Guest Editorial: Sierra Trading Post – Friend or Foe?

In your recent article: “Prana works to protect specialty retailers when faced with overstocks,” you set out to research a tip that the Burlington, Vt. T.J. Maxx Store had several two way racks of Prana shirts for sale. After confirming the tip you went on to white-wash the incident making T.J Maxx the hero of the story by recommending them as a “best solution” for specialty closeouts in that they are “outside the industry” as compared with Sierra Trading Post.

You said there were three specialty dealers carrying Prana within five miles of the TJ Maxx store. I wonder if they agreed with your conclusion, when by contrast instead of dumping perhaps 100 shirts in their backyard, we would have sprinkled them over 50 states with statistically only two shirts going into the entire state of Vermont.

Your article quotes Prana’s president saying, “most TJ Maxx shoppers are not our core customer. They’re soccer moms…”, and then in your SNEWS® View you added that Maxx’s “target market is outside the industry.”

The Marmaxx buyers love it when specialty insiders adopt their rhetoric and close their eyes. Do you really believe that TJX does not compete with specialty outdoor? They have 1,468 T.J. Maxx and Marshalls stores averaging 30,000 sq. ft. They are a closeout behemoth with annual revenue of $15 billion. Their 2004 10-K contradicts their rhetoric: “T.J. Maxx and Marshalls primarily target female customers who have families with middle to upper-middle incomes and who generally fit the profile of a department or specialty store shopper.”

These are specialty outdoor customers (or they should be): active, educated, intelligent women who hold the purse strings to America’s GDP. They decide if the family hikes the Alps, or camps in Yellowstone. They buy the majority of their family’s clothes. You were on to something when you wrote: “Aside from TJ Maxx’s idiotic policy of not talking to the trade – what on earth are they trying to hide we wonder?” Well, now you know: Marmaxx sneaks dollars out of specialty’s tills!

But the question remains: Does Sierra Trading Post hurt specialty outdoor more than Marmaxx?

I founded Sierra Trading Post in 1986 to achieve the following goal for specialty manufacturers: “Move Excess Inventory, Preserve Brand Integrity.” Our first issue contained 44 items from 14 specialty outdoor manufacturers. We now buy from over 700 specialty manufacturers in a variety of specialty markets. We have never lost one because we hurt its brand. We partner with manufacturers, we help a company by taking the good with the bad, we pay a fair price, and our word is our bond. Call our vendors, confirm my story.

We are the specialist in specialty closeouts. Our vantage point has given us a unique perspective. We have learned a few things over the years:

1. Specialty retailers are most healthy when they offer their customers the “latest and greatest” selections from specialty manufacturers. Closeouts in their stores tend to erode or confuse their image and reduce full-price sales.
2. Specialty manufacturers are most healthy when they balance innovation, esthetics, and benefit-driven features with cost/benefit analyses and inventory control. The manufacturer who continually adds new styles without closing out old styles will run out of capital and be forced to sell or close their doors.
3. Product innovation creates closeouts; therefore, closeouts are necessary for a healthy specialty sector. They are not THE ENEMY.
4. The available quantity of closeouts is self-regulating. The manufacturer who consistently exceeds the 2 percent to 5 percent optimum range will eventually be forced out of business by market and economic forces.
5. Closeouts are nevertheless dangerous. Mishandling them can kill a brand, and hurt the specialty retailer.

These observations beg the BIG QUESTION: How does the specialty manufacturer sell their closeouts without hurting their brand, or those retailers who support it?

It will be no surprise that I recommend Sierra Trading Post as the solution to this dilemma, for these reasons:

• We are very clear that the items we offer for sale are closeouts. They are NOT the “latest and greatest.” We make no attempts to confuse or make something sound better than it is.
• Our closeouts are sprinkled throughout all 50 states, so that the impact on any one market is miniscule. Yet, I have heard retailers blame their drop in gear sales on us. Let’s take your example, the specialty market of Burlington, Vt. In 2004 our total sales to addresses in Burlington, Vt. of backpacks, daypacks, sleeping bags and tents were $3,820. How can such a miniscule amount hurt any retailer?
• We bring new customers to the specialty retailer. Over the years many of our vendors who track warranty cards have found that cards supplied by our customers are over 80 percent new to the brand. Many of these new customers become brand aficionados and are willing to pay full retail to acquire styles and colors we will never carry.
• Most of our customers are catalog shoppers. They are more likely to shop with Eddie Bauer, Lands’ End, L.L. Bean or Cabela’s than any local retailer. Unlike Marmaxx, most of our customers are truly outside of the specialty retail channel.
• We turn product quickly, and our offerings are limited. We are not a “one-stop-shopping experience” as most specialty retailers are. We intentionally do not sell in-line, full price products as some large closeout buyers do. By specializing in closeouts we further reduce our impact on specialty retailers.

EVERYBODY WINS WHEN CLOSEOUTS GO TO SIERRA TRADING POST…The specialty manufacturer gets a fair price, and is able to reinvest that money in next year’s line. His brand image is not hurt, and full price sales are not diminished. The specialty retailer is free to carry the “latest and greatest” products from specialty manufacturers, thus ensuring the uniqueness of his shop. He does not have to worry about the retailer across town carrying similar items on closeout.

I believe Sierra Trading Post is the specialty retailer’s friend, not their foe.

Keith Richardson
President and Founder
Sierra Trading Post

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