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This summer’s announcement that Ibex would abandon the wholesale channel and would transition to a direct to consumer only model, caused a few of us in specialty retail to take pause. Is this the new reality we are going to be faced with every season?
Or, is there a lesson to be learned in what Ibex did? It’s my view that Ibex ended up where they are, which is with a foot in the grave and nails in the coffin, because of their own actions which failed to create “retail priced” value in the products that they produced.
Our Ibex sales rep, an excellent rep and veteran of the industry, indicated that retailers simply did not support the brand well enough to justify continuing the wholesale channel. If we had all just bought more this would not have happened, he says.
On its face, he is right: That is exactly what happened. But it’s more complicated than that.
The real question is why did retailers fail to support Ibex in the way they expected? At The Trail Head, we were a limited—but loyal—supporter of the brand for over 20 years. In the past 18 to 24 months we have had 41 styles of Ibex’s line and around 175 SKU’s with sales history. Our Ibex offerings were balanced with other apparel brands who came in with different price points and technologies. We have a responsibility to offer our customers choices. In the end, Ibex had good product but bad policies, and I think the rest of the outdoor industry can learn a lesson.
Several years ago I mentioned Ibex by name in an interview I did with OBJ about some of the challenges retailers were facing. I specifically called out Ibex as having the single most aggressive customer acquisition effort of any company I currently did business with.
Let me paint the picture: We retailers did the job of introducing consumers to the brand, which faces fierce competition from the likes of Smartwool, Icebreaker, Patagonia, Arc’teryx, and a handful of others just for shelf space in stores. We introduced customers to the quality and fit and features of Ibex apparel, and showed them products that were unique and had great value even though the prices were on the higher end of our spectrum. In short, we built Ibex brand advocates out of our regular customers.
As our customers became excited about the brand, they would reach out and touch the Ibex online platform to learn more about the company that made the wonderful piece they bought at their local retailer. Most of us who carry Ibex apparel are small retailers with a limited selection of SKUs. It’s natural that customers would want to see what else Ibex made.
This is where Ibex crossed the line, and forgot about its retail partners. For the past 6 to 8 years, we have watched them use everything in their toolbox to convert our customers to their customers. They offered free shipping, first buy discount coupons, gifts with purchase, and straight up discounting. They blasted out email offers more frequently than brands 100 times their size. If you ever mentioned Ibex in a Gmail, for the next month an Ibex ad would populate the ads on any online search you did.
Ibex was relentless in their efforts to lure away our customers.
And now they are paying for it.
You see, as a retailer, we make decisions about who to support based on product and company performance. If the product is great and the company is great, we buy more from them. If the product is great but the company proves to be a less-than-ideal partner, we mitigate our risk through buying less.
Of course, we all understood that Ibex could not survive without a DTC channel. Few brands can these days. The margins are too enticing and many markets have lost specialty outdoor distribution through stores closing. But I believe they would have received broader and deeper retailer support if they had taken a different path. It is really not that hard to understand.
The notion that my vendors are spending magnitudes more money on acquiring a DTC consumer while still doing a huge percentage of their business wholesale is simply a recipe for “getting Ibex-ed.” I would encourage retailers to remind—to demand, really– that vendors shape marketing budgets that match what the sales look like. If a brand is doing 70 percent of its sales through retailers, does 70 percent of its marketing budget drive consumers to that channel?
The general answer is quite simply: No. Brands struggling at retail are spending way more on the DTC channel, which has a growth rate. They spend little to none on the channel that built the business for them, then bitterly complain that retailers are just not supporting them anymore.
Why the blatant double standard?
Will getting “Ibex’d” become a verb in the language of retailers, synonymous for getting screwed by the brands you helped to build?
I am canceling my fall orders with Ibex. They are just another competitor now. Ibex is of course not pleased with me. They feel that I am leaving them holding the bag of inventory I committed to. I intend to pay my rep the commission he earned, but it is Ibex that owes him the money, not me.
In the end, Ibex left retailers after we worked hard to help them build a brand. I know that is not how they see it, but that is the reality. I look forward to spending my resources on brands that support what we do. I may go down, but I will at least go down swinging.
I am not totally bailing on Ibex until the bitter end. I am leaving the orders in place right up to the cancellation deadline, just in case a core customer that I developed walks through my door and asks to buy that one last piece from me before he too, gets Ibex’d out of supporting his local retailer.