On July 5, Ibex CEO Ted Manning announced to company employees that fall 2017 will be the last season the merino wool outdoor clothing company sells product through wholesale channels. Ibex shifts completely to a direct-to-consumer model in spring 2018.
“We’re pivoting toward our strength. Our wholesale business and our direct sales were on two divergent trajectories, and we had to choose,” Manning said. “The reality is we now have opportunities that may never have existed if we tried to balance both channels.”
Founder John Fernsall launched Ibex in 1997, and Connecticut-based private equity firm North Castle Partners invested in 2010. Manning said direct-to-consumer channels have always accounted for at least half of Ibex sales; since he became CEO in 2013, direct sales have increased in the high single digits each year while business-to-business channels were never profitable.
While Manning conceded private equity ownership means Ibex will eventually be for sale, he refuted the idea that the brand was pressured to go direct to attract buyers. “I cannot stress enough how little our private equity ownership had to do with this decision,” he said. “The truth of the matter is much simpler. We gave our very best efforts, with outstanding partners, and we were not able to make it work. In the face of a highly dynamic and volatile marketplace, we made a decision to move forward in the way that best ensures Ibex’s success.”
After Ibex completed a strategic review this spring, the decision to go direct was made in the last week of June. About 300 wholesale doors will carry fall 2017 product; 2018 lines will only be sold through the brand’s website and Ibex brick-and-mortar locations in Boston, Denver, and Seattle. Ibex currently works with nine sales agencies and 17 individual reps in the U.S. “I adore our specialty reps and retailers—we had better than we deserved,” Manning said. Most principal reps received the news in a conference call with Manning and VP of Sales Scott Parr the day after the internal announcement.
“It was a big surprise,” said David Egan, the founder of Perpetual Motion NW sales group and an Ibex rep for 17 years. “I don’t agree with it, but if it makes sense financially and keeps the brand alive, it has to be done.”
The announcement came just six months after Ibex implemented its Elite Dealer program, which gives retailers 10 percent of each online direct sale from consumers within their area. Mike Donahue, co-owner of the Outdoor Gear Exchange in Burlington, said it was too early to gauge the program’s results for his business.
“I thought that was an honorable way to try and expand direct-to-consumer but respect the dealers,” he said. “Ibex has been a super strong partner for us. They always focused on telling the story of why you should wear wool, and they made it possible to offer casual, lifestyle, active, and bike options. I’m sorry to see them go.”
Even retailers who don’t carry Ibex praised their work. “Ibex makes beautiful product, and they always have,” says Wes Allen, co-owner of Sunlight Sports in Cody, Wyoming. “But the brand has perpetually been in competition with their dealer base. They got addicted to discounting early and struggled to have meaningful retail depth.”
Direct sales bring higher margins for Ibex, but Manning pointed to other advantages as well. A streamlined supply chain will save costs and reduce the brand’s carbon footprint. Without trade show and retail deadlines, Manning says product will be finalized three to five months closer to when it’s available to consumers. This means designers will be more responsive to consumer feedback, and Ibex can deliver four to six seasonal drops each year and the opportunity to be more flexible with pricing mid-season.
“It’s great that Ibex finally picked a lane,” said Rich Hill, president of the Grassroots Outdoor Alliance, a community of 65 independent retailers and 72 brands. (Hill worked for Ibex earlier in his career.) He says Ibex’s move is yet another indication that outdoor brands are trying to adapt to a crowded market, a general retail downturn, competition from online retailers, and the success of DTC startups like Stio and Cotopaxi. “I do believe DTC marketing is the future,” Hill said, “but we shouldn’t confuse a marketing tool with a purchasing location.”
Ibex pulled out of the Outdoor Retailer show the week after Manning broke the news. “We’re committed to honesty,” said Manning. “Setting up a booth felt inappropriate.” He emphasized that Ibex’s core values—high-quality product, ethical treatment of animals, conservation, and community involvement—remain unchanged. To that end, Manning and other Ibex staffers will be in Salt Lake City next week. Look for them at Thursday’s March for Public Lands.
On July 5, Ibex CEO Ted Manning announced to company employees that fall 2017 will be the last season the merino wool outdoor clothing company sells product through wholesale channels. Ibex shifts completely to a direct-to-consumer model in spring 2018.Subscribe for full article
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