Industry Insider/Friday Free For All: Are Snowboard Shops Doomed?
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- February 27 2009
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- 17 comments
Industry Insider features is a forum for members of the action sports industry to share their opinions. This week’s installment doubles as a Friday Free For All, a feature that allows you to do the same. Please refer to our comment policy before you post.
Words: Tabor Coates, Owner, Eastern Boarder
I have been in the snowboard business for 20 years, during this time I have weathered years with no snow, economic recessions, and step-in bindings. However the last two or three years have been the scariest. It is not the current economy that worries me the most, it is the lack of partnership between shops and manufacturers that leaves me asking myself, “Are snowboard shops doomed?”
Shops have always competed with mailorder and more recently online retailers. In the past, most of these outlets held price and many of the top brands were not available through them. In the current environment, shops are not only being undercut by online retailers offering deep discounts all season long, we are also competing with manufacturers selling directly to customers. One of them offered multiple item discounts in December. Any snowboard retailer can tell you that the hit to their business has been substantial. Lost sales are obvious; what is less obvious are the hours spent with customers to properly fit them with equipment, educate them about new technology and the differences between styles and materials, only to have them leave and make their purchase online…and then bring the equipment back to the shop to have it set up.
I am fed up with hearing manufacturers tell me year after year that it will not happen next season. Some of the brands do a better job than others at controlling online dealers, but it seems like the largest brands are the worst.
I probably sound like some crusty old snowboard dealer, bitching about business slipping, and I guess that’s what I am, but I have seen similar trends hurt other sports. In the 80’s windsurfing was thriving, windsurfers went to shops where they could demo & buy equipment, take lessons, or just hang out and meet other enthusiasts. As the sport grew in popularity mailorder companies sprung up, offering steep discounts. Not long after, shops began to disappear and the sport disappeared with them. BMX is a current example of a sport stifled by low mailorder pricing. BMX retailers have such a hard time making the numbers work that there are very few core shops. BMX is held back due to the lack of shops out there offering the whole experience; the hardgoods, clothing, shoes, videos, and just a place to hang out and meet.
Retailers and manufacturers rely on each other to survive, and unless we find ways to support each other we are all doomed. I have an idea and it may be crazy, most of them are. What would happen if manufacturers sold items directly from their Web site and shipped them to a dealer near the customer? The equipment could be set up by a professional, the dealer could tell them about the warranty, how to take care of the equipment, offer related items and even encourage them to take a lesson if they’re new to the sport (the next time someone tells you they tried snowboarding but it wasn’t for them ask them if they took a lesson). All of this could help make snowboarding a more positive experience for the customer. The manufacturer could even sell these boards to the dealers at an inflated price or split the sale with the dealer. This system would be much better than having the vendors as competitors, creating friction with dealers.
I also think manufacturers should have a zero tolerance rule for online dealers that think
they can break the rules and screw up the whole market so that everyone loses. I know that online retailers are under pressure to grow their numbers every year to unrealistic levels. Let’s remember how profitability works, it’s not how much money you make it’s how much you keep. I won’t even get into the discounting problems with bigbox stores. Its hard enough to make a profit on hardgoods with only a 40 margin especially when you factor in freight charges, package deals, price matching, late or no snow, and all the leftover products that you have to sell at cost. I really think hardgood margins need to be keystoned like softgoods. I don’t feel that the manufacturers should take the hit, I just think the retail prices should come up a bit. I know that most companies won’t like the idea of moving retail prices up, but I am sure that the more profitable brands are the ones dealers would really promote. This would also help dealers pay their bills on time and make the whole industry healthier.
I don’t want to sound hypocritical. We offer product online for customers who really want to purchase it from their computer. We also offer sale prices at the end of the season on leftover product. For some customers the online sales method works fine, however if you don’t know exactly what you want it can be a nightmare. Can you imagine buying snowboard boots without trying at least five pair on first or buying a board without flexing it first? Think of all the mistakes a first time buyer could make in choosing equipment and then trying to set it up themselves. This could really lead to a negative snowboarding experience.
I would like to see the snowboard manufacturers team up with the dealers and figure out a way to drive business to the shops not only for the benefit of the dealers, but for the sport in general.
Eastern Boarder has 5 retail locations in Leominister, Worcester, Natick, and Danvers Massachussetts, as well as Nashua, New Hampshire. Check them out online at www.easternboarder.com.
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February 27th, 2009 at 10:05 am
No. Shops like Eastern Boarder wont be doomed. They will take a pretty bad hit though until we sort through this econo-mess and the manufacturers realize they need to support their core dealers again.
In the meantime (I’m no retailer, but I’ve been around the block in this industry a few times), I personally would advise the shops need to:
- have the best customer service humanly possible, and hire the best shop kids to do it (they’re out there, espcially now–do you due diligence!). No time for cool guy attitudes anymore. Treat your customers with care and respect and teach them what they need to know, and they’ll come back. Create an environment that pulls consumers in, and keeps them coming back for more.
- be the guy that doesn’t carry Burton. Bring in the small brands and the established mid-size brands and sell the heck out of them. Offer what others don’t and have the knowledge to explain why these brands are just as good or better than the mega-brands.
- learn how to market your store. This doesn’t necessarily mean buying ads in the local newspapers. It means getting creative, getting your staff on board. Social networking, word of mouth, holding local events are all things you can do that can be inexpensive and effective. Radio stations also seem to be hurting for dollars right now–try doing product trades with them for promo giveaways to get exposure and drive people in-store.
My whole outlook on the state we are all in is that the cream will rise to the top, and those who have been doing things half-ass or with shady methods will fall off. We all have to work harder for less, but in the long run, it’ll pay off for those of us who do…
Good luck EB, but I think you’ll be fine.
February 27th, 2009 at 11:37 am
Imagine if every manufacturer decided to stop selling online all at once… or began a system like Tabor suggests (which does already exist - and I have been thinking about trialling for years) where online sales channel customers into stores….. imagine what that could do for the industry as a whole - sure there are reasons why we need online sales, or at least competition…. but i think a widespread pick up and move away from discount online sales (just sell your overstock and samples online you idiots!) would improve the industries position by unimaginable proportions.
my 2 cents.
February 27th, 2009 at 12:12 pm
” In the meantime (I?m no retailer, but I?ve been around the block in this industry a few times), I personally would advise the shops need to:
Out of curiosity what is your expertise? Not trying to be an instigator, just curious because you seem to think you have all the answers.
February 27th, 2009 at 2:41 pm
You are not a crusty old snowboard dealer, bitching…I totally agree. I REALLY like the second point of what tundrah said…Bring in the small brands and the established mid-size brands and sell the heck out of them.
February 27th, 2009 at 4:03 pm
I am a marketing person who was a shop kid many years ago, and have worked directly with retailers, reps and in-house sales people for the last decade. So, no, I’m not a retailer.
Sorry if you don’t feel I am qualified or that my comments are worthwhile. This is an open forum… if you don’t like what I have to say, then all you have to do is not take my advice.
Or, if there is something I am suggesting that you think is so off-point, why don’t you just comment about it specifically?
February 27th, 2009 at 6:09 pm
Re: What would happen if manufacturers sold items directly from their Web site and shipped them to a dealer near the customer?
While this suggestion seems to be a win for both shops/manufacturers, it’s definitely not ideal. First is the issue of consumers who don’t have a local shop nearby. Do you really want to force them to go to a shop when it’s far more convenient to purchase online and have an item shipped directly to them?
Some might say, look into something like Shopatron, but realize that many snowboard shops don’t even have an online presence, and despite any system that is aimed at making a transaction easy to fulfill, why would any brand want to rely on a shop to handle fulfillment? At the end of the day, the manufacturer’s rep is at stake, not the shop fulfilling it. So when orders don’t get processed in time, are mis-shipped, the consumer is going to get pissed at the manufacturer. Yes, even manufacturer’s make mistakes in order fulfillment, but why add another point of failure into the fulfillment process that can go wrong? Also, when you look at most industries almost all manufacturers end up going the direct sale route. Any solution to pass off sales to brick and mortar shops is just a temporary band-aid.
I agree that the real issue at hand is online dealers going off-price. It’s really up to the manufacturer’s to have more stringent requirements and serious repercussions for early discounting. The fact of the matter is that there is a large percentage of people who know what they want to order online, because there is no way that any local brick and mortar is going to have the selection that some online stores have. E-commerce is nothing new and it’s another outlet for sales, unfortunately most shops don’t have an online presence and it’s an uphill battle if they haven’t established an online store within the past few years.
Do I have a solution that could benefit manufacturers/shops through online sales? Unfortunately, no but like tundrah’s reply, it’s up to the shops to set themselves apart from their competitors.
February 27th, 2009 at 8:42 pm
Manufacturers going direct is going to kill the core of our industry and it’s going to collapse into itself. Without the core retailer to service the customer, there’s no place for the core consumer to get their info on what really goes down, what products are worth the investment, what brands are worth the investment (on the street). Next thing you know Quiksilver = Gap, Krew = Tommy Hil, Billabong = American Eagle, DC = Nautica, Volcom = Old Navy, Burton/Analog = Sean John.
The retailers will go out of business and the manufacturers will implode. No matter how we as manufactures and retailers sugar cote it, it’s inevitable. Why are we trying to change something that’s worked in our industry for decades? Because Hollister or A&F are trying to out do us? Really? Let them have a slice. Let’s position ourselves to support our local retailers in the core areas to out perform the mall based stores. These are the stores that give back to the community and engage in events and the local economies.
February 28th, 2009 at 1:38 am
I’m guessing this is in reaction to the Burton post last week. Around mid-February, Burton drops it price in its stores 20% and all it’s online partners follow. The discounting seems to be a unified front. So unless the unaffiliated retailer is not in loop and does not lower there price at the same time, then they are going to lose a sale to an online partner or a Burton store. So unless the board is being bought ebay or the grey market, pricing is pretty fixed across the board, until end of April then it seems to be a free for all. I think brands need to have tighter vendors agreement with both their online and brick. With an open communication about pricing controlled by the sales manager, so everybody is on the same page. If you are not keep your price in line with what is happening online then yes you are going to lose a sale. I would say 50% of the people walking into a shop looking to drop some cash already know what they want. The days of the ignorant consumer are over, the minute they try to get sold on something they saw online that morning for 20% less oh course they are gona walk. Do you Honestly think people are gona wana spend an extra 100 or 200 bones just because your “you” get over yourself. BTW I’m not talking about u in particular.
If you want them to spend the extra cash you have to give them reason. I truly believe anybody who really loves snowboarding wants to support their local shop. And in the end I think customer service is the key factor. I hear you describing these great scenarios of a well informed staff telling a customer all about the products and what is best for them and stuff but unfortunately it is the exception not the rule. They sometimes fail to listen to their customer and sell what they like or need to move as apposed to what they want. And the right staff goes a long way, and genuine “Hey man what’s up!” goes a long way, but hung over “Hey Man…” Could be your nail in the coffin. Also make your reps work for their commission. Make them do PKs and often, it’s good team building for the staff and it help solidify relationships with a brand.
I think Evo Gear is the perfect example of a store blending online and traditional retail. They embraced change with a fresh perspective, because they are not clinging to the “good old days”, they where not around then. This was just the situation when they open so they build their model around that. They have a gallery in their shop, host events and are part of the community or create a community, they give back and contribute, to me that is key. Because if all your store is just a cash register way should I support u and give u the few extra points.
February 28th, 2009 at 8:08 am
About the discounting being a unified front with Burton (or other mfg) that is not the case at all. The mid-Feb time period was when it was allowed to go off price with Burton.
What this original post and what I referred to in my reply were shops going off price as early as November. Yes you read that right: November. While it was primarily west coast shops, there were some east coast shops as well. This kept going on before online partners were technically allowed to go on sale which was this month.
So even amongst the online partners, there was definitely no level-playing field. I do have to give credit to EB for being one of the select few online dealers who didn’t go on sale multiple times the past months (as far as I could tell anyways). Of course this is inevitable when a lot of those P2P partners had to meet unrealistic buys and had tons of stock to sell, so you can’t blame just the shops as it’s a trickle down effect from guys like Burton.
February 28th, 2009 at 11:09 am
for starters. I would not say online is that profitable. For quite a few stores it will me the end of the line. Its a huge gamble. Only the ones with very deep pockets can make it thru. I am sure there is massive money still owed to burton from their p2p partners. Next year is going to be ugly, but the strong will survive.
As a consumer and retailer, we need to support good stores, so we actually have downtowns.
February 28th, 2009 at 8:56 pm
Tabor,
I feel your pain, but this is all a cycle and we are in the perfect storm of a young / unexperienced industry that would be going to go through this regardless of the economy falling into the toilet. Snow has been over saturated for years, margins have suck for years and there is just too much product and too many retailers trying to sell it. The strong will survive and most of the big box stores / larger chains will suffer like never seen before and get out, those who are left will pick back up and margins will rise until the next wave, but hopefully the industry will learn from this history lesson this time around.
March 2nd, 2009 at 4:52 pm
Anyone else think this is ironic coming from the owner of a shop that if googled states: “EASTERN BOARDER the finest online store for snowboards, Burton snowboard, snowboard bindings, skateboard, skate shoes, Nike SB, free shipping.”
As with every business you need to evolve to your customer. There are always going to be the core shop kids but online shoppers are emerging all the time. There are tons of reasons to buy online and its our job as shop owners to adapt to this market.
Saying we have to ban together to stop this stuff from happening is retarded. This isn’t the music industry? It’s our job to evolve to our customer and come up with innovative ways to get them the right gear so they’re stoked. For right or wrong snowboarding is what it is these days.
I would like to hear what percentage of Tabor’s business comes from online compared to traditional?
Woooooooooord
March 3rd, 2009 at 7:23 am
Sounds as though he hit a nerve? You wouldn’t be a retailer who was dropping his pants in November would you? If your going to be an internet tough guy and call others idea’s “retarded” at least be a man and let everyone know your name and shop, only fair isn’t it?
March 3rd, 2009 at 7:52 am
lets be honest here. How many people are actually capable of even mounting their own snowboard? That number is probably in the 30% range. So the snowboard biz in general has some huge flaws in it. I have been doing it for over 20 years and the last 10 have been quite pathetic. Everyone who doesn’t care about their customer after the sale needs to get the hell out of the biz. If we don’t fix the retention rate, then this is going to shrink incredible fast. Selling online, and opening a chains of store just make you a lame sporting good store. Why did you get into the biz? I think alot of store owners need to rethink that and get back to the basics.
For the majority, buying online is dumb. Can a review really recommend a board for someone. Lets all read stickers on the back of boards, and sell them that way. We could also sell paint and anything else with a sticker on it.
As you can tell I don’t have much sympathy for the people who have gone beyond why they started in the biz. They lost focus and have risked everything for the almighty dollar. They probably don’t even snowboard anymore.
One last thing about the easternboarder. I don’t know much about them, but why is it the first name and the bulk of their content online is about the big b? It seems silly to be competing with your suppliers and in turn supporting them being your competition.
March 5th, 2009 at 2:46 am
Shopatron works with over 600 consumer goods manufacturers to take online orders from manufacturer web sites and direct those orders to retail stores for fulfillment (in-store pickup or shipment). Shopatron has been doing this for eight years.
I am speaking at the Source SnowForum in Germany in April on this very topic. http://www.boardsportsource.com/snow_forum_09/en
Shopatron works pretty well. Tecnica and K2 among others have recently announced they will use Shopatron to drive online shoppers into stores.
Some manufacturers will use Shopatron, and others will choose to sell direct to consumers without retailer partners. My Dad owns a retail furniture store, has for 35 years, and would never stock a single product of any manufacturer who opened any direct selling anywhere, not even one little store someplace across the country from him. Other retailers do well with brands that sell direct. That’s just not my Dad’s strategy. Retailers have to decide for themselves how to play.
Besides BMX and Windsurfing, you can also look to the Tennis industry for a lesson on the value of local retailers (specialty as well). Tennis manufacturers went big box, specialty tennis retailers went away, and tennis participation faded.
Check out http://www.shopatron.com if you want to learn more. Normally we don’t post in blogs, but this one specifically mentioned the need for a solution like ours.