Paddlesports market improves this summer, but forecast remains cloudy

Sales of paddlesports equipment are up slightly this year, according to Leisure Trends data and interviews with retailers, but the crippled economy, eroding boat margins and the weak whitewater market continue to slow any recovery.

“We’re up. It’s not a barn burner, but I wouldn’t expect a barn burner in this economy,” Darren Bush, owner of the Rutabaga paddlesports shop in Madison, Wis., told SNEWS®.

On May 5, Leisure Trends (www.leisuretrends.com) offered a fairly sunny forecast for the paddlesports market, saying in its Topline Retail Market Overview, “Paddlesport retail sales were up about 14 percent from March 2009, signaling a positive start to the 2010 paddle season. Growth came from all three store channels and nearly every major product category this month.”

SNEWS spoke with several retailers who confirmed that sales had increased so far compared to last year, but there were other dealers whose business was flat.

“The winter was really bad for us, so there was some pent-up demand and sales were good by the end of March, but paddlesports as a whole is pretty flat,” said Joe Butler Jr., owner of Black Creek Outfitters in Jacksonville, Fla. (www.blackcreekoutfitters.com). “Units are down in boats about 20 percent.”

Another paddlesports dealer, who asked not to be identified, said his boat sales are completely flat compared to 2009, which was down about 15 percent from the previous year.

Classic struggles continue

The whitewater segment of the market might be struggling the most, hampered by well-documented issues such as a lack of participation and a market flooded with discounted boats. “Whitewater sales are down about 10 percent,” said Sutton Bacon, CEO of Nantahala Outdoor Center (www.noc.com) in Bryson City, N.C. “The whitewater industry continues to have a lot of trouble. And I’ve spoken with a lot of retailers who are heavily concentrated in whitewater and they’re reporting that same thing.”

Bacon said a major issue continues to be low participation. “In the latest Outdoor Foundation study, whitewater participation was something like second to the bottom of 40 different activities. It’s a high barrier of entry, and there are perceived risks,” he said.

Dealers also continue to deal with eroding boat margins. “The industry is also struggling with a strong secondary market of boats. The specialty retail channel continues to be eroded by mass discounters out there,” said Bacon.

The problems with margins are not limited to the whitewater market. Thrifty consumers are looking for deals on all kinds of boats, putting pressure on a wide range of dealers to match low prices found at large chains, the Internet and elsewhere. 

“I talk with retailers all around the country, and I see a lot of price matching going on,” said Cliff Earle, a veteran rep in the Southeast who works with several paddlesports brands, such as Bending Branches, Current Designs, We-no-nah and Kokatat. “For years now the big boxes have redefined opening price points for boats, and they’re convincing consumers, particularly newbies, that you can buy a sit-on-top for $199.”

“Margins are down a point and a half to two points,” said Keith Miller, owner of California Canoe & Kayak (www.calkayak.com), which has retail and rental locations in Half Moon Bay, Oakland and Rancho Cordova, Calif. “People are shopping everywhere to find the cheapest price. A day doesn’t go by that somebody doesn’t say they want to buy from me, but they can get 20 percent off at this website, or 15 percent off at that website.”

Contrary to these reports, Brad Taylor, director of field services for Confluence (www.confleuncewatersports.com), said retailers aren’t talking about the margin issue this year as much as in the past. “I don’t see people dwelling on it as much. They’re pretty busy, and they’re moving forward,” said Taylor, who has visited about 120 retail stores in the last three months.

A ray of hope

While margins continue to give dealers headaches, Leisure Trends data and retailer reports signal that the specialty paddlesports market is making a bit of a comeback this season.

Through April of this year, unit sales of paddling products at specialty stores are up 8.3 percent compared to last year, and dollars are up 7.2 percent, according to Leisure Trends.

Many retailers we spoke with confirmed that sales have increased, albeit modestly, and some high-end products are faring relatively well.

“Our sales in boats and accessories are up,” said Jon Holmes, paddlesports buyer for Bill and Paul’s Sporthaus (www.billandpauls.com) in Grand Rapids, Mich. “Things are on par with where they were in 2006 and 2007, and those were pretty good years. Every category is up — and performance rec is the strongest category.”

Despite the poor economy, sales of boats and accessories have also increased at Rutabaga. “The crossover category in whitewater is fantastic, and rec kayaks and fishing boats continue to do well. I’m really pleased,” said Bush.

He and other retailers said that paddles and accessories have been the real bright spots this season. Bacon of NOC said accessory sales are up by double digits.

“They’ll continue to be strong,” said Bacon. “There are some really strong accessory vendors out there who are making some great new products.”

Holmes of Bill and Paul’s said sales of paddles are especially healthy this year. “Some of that I attribute to the fact that Werner has the Skagit $135 paddles — a really nice paddle for under $150 really gets people’s attention,” he said.

While consumers seem to be drifting toward buying more accessories, that doesn’t necessarily mean that dedicated paddlers aren’t still willing to spend money on higher-priced items. Bush said that Rutabaga has seen increased sales of Kevlar canoes, and Holmes said that “early season sales are fantastic” for the shop’s premium brand, Eddyline, which has boats retailing around $2,400.

Economic factors

Some retailers say the paddlesports market is improving due to an increase in consumer confidence. But, dealer opinions and market vary by region, and are not consistent from store to store.

Bush said that this season Rutabaga’s customers are not afraid to spend money, but they are being much more deliberate and thinking more carefully about their purchases.

People also seem to be willing to spend at Bill and Paul’s, and Holmes said shoppers do not have as gloomy an outlook on the economy as they did the last two years.

“The Grand Rapids economy is actually pretty stable, and is better this summer,” said Holmes. “When you hear on the news how bad the economy is, even if your position is OK, you’re still less apt to buy the nonessential purchases. While I don’t think things have improved drastically compared to last year, I think they’re not hearing all the awful economic news they were hearing last year.”

But this is not necessarily the case in certain areas of the country. Miller of California Canoe & Kayak said the economy is definitely limiting sales in his stores. “The California economy is still in bad shape. We’re up over last year in sales, but we’re not setting any records,” he said.

Joe Butler Jr. pointed out that the unemployment rate in Jacksonville, Fla., is 12.5 percent, and this has hurt many of the blue-collar workers who previously purchased fishing kayaks at Black Creek Outfitters and really fueled growth in that category. “The recreational kayakers are not as big a part of the mix as two years ago,” he said.

The economy is still a major drag on the market, said paddlesports rep Earle. “The whole population is still afraid of the economy,” he said. “Things were looking good, then the stock market plunged and the damn oil well blew up and put the fear of God into people.” He said that people who are dedicated to paddling now are choosing to upgrade their paddle or buy a PFD, but are choosing not to add to their boat collection until they feel more financially secure.

But Taylor of Confluence said that, during his many retail visits throughout the country, he has noticed an increase in consumer confidence. “We’ve seen a lot of layoffs, but those that are working feel pretty secure,” he said. “The economy has less of an impact on the market as the weather.”

Paddlesports experts are not as bad as economists, but if you get two in a room you might get three opinions.

Stand-up paddling’s cloudy future

If there’s one thing most people agree on, it’s that sales of stand-up paddleboards have been hampered by the economy. Earle and many retailers we spoke with said it’s tough to sell paddleboards this season because the entry-level price point is north of $1,000. As one dealer said, “There’s a lot of interest in it, but very few sales. We rent them and have people gawk at them. That’s about it.”

Holmes said that Bill and Paul’s brought in stand-up paddleboards last year, but the store has hardly sold any. “We didn’t bring in anything new for spring, and we have just not had any interest in it,” he said.

Bacon of NOC is dubious about the future of the sport in the outdoor specialty world. “From what I’m hearing, retailers are sort of mixed on stand-up paddleboards,” he said. “A lot of retailers behind the scenes are feeling it’s sort of a manufacturer-driven fad that’s not going to last. We have the token one or two — we might have sold one actually.”

Still, like every other issue in the paddlesports market, you can find contrary opinions, and retailers willing to give stand-up paddling a shot. “We’re going to embrace it next season,” said Dawson Wheeler, co-owner of Rock/Creek (www.rockcreek.com) in Chattanooga, Tenn. “We wanted to let the market grow a bit organically,” he said, adding that the University of Tennessee has purchased 12 boards for its outdoor program, signaling that local interest is growing.

Meanwhile, Rutabaga is going whole hog to promote the sport — literally. “We just had a luau at our shop, and we roasted a pig, wore Hawaiian shirts and got a whole bunch of people on boards,” said Bush, who noted that the event attracted many potential new customers. “We saw people at our luau we’d never seen before — yoga instructors and a lot of other people into fitness,” he said.

So far this season, Rutabaga has moved a modest number of boards. “They’re selling,” said Bush. “They’re not flying out the door, but they’re selling.”

And that pretty much sums up the general state of things this summer. The forecast is not all sunny, but there are breaks in the clouds.

–Marcus Woolf