Regional Retail Reports: East and south wary of weather, big box

We’re launching a new SNEWS regular feature — Regional Reports — designed to help the industry maintain a feel for what is affecting sales and the overall outdoor market in different regions around the country. Our readers have been asking for these reports from us and, as always, we try to deliver.

Beginning with this report, we will bring you glimpses into various regional markets through the eyes of retailers and reps. As we promise with our annual SNEWS Retailer Survey, we will not release the names of those who agree to speak openly and honestly with us. The retailers who have agreed to contribute to our regional reports research on a quarterly basis are key retailers in each region.

This week, we bring you a look at the retail climate in the Northeast, South Central and Southern regions of the United States. As always, we appreciate your feedback and commentary and welcome emails to: regionalreports@snewsnet.com.

Northeast

(Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, Connecticut, New York, New Jersey, Pennsylvania)

While retail chains and big-box stores continue to spread throughout much of the country, the trend is much less pronounced in the Northeast. A couple of the retailers we spoke with reported that Dick’s Sporting Goods had moved into their area within the past two years, but smaller stores say they’ve felt little direct effect. In fact, one retailer said that, despite the appearance of a Dick’s two years ago, he was experiencing record sales this year.

Holiday sales were a mixed bag throughout the Northeast during this holiday season. We spoke with stores in Maine, New Hampshire and Vermont that saw holiday sales decrease slightly, just 2 percent to 3 percent, compared to last year. In the case of one Vermont store, a 10-percent drop in overall sales for the fourth quarter of 2003 actually followed a record year in 2002. Stores that fared well seemed to make modest gains. For example, a Connecticut dealer reported an overall sales increase of 8 percent. Meanwhile, expectations for the first quarter of 2004 are modest. Most retailers said they hope to match last year’s sales, or increase slightly. Most people we interviewed were hesitant to make predictions for the coming months, because sales will be so weather dependent.

Fortunately, the overall U.S. economy is not wreaking havoc on Northeastern dealers, though it has affected their budgeting. One dealer experienced an “appreciable effect” on travel budgets, forcing the store to cut back on trade show attendance. Many dealers re-evaluated their open-to-buy, cut back inventory and chose to work primarily with vendors that require less up-front business.

Weather remains the main driving force for Northeast sales, and retailers saw mixed results. New York received winter storms in early December, but cross-country dealers say there wasn’t a great amount of snow in the area. Vermont dealers say that things started slowly with a warm December, though the cold weather finally set in for a decent recovery. Pennsylvania saw a decent number of cold snaps, but periodic warming made for poor ice climbing conditions.

For Northeaster dealers, several products stood out this holiday season, including cross-country touring skis, digital compasses and Arc’Teryx outerwear. Snowshoes seem to be holding strong, but the big surprise hit — you may want to sit down for this — has been the pink Denali jacket from The North Face. And to this, we say, you go girl!

When asked which products and brands customers ask for when they walk through the door, a few dealers claimed that Hot Chillys lives up to its hot name. Also, a Connecticut dealer said he could have sold thousands of pairs of Ugg boots. But one New York retailer gets the prize for the best response. “What are they asking for? A bathroom. No, I’m serious, we’re known for having an exceptionally clean bathroom.”

South Atlantic

(Delaware, Maryland, District of Columbia, Virginia, West Virginia, North Carolina, South Carolina, Georgia, Florida)

To quote J.R.R. Tolkien, “Rumor grew of a shadow in the East.” For the outdoor world, the great shadow is being cast by large retailers, whose growth has exploded in the area. Towns in North Carolina, South Carolina and Georgia are not only seeing a great influx of Dick’s Sporting Goods stores, but also a rise in the number of REI stores. High-end shops are holding their own, because they still manage to carry an appreciated variety of high-end apparel and gear. However, a dealer in Virginia said that Dick’s has captured some sales to Boy Scouts, as well as sales of mid-priced and lower-priced items.

Nevertheless, nearly every dealer interviewed reported sales increases for the holiday season, some increasing as much as 15 percent over last year. The first quarter of 2004 should produce sales equal to last year, or maybe a slight increase of 4 percent or so.

We confirmed earlier reports that retailers in the South Atlantic have trimmed back inventories and adjusted travel budgets to deal with the still-lagging economy. Many dealers are sending fewer employees to national trade shows and opting to attend regional shows to meet budget requirements.

It’s a good thing that retailers ran a tight ship this year, because weather conditions have not been stellar in some areas. While North Carolina dealers said cool weather in early November helped to jump-start sales, Maryland experienced mild weather during the height of the holiday season, which hurt accessories, such as gloves. On the bright side, Virginia dealers report that it was “good and cold” for holiday shoppers.

Though Georgia had a warm November, the weather turned cold two weeks before Christmas. Suddenly, snowboard pants, hats and gloves proved to be popular sellers. While sales of all-leather hiking boots have declined in general over the years, many South Atlantic dealers said they sold very well this fall and winter. On an interesting note, one South Carolina dealer did bang-up sales with Ear Bags ear warmers.

Perhaps the most mixed message regards soft shells. While some dealers do brisk sakes, a handful of shops are having a tough time moving them. Apparently, it’s not a price issue, but consumers are still trying to understand the concept, and they tend to buy the hooded pieces that resemble a traditional shell. One dealer said the more specialized soft shells didn’t move well at all these holidays.

What are customers asking for when they walk through the door? We hear that many people are looking for shells that have a zip-in fleece liner. Other than that, The North Face remains an often-asked-for brand, and — once again — the Denali jacket has become a trendy piece for younger people, especially young girls.

South Central

(Kentucky, Tennessee, Alabama, Mississippi, Arkansas, Louisiana, Texas)

Down in the South, large operations such as Galyan’s, Dick’s, Cabella’s and Bass Pro Shops have begun to loom large over the landscape. A Louisiana dealer reported that when a Bass Pro store moved in, his store traffic took a significant hit. Not only are commodity items being affected, but Bass Pro is also carrying brands such as Woolrich and The North Face. A Florida dealer told SNEWS of rumors that Dick’s will soon move into that state, and do it in big way.

In the South, most of the dealers interviewed said that retail competition — more so than weather — has been a detriment to their businesses. Two different Texas stores each reported that holiday sales dropped at least 10 percent in 2003. Throughout the South, declines of 10 percent and 15 percent were common. For the first quarter of 2004, these retailers are just hoping to maintain last year’s levels, and almost none expressed hope for much growth.

Southern retailers have worked hard to adjust to the overall economy. Stores cut back employee hours (one as much as 10 percent), while most shaved their open-to-buy. In fact, one retailer reported that his buying budget was “back to 1999 figures, almost to the penny.” Fortunately, consumers are still spending, as one Arkansas dealer said, “Our industry isn’t recession proof or terrorist proof, but people are still buying nice things that make them happy.”

When you’re talking about an area stretching from Florida to Texas, it’s understandable that weather varies greatly. In Louisiana, the first frost came three weeks late in November, and sales slumped. But Florida saw a string of good luck this fall and winter as each cold snap fell conveniently on the weekends. “You couldn’t have timed it any better,” a Florida dealer told SNEWS.

For those that enjoyed the cold, Merino wool products were hot sellers, and consumers no longer seem deterred by higher price points for quality socks. While soft shells sold well for a handful of retailers interviewed, they’re still a tough sell in the South. As one retailer explains, “A lot of (stores) are banking on these, but it’s turning out that the best use really is out West.”

When people walk through the doors of Southern outdoor stores, what are they asking for? Well, many are asking for specific items that are on the printed list in their hands — the list they compiled using the Internet. The Internet is a major source of information for customers these days, and some folks are asking dealers to match prices they find on the web.

Other than discounts, customers are still asking for traditionally strong brands, such as Patagonia and The North Face. Apparently, The North Face has made major strides in its fulfillment and has gone a long way toward restoring its reputation in that regard. And lest we forget, the remarkable item this year was — you guessed it — the Denali jacket. We guess pink’s not just for Barbie anymore.