyer. "As a close second, the hiking category remains strong for us with a more traditional product." She says the chain is definitely selling more multi-purpose outdoor shoes than boots at this point. "We think the shoe selection has followed gear technology," observes McLean. "There is less demand for a “beefy” boot because, even for multi-day trips, you simply are not supporting as much gear as you once had to." She says that while women are concerned with the weight and performance features of boots, appearance is important. "Not that women are looking for a “fashion” boot but they do have an interest in something that looks good and meets their needs." Backwood's best selling men's boot are $125. Allowing the customer to leave with socks and/or accessories helps drive a respectable out-the-door purchase of around $200. "Our top selling women’s boot is $125 but we had strong sales with boots at $140," adds McLean. "At $155, and highly technical, we had to take a markdown to move them through. We have edited the women’s boot assortment accordingly going forward. The $125 boot definitely has street appeal."


Photo courtesy of Salomon

At Backcountry.com, boot categories for men and women have been strong all year. Backpacking and insulated pac boots have been working with men while leather casual boots of all lengths as well as women's insulated or shearling-lined après boots have driven the women's side. "For men, we've had an exceptional year with backpacking boots," says Chris Dunn, assistant footwear buyer. "We've been seeing more traditional leather backpackers like the Vasque Sundowner or the Merrell Wilderness follow fashion trends this year, with similar silhouettes as women’s boots in other categories. Winter boots picked up a little late this year, but with the series of winter storms that rolled through the country at the beginning of November and during the Christmas shopping season, our pac boots for men and après boots for women have been very strong categories for us." He particularly singled out women's après boots as a strong seller for the online retailer. "There are so many great styles this year that have both a great fashion play with functional luxuries to keep feet warm through the day," Dunn says. Demand for rich leathers appears to be an equally strong, ongoing trend. For Fall 2011, the Backcountry.com buying team have already seen a wide range of casual and après boots with an array of suedes and full grains for men and women. "Our female customer has been looking for the perfect blend of fashion and functionality," says Dunn. "Sorel executed their mix really well this year with their women's winter offering. Our male customer is still sticking to the old standbys of utility and technology." Photo courtesy of Obermeyer

Besides Sorel, The North Face also continues to be strong with their winter selection, Dunn notes. Asolo, Merrel, Vasque, Mammut, Scarpa, and Kayland have all stood out in backpacking with highly technical and traditional leather styles that performed all year long. Dunn says that more so than 2009, consumers in 2010 seemed more confident economically and willing to pay for quality. 'Value' in the boot category comes in an insulated winter boot at $90-100; something that is warm and provides good traction and protection through the winter months," says Dunn. At Jesse Brown's Outdoors in Charlotte, NC, Asolo and Merrell are leading the way in the boot category. Oboz and Scarpa are also key styles." Asolo is working in the 'boot' category mainly because they made a commitment to being the BOOT company," says owner Bill Bartee. "Merrell's success still comes from fit, recognized brand and affordability." Among categories, backpacking and winter boots are the winners lately, both due to the perception of protection and comfort, he believes. Light hiker-mids have slowed recently, mainly because consumers are going to low tops or backpacking boots." Conservative with a little-bit of colorful accent have been well-received with us," adds Bartee. "Also, the usability of added value - hiking shoes that are also good as a lifestyle shoes, too." Jesse Brown's Outdoors has a few boots at $250 that only the "true user" is going to purchase. The sweetspot is around $100 to $179. "[The boot category] has been good," offers Bartee. "Much of it comes from people investing in their sport and in their passion. WEEK 1104 | SGBweekly.com

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SGB WEEKLY l JAN 24, 2011

Photo courtesy of Oboz

During the early days of the recession people held back on a boot purchase (and made their old ones do). Now they are pulling the trigger and making the purchase." Schnee's in Bozeman, MT, is seeing a "very strong" boot business largely on the strength of the light hiker category and the après category. The traditional backpacking boot is generating flat sales but Curt Smith, footwear and retail manager, still considers it "good and healthy" given the volume the store does in the category. Added Smith, "In an economy where a higher price point is probably averted a little, we're still holding our own there." Indeed, some traditional boot prices have increased from $280 to $340 but the core user is still buying. "People aren't shying away from it. They’re reinvesting in the category because they had some success there," says Smith. Men's winter boots have also picked up after a challenging year in 2009. But Smith says the light-hiking category - with prices around $120 and below – have been consistently delivering double-digit gains, driven by the multi-purpose trend. He particularly cited the success of Golite's Lime Lite model. On the fashion side, Ugg has been a big seller although Sorel, which he says "has revolutionized the winter boot business," is the fastest grower. Keen, Merrell and Dansko are also strong sellers at Schnee's. On the more traditional side, Lowa, Oslo and its own Schnee's brand lead the pack. Alpine Shop, which operates three stores in Missouri, has seen a 13.7 percent increase in its hiking high category along with a 28.8 percent jump in its hiking low category. "In general, [the boot category] has been performing pretty well," says footwear buyer Angela Bono. "We sell light hikers, fabric and leather, about 30 percent more than their leather heavier hiking counterparts. We also closely follow inventory levels and do at-once orders frequently to chase business. Our staff is well trained in the fit of each individual boot and uses that to guarantee our boot fits. We also do a lot of grass roots outreach within our community. For several years now Alpine Shop has been teaching special clinics with regard to footwear, socks, and insoles with BSA Scout leaders and our local military branches." Bono suggests that backpacking and light hikers have a steady year-round business for the chain in the Midwest, with a nice spike in the springtime. "We had particularly good sell-through in the casual leather winter boot category; particularly the Sorel Cheyanne and Ellsmere for men," Bono adds. "We also saw successes in the women’s waterproof and insulated, the Ugg Adirondack and the Ugg Belfair. Traditionally, at this time of year, the women’s hiking category slows for us." The top four volume drivers for men this year at Alpine Shop are the Vasque Breeze, Vasque Wasatch, Merrell Moab GTX, and Merrell Moab Mid GTX. In women's, the top four are Ugg Classic Tall, Ugg Classic Short, Ugg Bailey Button, and Vasque Breeze. Vasque and Merrell are two brands particularly standing out.

"Vasque is a member partner with the G.O.A. (Grassroots Outdoor Alliance)," says Bono. "We have good program terms and the ability to adjust pre-season orders without hassle. Merrell does well for us, due to their replenishment inventory position and great customer service." Bono says customers generally seem to be buying closer to when they need the boots. Style remain important, particularly with women, but weight, fit and price also influence the purchase. She adds Alpine Shop's focus on fit helps reduce the emphasis on price. "We offer value by guaranteeing all our hiking boots fit and insure that the customer has everything they need to be comfortable in their new shoes with proper socks, Superfeet, and anything else they might need," says Bono. "Most of our customers don’t mind paying up for quality hiking boots. We do have a very large scouting population in the St. Louis region. We tend to see more price-sensitive parents when it comes to hiking boots, but they are still interested in having their children fitted well." At The Base Camp in Billings, MT, late spring and early fall are the busiest selling periods for hiking boots but this fall has particularly benefited from cooperative weather. "Montana had a beautiful, extended fall this year and that definitely had an impact," said Cindy Cast, The Base Camp's footwear buyer. "The more opportunities people have to get outdoors, the more they see the benefit of new or upgraded hiking boots." An early heavy snowfall has led to good sell-throughs in winter boots. Women's hiking boots overall have been on the rise, she added.


WHAT DO YOU HOPE TO SEE AT THE 2011 WINTER OR SHOW? 1

2

“More crossover rugged looks for daily use. More natural construction (leather, canvas, hemp) and less ultra-techy looks.” - MIKE MASSEY,

Massey’s Professional Outfitters

3

4

1. Timberland® Men’s LiteTrace™ 12 oz boot offers stability, traction and durability with single-layer waterproof upper, no-sew construction and minimal seam-sealing. Green Rubber™ outsole features lightweight Pebax® foam heel insert. MSRP $155 2. Chaco Chukka-style Men’s Otis with brushed suede leather, lace-up fit and Chaco’s ADDSTRIDE™ midsole for arch support. MSRP $140 3. Hi-Tec Capri 200 with waterproof suede upper, 200g Thinsulate insulated construction, durable shell construction, Comfort-Tec sockliner. MSRP $100 4. The North Face Back-To-Berkeley throwback styling meets contemporary technology with HydroSeal® waterproof protection and IcePick® lugs. MSRP $120

Asolo continues to a leading boot brand for The Base Camp for many years. Oboz is a newer brand seeing a strong reception. Said Cast, "When they started up they began with a small lineup and got it right before expanding." At least in Montana, performance remains the top criteria consumers look for in a boot. "They have to know if they are going to be out in steep terrain for multiple days, the boot will not breakdown," Cast said. "Serious backpackers still like one piece leather construction. It takes a lot of skill and product knowledge to convince a customer that a leather fabric construction might work very well for their type of backpacking. There are some consumers who are very up to date on construction methods and are looking for the newest technology, but Montanans tend to be traditionalists and like their all leather boots." So far, The Base Camp hasn't seen any meaningful spikes in product prices emanating from China. "The prices changed more dramatically two years ago due to rising fuel costs," said Cast. "[But] deliveries have been the issue this past year. In general, the bigger companies who own their own factories have had a little better delivery than small companies who were at the mercy of Chinese factories closing." At Elephant's Perch in Ketchum, ID, the overall boot category has been slow, due partly to consumers shifting to winter boots with the arrival of snow. "I would say a general trend for us is in the light day hiker category," says Liza Wilson, hardgoods and footgear buyer. "We are selling less of the big boots. This trend may have a lot to do with the Five Finger craze and people looking for less not more." ■

“Hold that price. Due to the dollar and sourcing, many of the companies are being forced to up their price. That’s okay to a point but eventually we will have diminishing returns on the sales front. Otherwise, it’s still fit and storyline. We all now that fit and function matter but a good story (marketing) goes a long way with the consumer. See Vibram Five Fingers (for a visual and story) or Oboz (they plant a tree with every shoe purchased). Consumers love the story so therefore retailers love the story.” -BILL BARTEE, Jesse Brown’s Outdoors “More than anything, we hope to see price stability in the category as we do not want to price people out of the market.” -KRISTIN MCLEAN, Backwoods “For men, I’d like to see the perfect Chukka. I’m a sucka for a Chukka. For women, I’d like to see someone rival the Sorel après styles. They’re that good.” -CHRIS DUNN, Backcountry.com “Good Product and good program terms that will help us reach our sales, term and margin goals.” -ANGELA BONO, Alpine Shop   “Lots of brands are starting to have momentum in boots. I hope they don’t change their products. We also hope they’re putting adequate inventory into position so we can replenish items in season and have the ability to further grow the category.”  -CURT SMITH, Schnee’s 


CALENDAR

27-29

PGA Merchandise Show Orlando, FL

27-30

SIA Snow Show Denver, CO

31-1

SIA On Snow Demo Winter Park Resort, Co

FEBRUARY

1-3 1-3

WWSRA Northern California Active Sports Market Reno, NV

1-4

EWSRA Winter Sports Expo Edison, NJ

14-17

NEWSR Winter Sports Expo Manchester, NH

16-18

GDS Shoe Show Dusseldorf, Germany

WWSRA Rocky Mountain Winter Market Denver, CO

2-3

Mid-Atlantic Winter Market Oaks, PA

2-5

Sports, Inc. Outdoor Show Phoenix, AZ

6-8

EORA Southeast Winter Market Greenville, SC

6-9

ISPO 2011 Munich, Germany

7-9

WSA Show Las Vegas, NV

6-10

MRA Winter Market Boyne Mountain, MI

14-15 14-17

SWRA Winter Show Snowshoe, WV NEWSR Winter Sports Show Providence, RI

14-18

Magic Marketplace Las Vegas, NV

15-17

MAGIC Fall / Winter Show Las Vegas, NV

15-17

MNSRA February Show Madison, WI

21-24

Worldwide Spring Trade Show Reno, NV

6-9

23-24

WWSRA Inter Mountain Winter Market Salt Lake City, UT

AUGUST

23-24

WWRA Southern California Winter Market Costa Mesa, CA

4-7

MARCH 1-3

WWSRA Northwest Winter Market Seattle, WA

APRIL 14-17

Sea Otter Classic Monterey, CA

14-17

FIBO 2011 Essen, Germany

MAY 1-4 NSGA Management Conference and Team Dealer Summit Tucson, AZ JUNE 14-16

Licensing International Expo Las Vegas, NV

27-29

EORA Southeast Summer Early Bird Show Greenville, SC

27-29

EORA Northeast Summer Early Bird Show Manchester, NH

29-30

TAG Spring / Summer Show St. Louis, MO

JULY

3

EORA Mid-Atlantic Summer Show Parsippany, NJ

Outdoor Retailer Open Air Demo Outdoor Retailer Summer Market Salt Lake City, UT

TRADE ASSOCIATIONS | BUYING GROUPS

JANUARY

For full year calendar go to sportsonesource.com/events

Athletic Dealers of America 1395 Highland Ave. Melbourne, FL 32935 P: 321-254-0091 F: 321-242-7419 athleticdealersofamerica.com National Sporting Goods Association 1601 Feehanville Dr., Suite 300 Mount Prospect, IL 60056 P: 847-296-6742 F: 847-391-9827 E: info@nsga.org www.nsga.org Nation’s Best Sports 4216 Hahn Blvd. Ft. Worth, TX 76117 P: 817-788-0034 F: 817-788-8542 nationsbestsports.com Outdoor Industry Association 4909 Pearl East Circle, Suite 200 Boulder, CO 80301 P: 303-444-3353 F: 303-444-3284 E: info@outdoorindustry.org outdoorindustry.org SGMA 8505 Fenton Street Silver Spring, MD 20910 t. 301.495.6321 f. 301.495.6322 E: info@sgma.com sgma.com SnowSports Industries America 8377-B Greensboro Dr. McLean, VA 22102 P: 703-556-9020 F: 703-821-8276 E: siamail@snowsports.org snowsports.org Sports, Inc. 333 2nd Avenue North Lewistown, MT 59457 P: 406-538-3496 F: 406-538-2801 E: info@hq.sportsinc.com sportsinc.com Sports Specialists Limited 590 Fishers Station Dr., Suite 110 Victor, NY 14564 P: 585-742-1010 F: 585-742-2645 sportsspecialistsltd.com Team Athletic Goods 629 Cepi Dr. Chesterfi eld, MO 63005 P: 888-796-0734 F: 636-530-3711 tag1.com


"I can't imagine having achieved the expanded retail space & growth of our business without regularly attending OR." – Marc Sherman, Outdoor Gear Exchange and GearX.com

201 1

2012

AUGUST 4-7, 2011 Salt Palace Convention Center Salt Lake City, UT

JANUARY 19-22, 2012 Salt Palace Convention Center Salt Lake City, UT

Open Air Demo AUGUST 3, 2011 Jordanelle State Park, UT

All Mountain Demo JANUARY 18, 2012 Wasatch Range, UT

VISIT OUTDOORRETAILER.COM OR CALL 949/226-5722 FOR MORE INFORMATION.


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Sgb Weekly 1104