The mood was less than euphoric when the 9th Annual SKI Magazine “SKI Business Week” convened in Vail in early December. Surely, the need for more snow was on everyone’s mind—the will-there-be-enough-snow-for-the-holiday crowds? syndrome.
But the threat of another “low snow” year in the West was something to put out of one’s mind for three days, while the manufacturers, distributors, sales reps and other industry guests of SKI Magazine listened to people from the “outside world”—notably Joshua Peritz, vice president for consumer research, Yankelovich, Skelly & White, and Alan Andreasen, professor of business administration, University of Illinois—ask them questions about this business we’re in. And they heard from people in this business—notably Seth Masia and Susan McCoy of SKI Magazine and Jim Spring of SMART, Inc. tell them that, to date, sales were off this year, and some interesting buying trends were appearing.
There was some “good news” there: Ralph DesLauriers, president of Bolton Valley and chairman of the new NSAA International Marketing Committee, reported on that body’s first meeting to coordinate the search for new markets for American skiing. And the ASF’s Joe Prendergast had high hopes for the ski industry when the Reagan administration took over in January. Peter Wilson, an export specialist with the U.S. Department of Commerce, said that there was assistance available for companies who wanted to get into exporting their products. (You can reach him at 202/377-2834.)
Some highlights from SKI Business Week:
Jim Spring, President, SMART, Inc.: Retail sales were down 29% in units and 25% in dollars during the 90-day period of August 1 through October 31, 1980.
Sales in the West were even with last year; Mid-Western retailers were “suffering” and the East was off, though not substantially, said Spring. The greatest drop in sales was in equipment—both alpine and cross-country, with a 43% decrease in units sold; a 30% decrease in dollars. High-end equipment is selling, while package sales have really dropped. Spring felt the drop in X-country sales was due to two consecutive years of poor snow conditions in the Northeast and Midwest. The decline in alpine sales reflects the drop of beginners coming into the market. Other factors: the “baby boom” crowd is aging; many people are paying more money for what is perceived as quality and will last longer and they’re buying during the early season—the “carnival” atmosphere of the pre-season ski sales turns our customer off, according to Spring. Accessories are selling at a faster rate than major, high-ticket items.
“(The availability of) time and money are two factors that will put skiing on the shelf,” said Spring.
Seth Masia, SKI Magazine, speaking on trends in ski equipment purchases, as developed in the SKI 1979 subscriber survey: “Our reader is becoming a better skier—advanced to expert categories are growing, while beginner-intermediate categories are dropping,” said Masia.
“However, this is not a growth year for skiing,” he added. “Although the cash volume of sales is up, it’s mostly due to inflation. Currently, there is overproduction in an overcrowded, hypercompetitive market.”
Due to overproduction, ski shops are not getting full margin on their product. Last year 27% of the skis purchased were bought at full price, 47.5% of them were bought on sale and 12.9% were package skis. The average discount was 19% off the top end price.
Eddie Buehlman, vice president/Europe, American Express: Education is the key to successfully marketing the U.S. ski product in Europe, according to Buehlman. He adds: “There is a total lack of knowledge about the U.S. product and it affects both the travel agent and the consumer.” He added that language and trans-Atlantic airfares were also barriers in attracting European trade. But, since the U.S. is currently a “hot” destination for European tourists, he sees an opportunity for us to market to the up-scale, urban, experienced skier. How: organize travel writer fam tours; do some test marketing via direct mail; educate the travel industry in booking U.S. destinations and produce information materials—in many languages.
“Once the demand is created.” says Buehlman, “the larger tour operations will take over the sale of the product.” Meanwhile, he advised, the effort would involve joint co-operation, three-to-four years time and investment. He suggested that the effort focus on the “name” ski areas, such as Aspen and Vail.
“Just as with American skiers, the knowledgeable skier will ski Vail or Aspen first and then shop around for the lesser-known areas in later trips.”
Joshua Peritz, Yankelovich, Skelly & White: “The ski industry needs information—you must pull together a common body of knowledge about your business. If you know where you are, then you can tell where you’re going,” noted Peritz, who posed some questions for the industry. Are you in an over-capacity situation? That can be deadly. Is the momentum out of the business? Have you noticed that your market target is aging? (The median age of the population is now 39—eleven years ago it was 31.) Are you concerned about the “drop-out” rate? Is your capacity greater than it ever should have been?
Some factors in the marketplace affecting the overall population: affluence has eroded; people are beginning to accept the psychology of limits; by the end of the ’80’s, 70% of all women and 72% of all men will be gainfully employed; we will not replace the population in the next 10 years—women are not producing babies; hence, the average number of children per family has dropped to 1.8. Growth areas in the market are the 25-44 year-olds. Also the over 50’s—don’t ignore them. The fitness boom has leveled off with 40% of the population vitally active. This will help the ski industry—if they exploit it. Businesses that offer relief from stress will find a market. The people who activly exploited the credit phenomenon of the ’70’s are in a hiatus as far as credit buying is concerned.
Saying there was a lot of pentup enthusiasm in the consumer who currently is very much into “wait-and-see-ism”, Peritz urged the industry to think competitively about packaging the product. Encourage new uses. Make skiing attractive and competitive with other options and talk directly to the individual you want to reach.
Alan Andreasen, University of Illinois: pessimism, rising costs of energy, moves to the Sun Belt; political restraints on growth, a drop in beginners entering the market—all create the conditions for the peaking-out of a mature industry, said Andreasen, who made some other observations about the industry.
“Be ready for the point where the industry peaks out and engage in strategic planning, he warned. “Certain features of the ski industry suggest that it is in a maturity phase or about to go into a decline. You need to understand the market’s dynamics—what’s behind those sales patterns? You need better data, too.
“You may have to re-position your products and lines if the product is changing. Give people more reasons to go skiing more often.”
He noted that the ski publications seemed to be geared to experts, afficionados and that they dwelt on technique, equipment, etc. He felt the consumer is more interested in the vacation side and the physical benefits of skiing. People may be looking for a different package of benefits than the industry currently offers.
