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March 2006

Seeking Success at Retail

The SIA Model for Success research says that guests just want to relax and enjoy the mountains. Have we been missing the point?

Written by Rick Kahl | 0 comment

SIA’s Model for Success (MFS) research presents some surprisingly good information for resort retail operators. The MFS analyzes the retail landscape and consumer attitudes toward gear and retail shops. It exposes the stagnant state of winter sport retailing over the past seven years and, while it stops short of making recommendations, highlights several avenues for growth.

Leisure Trends performed the MFS research and concludes that the enemy is “us,” the supplier and retail community as a whole, and to some extent resorts as well. The collective “we” often fail to understand what motivates skiers and riders and thus fail to tap the sales potential of these motivations.

Sports retail often suffers from a focus on the product, not on the customer. Specifically, retailers, suppliers and resorts often tout the advantages of gear. What consumers want to know, though, is what’s in it for them. Thirty percent say they would buy a new product if they believed it would improve their performance; another 65 percent say “maybe.” The point is, describe how a product will benefit the customer—how it will make them warm enough to ski at the top of the mountain, enable them to explore previously unthinkable terrain, or see clearly enough to ride the trees in a snowstorm—and people will be more likely to buy.

Change is needed, because the MFS market data paint a picture of a business in decline. Though overall sales in dollars are flat from 1997 through 2004, unit sales are down in all retail channels, and the number of retail storefronts shrinks every year. Despite this shrinkage, the average store is selling fewer units of ski and snowboard equipment. In 1997-98, consumers bought a combined 1.5 million new snowboards and pairs of skis. That number has steadily declined, hitting 1.2 million last season.

During the same period, total U.S. households have grown by 10 percent, and households with income of $75,000 or more—the entry-level income for family participation in skiing and riding—have increased by 45 percent. The conclusion is inescapable: the winter sports market is losing share.


On the Bright Side
The research suggests that a focus on key selling points has the potential to reverse this long-term slide. To take that opportunity, it helps to know exactly what your customers want. A survey of skiers and riders who had participated in each of the past two years—a fairly core audience—found that the biggest turn-ons are being in the mountains (63 percent) and mountain scenery (55 percent). While it’s difficult to translate these factors into retail sales, they help explain why skiers and riders have been heading to the hills at a record pace for the past five years.

“Controlled gliding” is favored by 47 percent, and this may be the most overlooked positive. Much of the industry’s imagery ignores the lure of controlled gliding. We assume it is too boring to motivate guests. But most skiers and riders spend most of their time on the groomers. This is not merely because powder conditions are relatively rare, bumps are challenging, and off-piste is an unknown quantity. It is because skiers and riders like the feeling of taking the gravity ride down. And this motivation can help retailers sell gear.

Leisure Trends notes that these three priorities mirror a key change in consumer attitudes generally. The average American is not aspiring to greatness, seeking a personal best or testing the limits of speed and skill. Instead, Americans are seeking inspiration. For skiers and snowboarders over age 25, that often means a change of scenery in a less stressful and more natural environment than they toil in at home.


Marketing Misses
Sadly, two of the things that turn on marketers and other mountain folks, such as social life and the opposite sex, don’t count for much with most guests, according to the MFS research (though social aspects are probably more important for destination visitors.)

Of course, some skiers and riders live for steeps, trees, off-piste adventures and other hardcore pleasures. “Jumps and acrobatics” are big with 25 percent of skiers and riders under age 25, according to the survey, so terrain and products that serve this market are clearly important.


Implications for Resort Retail
Area retail shops in particular are uniquely positioned to convince skiers to buy more often. They have an opportunity to turn customers’ enthusiasm into instant sales.

For one thing, ski and board demos have strong potential to generate sales for area shops—an advantage they have over city shops. Skiers and riders are not predisposed to believe that new gear will make much of a difference in their experience; 54 percent believe that they don’t need the latest gear to perform their best. They accept the notion that new gear makes the sport easier (63 percent), but they don’t feel it needs to be easier—so “new and improved” is not a reason to buy. Instead, they mostly buy new gear to replace old gear. Which begs the question, when is it time to replace old gear? They need to feel the difference in their own skiing and riding, to discover how new gear improves their experience, before they buy. Hence the value of demos.


Playing the Safety Card
Gear safety is a very big issue with skiers and riders, even though resorts, retailers and suppliers rarely mention it. Winter visitors are very aware of the potential for injury, and will buy items to protect their safety, such as new bindings and helmets, as well as clothing and accessories to stay warm and avoid frostbite. Park users are adding body armor, from elbow and knee pads to butt pads and mouthguards.

Resort shops especially should cater to these concerns. If guests show up in your resort shop, they obviously haven’t been scared away from skiing and riding by the potential risks. The rapid adoption of helmets in the past five years shows that people are receptive to safety messages. Just be careful what you promise!

People may not be willing to buy new gear just to gain a slight performance edge, but safety can open their wallets. For example, guests will ski/ride more comfortably and in more control with new gear—and this improves their safety. On a snow day, better goggles allow you to see better—an obvious safety advantage. The same is true for fog-free treatments. These are all key selling points for resort retail.


Converting Traffic to Sales
Retail shops at ski resorts have a great deal of traffic, but convert a relatively low percentage of that to actual sales. More than 60 percent of skiers and riders visit resort shops—only 21 percent buy anything. In contrast, only 55 percent of skiers and riders visit specialty stores at home, but 40 percent buy there.

The low conversion to sales at resorts occurs despite the positive energy of being at the area and the obvious potential for impulse purchases. Worse, only five percent of customers buy four or more items at a resort shop, a lower percentage than any other retail channel.

Why aren’t resort retail shops getting more sales? The MFS data suggest a combination of price, value and merchandising.

Skiers and riders are extremely price-sensitive. You might not guess this based on what they pay for lodging. But when it comes to gear, 75 percent aim to buy primarily when goods are on sale.

This is not because they believe gear is overpriced. In fact, only about 10 percent of skiers and riders feel gear prices are a ripoff, according to the research. Many areas, in fact, sell a lot of high-end apparel and gear—you know who you are. But that doesn’t mean customers want to pay full price. They want to feel they are getting good to great value, even on high-end gear. They want the retail version of a discounted season’s pass.

This is extremely important for resort retail shops. If your guests must purchase something at the area to replace lost or inadequate gear, they may resent paying full retail. They may well pay full price once, but that discourages them from shopping your retail store except as a last resort. Aside from offering customers a range of prices on potential replacement items, as many do, resort retail shops can structure their buy so that they can offer customers “20% off” and still earn a 50 percent-plus margin. This is especially true with accessory items like gloves, goggles and sunscreen. You don’t have to offer closeout prices, just enough to show customers they are getting good value.

Many resort shops fail to make use of sales items to build traffic. While every retailer wants to maintain full margins as much as possible, it’s also true that customers are looking for deals. So give them what they are looking for.

But price is only part of the equation. Merchandising is also at play. Area retail shops must work harder to impress folks the first time they walk through the door—because the customer may never return. Seventeen percent of resort retail visitors stop in just once—the highest one-time percentage of all channels.

In style and attitude, most resort shops lean toward the purely functional. Most areas treat their retail operations as replacement shops—if guests have lost, broken, or forgotten key items, they can replace them at the area. This reinforces the notion that area retail shops are mainly there for stopgap purchases. And that need not be the case. Believe it or not, but some customers will buy because they find something they like.

Since the retail competition includes specialty stores and outdoor retailers, many of whom pay a lot of attention to merchandising and store design, so must resort retail shops. Yes, there is a big service element to the resort shop, but it should also compete in terms of style, décor, and merchandising with specialty and outdoor stores. These stores have set the level of quality that your customers expect. The MFS data show that your customers are becoming comfortable with outdoor stores; witness their high repeat traffic and business. A lackluster shop doesn’t justify high prices. Does your retail operation measure up?