The co-op comprises about 110 retailers and 150 outlets around Germany. Wahnel believes that the outdoors is more popular than ever, but the business has changed.
The retailers need to rethink and reposition themselves somewhere between the core customers and the mainstream. “Those who don’t will be in trouble,” Wahnel warns. In the interview with ISPO.com, he considers the winners and the losers in the market and the changing conditions in a business which is still highly attractive.
ISPO.com: Tim, it seems as though the outdoor business has accelerated after a couple of flat years. How would you explain that?
Tim Wahnel: One thing should be clear, the outdoor hype that peaked in the cold winter of 2010 is long gone. Now, there are several factors which have an impact on our figures: Are there any brands which could successfully make the step from the core target group to the mainstream? Does the weather encourage people to go outdoors? How many players are there in the market and how competitive are they?
What are the answers to these questions on the retail side?
As a matter of fact, the outdoors remains highly popular in all its forms. The category covers a broad range of consumer demands, from physical exercise to culture and health, recreation and lifestyle. Under the headline “outdoor”, specialty retail serves a heterogeneous group of customers whose interest in outdoor sport and lifestyle has remained unchanged.
Who are currently the winners and the losers in the market?
The truth is, the market and the demand have been changing. On the losers’ side, you find the vendors who believed in making a “fast buck”. They sacrificed their brand profile and their distribution policy to achieve it. Those brands now have to sit down and deal with the results of this strategy – a strategy that appears to be unsustainable.
Is this the end of the mainstream?
The mainstream business is declining. The hardshell jacket designed for the morning walk to the bakery is not currently a big hit. As a result, low-profile me-too retailers no longer find themselves on the sunny side of the street; indeed, some have already exited the market. The majority of our affiliated retailers have reacted to this development, adjusted their product ranges and now focus on their core qualities.
Categories that require more customer advice and service – such as pants, footwear and hardwear – have been on the rise and have gained a larger portion of our total sales compared with previous years. Apparel is declining, largely because of collections that have become extremely short-lived. In this category there has also been an inappropriate distribution of the risk between the vendors and the retailers.
So, you compensate for the decline in apparel with hardwear?
There is no reason to celebrate, to be honest. Almost all of our retailers report declining customer footfall in their shops, which derives partly from the brands’ own retail activities. This leads to a substantial decrease in our turnover.
What is the current situation between online and on-street retail in the specialty outdoor sector? How do your affiliated retailers make their choices with regard to sales strategies?
The portion of online sales is definitely growing, but the growth rates have slowed over the past few years. For many of our members, their internet presence is more of a shop window addressing their regional customers. By far the biggest part of their sales is still generated through on-street customers.
In the shops themselves, we have noticed that sales have remained almost at the same level as in the previous years, despite declining customer footfall. This seems to indicate that the consumers who enter a shop do buy something. What we are missing are customers who just drop in to look around and who are just seeking information.
There has been much discussion about the Click & Collect concept. How far have you guys got with this?
Our focus is to show the consumers who browse for items online that the merchandise is available in local stores. The number of customers who are well-informed even before they enter a shop is huge and is still growing.
Digitalization means a tremendous challenge
The Click & Collect approach means vendors are integrating local retailers into online sales – a development that we warmly welcome. The number of customers who choose this way of purchasing is smaller than the large majority of those who buy purely on the internet. It will be a major challenge for our colleagues in the retail sector to retain their contact with certain target groups which are becoming increasingly “digital”.
What is the situation on the pricing front, viewed against the background of online competition?
The pressure on the prices remains enormous. The more trendy a brand is, the more attention it gets from price-driven retailers. And, true to form, the usual suspects spiral down the pricing at the beginning of every season.
We have noticed, however, that the slight drop in popularity in the outdoor sector has led to some general dealers and department stores pulling out of the market.
Fair partnership pays off
Nevertheless, issues like stable prices and vendors’ distribution policy play a key role for the retailers in our group. In the first place, we make our money through the sell-out margins that we achieve. The sell-in from the vendors’ side is less critical.
Have a look at our ranking of top suppliers. The retailers value and reward vendors who behave fairly in the partnership. Therefore, the list of our top partners is packed with brands that are not necessarily designed to appeal to mainstream tastes.
And now for something completely different… the weather. Has 2016 been a special year so far?
Counter question: What is the perfect outdoor weather? Cold? Warm? Rainy? Changeable? And how can the weather help us when the seasons no longer conform to traditional weather patterns, or to the logic of the outdoor business?
Once the thermometer reaches 25 degrees centigrade, the first advertisements for short pants appear. In wintertime it is even worse. The snowy season has shifted until well after Christmas, which is traditionally the time when retailers discount winter merchandise to create space for the newest summer gear. We urgently need to rethink our business strategies when it comes to timing.
In any case, the weather in 2016 has again been more critical to our business than the general economic development. The beginning of the year was definitely too mild – we missed the big sales of warm jackets and our warehouses remained fully stocked. During the following months the weather was average for the time of year, which is usually good for the apparel sector.
What is your impression of the vendors and their policy toward retailers when it comes to purchasing volumes, new restrictions regarding selective distribution and all the other torture tools that vendors might apply?
Currently, the market is going through a lot of changes. Old patterns are being rethought and new things tried. There is an incredible amount of merchandise in the market, provided by many different brands that are interchangeable or superfluous. This situation allows retailers to check vendors out and decide with whom they should work and develop a closer working relationship. See above.