Outdoor consumers taking on price increases, gradually

Despite economic jitters, shoppers are paying more for their outdoor goods. SNEWS dissects the data, plus the best performing categories, and how long retailers think consumers can keep up the spending.
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Despite lingering high unemployment rates and sluggish consumer confidence, shoppers are paying more for their outdoor goods, which have been creeping up in average sale price as manufacturers try to pass on higher production costs.

The average retail sale price per item of all outdoor products sold at specialty, chain and online stores rose 6 percent in September 2011, from a year ago, the biggest increase this year, according to data from the Leisure Trends Group (www.leisuretrends.com). Year-to-date through September 2011, the average sale price per outdoor item is up 4.5 percent but the good news is the number of items sold is also up – 6.4 percent – leading to total dollars sold being up 11.2 percent to about $4.2 billion. In other words, outdoor consumers are buying more, along with spending more per item.

The increase builds on 2010’s January-September average retail price rise of 4.14 percent, after prices fell half of one percent during the period in 2009. Put it all together and since the bottom in 2009, average retail sale prices are up 8.83 percent for the period, and even slightly higher for specialty outdoor retailers alone – up 10.34 percent, according to the Leisure Trends figures.

The data illustrates two stories, Leisure Trends senior retail analyst Scott Jager told SNEWS – one, that outdoor consumers have been willing to spend a little more, but two, perhaps not as much as manufacturers and retailers may need them to.

“If you listen to what manufacturers were saying about increased production costs earlier this year, they were saying double digits easily,” Jager said. Indeed, outdoor manufacturers have told SNEWS that price increases between 10 and 15 percent are on the horizon. The pressure is coming from higher cotton and other raw material prices, along with increased labor costs aboard and a weakening U.S. dollar. (Read more SNEWS coverage on higher production costs with our early 2011 look at inflation affecting the softgoods and hardgoods markets.)

Retailers in the middle

Outdoor retailers we spoke to said they have been encouraged by their consumers’ ability to take on some price increases (or at least less discounting) despite a still-struggling economy, but they’re nervous of where that breaking point of higher prices might be.

“We haven’t seen a lot of price increases for the fall, but it’s definitely coming in the spring,” said Russ Gilsdorf, general manager of The Alpine Experience (www.alpinex.com) in Olympia, Wash.

Consumers are hanging in there, he said, “but it seems like they’re willing to spend to a certain amount – about $400 to $500 – and above that it’s like a switch. It’s not that they’re afraid to spend. They’re afraid to spend big.”

At Active Endeavors (www.activeendeavorsonline.com) in Iowa City, Iowa, footwear buyer Brian Nerad told SNEWS that sales were up for the year, and the store’s consumers have remained resilient going into the holidays.

“My worries are after the holidays and into spring – everything is going up $10 to $15 in footwear,” Nerad said. “As a buyer, I’m trying to find some footwear at lower prices that maybe we haven’t had before, just to hit that lower range.”

The good news is that early signs are pointing to a postive upcoming holiday season for outdoor and wintersports retail, especially after numerous reports conveyed strong September sales. And, according to a Leisure Trends survey, active American consumers indicated they would spend more money for holidays on outdoor gear this year – an average of $584 versus the intended $526 of spending a year ago.

“We’re seeing that we can hold our prices this year,” said Alabama Outdoors (www.alabamaoutdoors.com) store manager John Nuckols. “Yes, outdoor products are more expensive than say an Old Navy piece, but you won’t have to buy 17 of them because it wears out. That durability story – long lasting gear and apparel – has really resonated with the consumer. They see the investment well worth it.”

On outdoor products alone, if consumers spend a little more, it’s because they value a new technology on the product, Nuckols said. If there’s something to justify spending a few extra dollars, they have been. And they’re doing their research on those latest technologies, sometimes in the store on their smartphones. “They come with a bit more knowledge ahead of time – they know what model they want, what color, Nuckols said. “We’ve been doing a lot more special orders.”

Paying more, paying less

Consumers aren’t spending more on every piece of outdoor gear or apparel. While most categories are up for specialty in the past two years – January through September – some are down, according to the Leisure Trends data.

No surprise after some recent snowy winter seasons, wintersports equipment has seen the biggest gain in average retail selling price per item – up nearly 16 percent since 2009 in specialty stores. On the flip side, outdoor equipment as a whole, fell 1.8 percent during the period. Items such as tents sold for less – dropping 8.55 percent in average retail price.

Outdoor footwear average retail prices have risen 13.67 percent in the past two years, fueled by trail running shoes – particularly the minimalist craze – water shoes and slippers. Boot prices, while rising too, have lagged behind the others – a point echoed by Nuckols at Alabama Outdoors.

“I think retailers are going to be watching those higher-end hiking boot sales in that $150-$175 range,” he said. “We don’t see consumers investing in those as much. We’re placing more trail runners, lighter boots and Chacos on the wall.”

In other categories, the average retail price of outdoor apparel is up 7.47 percent since 2009, led by gains in outerwear, socks, handwear and headwear. And equipment accessory prices saw gains in luggage, camp accessories and action cameras, leading the category to a gain of 5.72 percent. Action cameras in particular have seen strong average price gains – up 29 percent – in the past two years.

Passionate outdoor consumers

Consumers are coming off the sidelines, despite the shaky economy perhaps because they are getting used to it, said Jim Kelly, vice president and chief operating officer at Leisure Trends.

“I think people have held their breath long enough waiting for something to change,” he said. “They’re now willing to spend more, but really only where their passions lie. And we know outdoor consumers are passionate.”

-- David Clucas

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