Regional Retail Reports: 2004 1Q report and 2Q projections for the east and south

This is our second SNEWS® Retailer Regional Report -- a quarterly look at the retail climate designed to help the industry gauge what is affecting sales and the overall outdoor market in different regions around the country.
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This is our second SNEWS® Retailer Regional Report -- a quarterly look at the retail climate designed to help the industry gauge what is affecting sales and the overall outdoor market in different regions around the country. As we promise with our annual SNEWS® Retailer Survey, we will not release the names of those who agreed to speak openly and honestly with us. The retailers who contributed to our regional report research on a quarterly basis are key retailers in each region.

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

In advance of Memorial Day weekend, area retailers in the Northeast, South Atlantic and South Central regions of the country were hard at work preparing for a much-anticipated influx of holiday sales. Common themes for discussion were those you might expect: the economy, the war and, of course, the weather. However, the managers and owners contacted by SNEWS® shared their opinions on the circumstances unique to their region that define the outdoor specialty retail landscape east of the Mississippi.

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

"Our sales projections are guardedly optimistic," said one Northeast retailer. His sentiments reflected the general consensus of all those surveyed in each region. The sense of genuine optimism recurred in every conversation with only one exception. Though met with caution, their belief in a positive outcome for the spring selling season was based almost exclusively on their confidence in their own strategic planning.

One Massachusetts-based retailer attributes her 25 percent increase over last year to "awesome customer service, product selection (and) marketing programs." Now in her fifth year in business, this retailer looks forward to that trend continuing into the spring and summer.

The manager of a long-standing Maryland store gives the credit of his success to "the right product mix, concerted effort on standards and suggestive selling." He has projected an increase of 10 percent to 15 percent over 2003 because as he says, "an entire company is doing what needs to be done."

Retailers who have buckled down and fully engaged themselves in the nuts and bolts of their business deserve a lot of credit. However, as we all know, weather will always play a major role in the success or failure of any outdoor-based establishment.

"The first quarter started out strong, buoyed by cold weather, making the softgoods selling season last longer than normal," said a retailer in Connecticut. "Then we hit the mystery period where customers didn't know when spring was ever coming (late March snowstorms continued into April). Now that the warmer weather is coming, we are excited by a renewed interest in paddlesports and we see a trend toward higher-end recreation boats and a lot of interest in composite/thermoformed kayaks."

Most Northeast retailers experienced an increase in boat sales early in the second quarter of 2004. Footwear sales have also shown promise with a majority of customers coming in looking for sandals from companies like Reef and Keen. Few would admit that any items were just sitting on shelves. So there are no dogs to report, though, most have said that camping hardgoods were in decline or moving slowly.

Though some project significant increases in sales, in light of circumstances out of their direct control, many will take satisfaction in maintaining their numbers from last year.

"May has been cool and rainy in the Northeast, which has been good for the sales of outerwear," said a retailer from Maine. "We are only moderately concerned about gas prices. Our greatest fear is supply concerns -- either real or perceived. Our projection is for flat sales over 2003."

In what promises to be a challenging year in recreation, Northeast retailers seemed more sensitive to the economy, the price of gasoline and the war. They are paying close attention to the effect these variables have on their customers' buying habits.

Still, indications are that despite increased gasoline prices, consumers are still planning to travel, and that bodes well for specialty retailers. A retailer in Massachusetts told us that while much of her business is traditionally derived from local clientele, she hopes to capture some summer vacation dollars from out-of-town visitors this year, and as a result, expects her store's numbers to be up compared with the same period last year.

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

Further south, retailer optimism continues unabated. Unlike their northern neighbors, retailers in the South Atlantic attribute their confidence to a thriving economy.

"The rising tide lifts all boats," said one Florida-based retailer. "Jacksonville is really growing." He credits his store with a 12 percent to 17 percent increase in sales for the first quarter of 2004 over the previous year. For the second quarter, though, he anticipates zero growth in cautious observation of a perceived notion. "We had a lot of pent-up demand," he said. "We had our best May ever. But people are watching the war." This retailer is playing it safe as he monitors what happens overseas. He's not sure what the next few months will bring. Although he hopes the trend will continue, he's not counting on it.

Another Florida retailer has a bit more faith as he turns a critical variable in his favor. "With raising fuel costs, people are looking at non-motorized transport," he said. Alternative recreational options spell success for this retailer who hopes to attract vacationers looking for more cost effective ways to spend the summer. He projects a 15 percent to 20 percent increase.

High-end purchases in boats appear to offer the best opportunities for growth among retailers of the South Atlantic. Big-ticket purchases with accessories are music to their ears. Customers are upgrading everything from PFDs to paddles. One retailer, however, already has several Liquidlogic kayaks on clearance and wishes he had put more inventory into Wilderness Systems Tarpin Series boats, he tells us.

Footwear is another growth category with sandals leading the way. One Georgia retailer, though, wishes he had not invested so heavily in Keen, despite the fact that Keen sales have proven so successful for many other retailers. "If I could take the money I put into Keen and redistribute it between Chaco, Rainbow and Reef I would be thrilled," he said. "We have sold them but not in the ballpark of what I am told by reps other stores are doing."

With confidence in the economy as well as paying close attention to the job at hand, retailers of the South Atlantic anticipate a good spring season. "If the economy continues to show forward motion, the Middle East improves and the presidential election does not get totally out of control," said a retailer from Tennessee, "we will see moderate gains in the second quarter. If we continue to give our customers reasons to come to our stores, i.e., trained staff, good information, good selections and a platform of events for active participation we should have a solid summer."

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

The expansion of big box retailers like Bass Pro, Galyan's, Dick's, REI and Cabela's continues to make the retail market difficult for dealers in the south. However, here again, we found that unrelenting sense of optimism that drives them forward in spite of fierce competition.

An Arkansas retailer reported a 26 percent increase in business for the first quarter. "I'm not sure why," he said. "I do have a lot of competition in this area and have heard that my major competitor is having trouble." He must be doing something right because he enthusiastically proclaimed that, "April sales were up 11 percent. May, so far, is up over 50 percent. I'm a happy camper!"

The opening of a Bass Pro Shop in Louisiana has one retailer feeling the pinch. She reports that first-quarter sales were down from last year. However, she attributes this mainly to being short staffed during times when customer service and salesmanship may have made the difference. To correct that shortcoming, "We've hired good salespeople," she said projecting an increase, though small, for spring and summer.

"Focusing on increased sales training," according to one Missouri retailer is the key to successfully competing against the majors. As many go head-to-head in their offerings of better-known brands, customer service is the local favorite's best bet in edging the national chains out of the minds of consumers.

Unfortunately, the margin for growth is rather thin. The same Missouri retailer anticipates only a 1 percent to 2 percent increase. The weather also has played a factor in that excessive rain has brought a slow start to the usually dry spring season. One Texas retailer reports that his business was down in the first quarter and projects a 5 percent loss in the second, which he attributes directly to the box stores that surround him. Business is certainly slow, but we were surprised to hear him say that, "Outdoor retail is not a growth market."

Footwear was again the leading product category among most retailers in the south with one store being particularly pleased with its sales of Birkenstocks. Keen sandals as well made a very strong showing. The initial performance of the much-lauded Jet Boil stove has proven disappointing. Forever optimistic, however, many retailers still believe that the technology will soon catch on.

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