They say inaction and drift over the years have resulted in five years of declining sales of ski equipment. Accusatory fingers point all over the place: at assertive buying groups, at European manufacturers who over-produce and dump, at retailers who suck the market dry with pre-season sales, at predatory rival trade shows, at greedy manufacturers who disrupt the market with in-season introductions of new models just to spike their fourth-quarter sales figures, .
But most of all the fingers are pointed at the supplier trade organization, SIA, which for most of its life was Ski Industries America, but which is in its second year now as Snow-Sports Industries America.
SIA, the argument goes, whose trade shows made the market for years, has failed to keep up with the times, has been out of touch with the basic rhythms of the marketplace—the timing of buy/sell cycles. Since SIA is an organization of the same manufacturers and importers of clothing and equipment who are among the severest critics, there is clearly an awkward, potentially damaging situation at hand.
It is understandable, then, that the president of SIA, David Ingemie, has fashioned a coercive mechanism that sits the parties down in a highly structured setting and induces them to turn the babel of criticism into the framework of a solution. Ingemie hopes the combination of new research and intense focus-grouping will give SIA’s trade show committee what it needs to generate that framework, which the board can then translate into action. (Again, details on Page 22.)
The problems being worked out on the SIA side are extremely complex ones with complex origins. I will list, in no particular order, some of the factors that make up the complicated picture, but it should be understood that each of these factors could, on its own, easily be the subject of an article. Also, that each complex factor can play out in varied and perhaps unforeseeable ways in juxtaposition with other influences.
➢ Once an association of very small suppliers, SIA has seen its membership change to one where the big players command a huge share of the market. Where once the small, rowdy band of entrepreneurs could noisily hammer out industry policies that were healthy for their fledgling businesses, today, after waves of consolidation, the players find it much harder to come together, harder to fashion solutions.
➢ Chronic problems of over-supply and clogged product pipelines have destabilized the world market for ski equipment. (Inherent in that sentence is another reality—that of globalization of trade—that has complicated the scene.) Typically, European governments subsidize those manufacturers with export programs to keep producing skis, for instance, even when the orders are not there to justify it. It’s a matter of jobs. The European factories have always protected their domestic markets by fixing retail prices at home. This meant that the U.S. in the 70s and Japan in the 80s became the dumping grounds for excess inventory. With the yen currently in the toilet, the U.S. is again the target. This means a lot of excess ski product reaches the U.S. and finds its way into the pre-season sales (Labor Day, August and even earlier). This product, in turn, sucks a lot of potential consumer demand out of consumer buying in fall and winter.
➢ Over time, there has been considerable consolidation on the SIA side, resulting in some very large players emerging with very deep pockets. This has had the effect of making them less dependent on SIA’s market disciplines and has enabled them to “do their own thing” with impunity. A major supplier or two declining to participate in an SIA on-snow can have the effect of marginalizing that show in the eyes of retailers.
➢ The leverage of the huge suppliers has been met by the leverage of the four big buying groups, and these groups have not been shy about using their clout. Whether singly, or especially in combination, they not only exercise their purchasing power on pricing, but they more-and-more dictate where and when they want to do their previewing and orderwriting. The rep groups are also capable of using muscle.
➢ The shifting sands of competitive trade shows represent an ever-present threat. Among them the Super Show of Atlanta, where Nike was a gigantic and pivotal player. A few years back the ski industry was heavily courted, but SIA was strong enough to repel the initiative. Nonetheless, it rattled some ski world cages. In the meantime, to illustrate the volatility of sports equipment marketing, Nike has pulled out of both Super Show and ISPO—crunching defections. In a separate development, Super Show has announced that starting in 2001, the show will be moved up to the second week in January.
Then there is the Outdoor Retailer Show (O.R.), staged twice a year in Salt Lake City by the hugely successful Miller Freeman operation, which coincidentally publishes Winter-Sport Business, a trade magazine. O.R. has attracted a fair number of SIA members as exhibitors and the hot breath of this show is felt in many ways. The big ISPO show in Europe, coming as it does at the end of January (pushed forward about five years ago from the end of February), is a bellweather for the U.S. market. A number of prominent U.S. buyers have been going there to preview.
➢ The rep shows, which have always been important, have become critical as the retailers’ venue of choice for writing orders. “Collecting paper,” as it is called in selling jargon, is the Holy Grail for suppliers, and the big Las Vegas SIA show has been generating less and less paper.
➢ Between rep shows, on-snow preview shows, buying group shows, to say nothing of the SIA show, the selling function has become impossibly expensive for almost everyone. (See separate story, Page 54.) Add to these costs the need to advertise in a proliferation of publications, both consumer and trade, and the promotional costs in support of equipment sales can get critically out of balance with manufacturing costs.
➢ The insecurity of retailers has been devastating in recent years. How to handle the surge in snowboarding has presented them with big problems. In recent years, even bigger problems have resulted from the chaotic, often mindless way in which the shaped ski has been unleashed on the industry. The retailer has reacted with understandable, but devastating caution, committing as little as possible for as long as possible. This, in turn, has forced suppliers to set their manufacturing targets on the basis of tarot cards and tea-leaves more than on projections of initial orders.
➢ A new development is the exercise by the ski resort conglomerates of their buying leverage. When an Intrawest or a Booth Creek shops its combined rental equipment needs, its combined employee uniform needs and throws in the stocking of its company-owned retail operations, there is a whole lot of product involved and the bidding is understandably fierce. (As an aside, it was interesting to see Booth Creek making a three-year ski commitment to Dynastar when its CEO, Tim Petrick, was previously a key architect of K-2’s strong market position.)
➢ Retailers have also had to contend for the last two years with a totally confusing set of messages breathlessly beaconed to some imaginary market of skiers. Ignoring the real customers who frequent ski retailers, ski equipment suppliers have been courting a world of Seth Morrison wannabes. Consumers have been bombarded with images of the new, idealized ski resort and it was Valdez, Alaska, the land of extreme, where untracked powder heaven is only as far away as your personal helicopter. Somehow or other, the image of excitement became confused with reality, and the industry seemingly came to believe its own hype and to seek sales volume from people who would huck off cliffs and rocket down 50-degree chutes.
So, it is a gnarly world on the equipment side. But what does that mean to us on the area side? The direct and immediate impacts are that there are some wonderful deals out there, especially on rental gear. There are also great deals available on uniforms and ski equipment for employees. These are not just for the conglomerates, but are there for the medium and smaller areas. Informed observers suggest these deals are going to be around and that there is no rush to commit.
As for the big conglomerates, don’t be surprised to see the major resort buyers dictating some design requirements. Buying groups have had that sort of clout on cosmetics in the past, but now we may see manufacturers coming up with molds to customize equipment for regional requirements.
Other than that, the current insecurity and churning on the SIA side is something that should not be welcomed on our side of the industry. With them focussed on untangling their buy/sell cycle problems, it is hard to get their attention for the real market development opportunities that exist for us all. We need them actively and enthusiastically on board with NSAA. It should be everyone’s fondest wish that SIA’s efforts to straighten itself out are successful and fruitful.
