As the Retailers of the Outdoor Industry (ROI) members head toward their annual buying show on June 12, it is with a collective eye cast well beyond the horizon as it seeks a vision that will define the group's future. Now 31 members strong, this association or collection of outdoor specialty retailers is one part buying group and another part coalition, topped off with an altruistic notion that ROI should be and could be about much more than stronger margins, group discounts and collective bargaining power.
It began around a table
In the early '90s, John Mead of Adventure 16, Dave Baker of Summit Hut, Joe Royer and Lawrence Migliara of Outdoors Inc., Walter Wakefield of Whole Earth Provision Company, Hank Cohan of Hudson Trails, Steve Nauss of Blue Ridge Mountain Sports, Tom Valone of Great Outdoor Provision Company and a few others we can't remember (yes, we had eyes and ears back then, too) gathered together informally during Outdoor Retailer trade shows (then in Reno) around a table to share best practices, talk about problems each faced as a specialty retailer, and use their collective knowledge to benefit the group. The gathering became known as The Round Table.
In 1993, it was decided that a more formal structure might best suit the needs and desires of the group and it formalized under the name Retailers of Influence (ROI). Why name it ROI? In some respects, from conversations shared with SNEWS® back in 1993, the acronym was a tongue-in-cheek shot at REI, underscoring the group's notion that by banding together, the specialty retail landscape would be best preserved and the field with those who enjoyed big-box buying power would be leveled -- somewhat. Not everyone embraced the sentiment of either humor or a buying group seeking better margins.
A letter sent to SNEWS® from a non-ROI retailer and published in our November 1993 issue said: "Are they really a buying group in formation or a bunch of upset, threatened, independent business people discussing common concerns? I ask the question honestly. Whenever I visit with other independents, REI is the focus of the discussion. There is talk of a meeting of independents to discuss strategy against REI and manufacturers who deal with them. This is the biggest undercurrent in paddlesports retailing that I've seen in 20 years.
"My spin is, quit whining. Do the best job you can and if REI has your shorts, they deserve them. They do not and cannot offer the service an independent can. I just got back from a manufacturer's office where there is a sign that reads: 'In Africa today a gazelle awakens knowing that if it is not faster than the lion it will be eaten. A lion awakens knowing that if it isn't faster than the gazelle it will starve.'
"Point is, it sucks. Yeah, you do the best to find, stock and understand equipment, and you get steamrolled by the big boy. The public pumps you for information and uses that knowledge up the street in order to get their 10% rebate. The specialty shop dries up and blows away and with it goes the specialist who bought the stuff that the wonk invented in his basement that helped further the sport."So, what is ROI? If it's a buying group focused on lower prices, then its members are damned to failure. Their only salvation is imagination and they are not using it. The savvy vendor will allow huge latitude to the imaginative independent retailer (and let's face it -- imagination and creativity are not the forte of any monolith).
"And if ROI is a network of individuals mulling over common concern, more power to them."
As the group continued to formalize the direction, the name changed, but the mantra that drove the group's mission remained the same.
"As we created the structure that would become ROI, we plagiarized a lot of ideas from John (Mead) and the Round Table discussions," Baker told us. "We decided we needed to demonstrate a real interest in making sure the individual voices of independent retailers, those with decent, well-run businesses, were going to be heard on a national scale and not just lost in the noise created by those who were caught up chasing the growth of the chains and dot-coms."
In December 1994, Retailers of the Outdoor Industry became the official name of the C-Corporation. Baker, one of the founding members of ROI, ran the corporation in conjunction with his store, The Summit Hut, from Tucson, Ariz. Valone, Wakefield, Royer and Migliara were the founding members.
As stated on its website at www.roi-usa.com, "Retailers of the Outdoor Industry, Inc., ROI is a corporation designed to serve the needs of retailers in the outdoor specialty industry. ROI's aim is to assist with increasing its members' margins and opportunities through professional associations and services. The independent outdoor specialty retailer is the key ingredient to the future success of the outdoor industry. By collectively combining its members' knowledge, experiences and energies, ROI promotes the outdoor specialty retailers' viewpoint for the benefit of its members and the industry as a whole."
As the group expanded, it even ventured into the realm of the private label, with ROI's own brand name, Iron Mountain Gear. Members sold tents, camp chairs, sleeping bags, inflatable sleeping pads, mesh bags and soft-sided luggage. However, the program was discontinued in 2001 in order to focus on being successful with branded items and strengthening relationships with vendors.
By 2006, the number of ROI members has grown to 31 retail companies with 70 storefronts. The group boasts over 700 employees, and annual gross sales in 2005 were more than $120 million. Now headquartered in Asheville, N.C., the organization is lead by David Matz, president of ROI, who works under the direction of a board made up of owners representing member retailers.
What's it take to become an ROI retail member?
According to Matz, "The members of ROI exemplify excellence in the outdoor industry: great locations, superb merchandising, strong relationships with vendors, pioneers of new products, early adopters of new technology, promoters of outdoor sports and environmental conservation. These retail owners and their sales staff use the gear and clothing themselves, as outdoor sports enthusiasts, and are committed to excellent customer service. Fiscally, the members must be absolutely sound.
"We want stores that have paid all of their bills on time, all of the time, for a long time," Matz told SNEWS®. "We know that there are probably only 50 retailers in the country who can meet our financial criteria, and they must continue to meet it as a member. It is critical for our ability to guarantee payment to vendors, to keep our credibility strong.
"We don't require a retailer to make any changes to become a member, but a retailer needs to be committed about what they do great and to improving what they don't do great," Matz said. "With us, it is open dialogue and active participation because we are a member-owned group and we have no time for anyone who simply wants to watch. There are some retailers we have approached about becoming members and they tell us they are not willing to share information and that pretty much ends the conversation."
Membership has its benefits
For those who do become members, ROI member benefits provide retail owners and buyers access to a network that's eager to share information on what works, what doesn't, what's new, what's out, best practices, new technology and much more. The group has established a bulletin board system where ROI members can post topics and solicit replies from the entire group for help with marketing and problem-solving strategies, forecasting trends, staff structures and incentive plans, and much more.
Naturally, since this is a buying group, there is access to at least 50 selected member vendors that support ROI in a variety of ways, including specially designed buying programs. Those vendors include large and small companies from brand names such as Vasque, Deuter, Marmot, Royal Robbins, ExOfficio, Patagonia, Lowa, Mountain Hardwear, Montrail and SmartWool.
Depending on the volume of product a member buys from member vendors, there are rebate opportunities that are offered as well. In addition, ROI enjoys an alliance with the Ski Merchandising Corp. (SMC) buying group (www.skimerchandising.com), offering members access to numerous ski-specific buying programs.
ROI also organizes and produces a private early buying show in June, currently held in Snowbird, Utah, where members can preview lines and pre-plan their buying prior to the various regional and national industry shows including Outdoor Retailer Summer Market. Benefits of this show, according to Matz, include knowing what will be phased out and what will roll into the next season early, getting a large portion of work done early, freeing time to actually shop the Outdoor Retailer show, sharing insights with peers from across the nation, getting to sit down with sales managers and key corporate representatives to discuss business strategy and timing for the coming seasons, etc.
An often-cited member benefit that's more important than it perhaps seems on the surface, is the fact that each retail member can utilize ROI President Matz as a central point of contact and as an advocate on their behalf with all of the vendor members.
Retailers aren't in this just for the money
Certainly, each ROI member retailer would love to receive an extra point or two from member vendors, but Matz told us that the organization is not willing to get bloody over negotiating for points. ROI, he told us, is more concerned with developing long-term relationships that foster industry growth and both vendor and specialty retailer health.
Consider that each ROI member pays $2,000 annually in dues. Factor in expenses of attending the Early Show, as well as other miscellaneous costs that crop up, and even retailers who are generating $2 million to $3 million in business each year and participating very actively with ROI in vendor programs find it hard to realize more than $7,000 in savings over simply conducting business as a non-ROI member.
Membership pays off in other ways. Baker told SNEWS® that Summit Hut added Keen one year earlier to its buying program because of input from other members -- and made an additional $17,000 in sales as a result.
"The real value is with the group knowledge and participation, because with that, we are all able to make wiser and more educated business decisions that ultimately save or make us all more money," Baker said.
What's in it for a vendor?
"If a company is getting involved with ROI with the intention of offering a larger discount as a means to receiving larger orders, don't bother. If your company is committed to the success of specialty outdoor, and has the patience to wait for well-earned results, it is an excellent group to be involved with," Rich Hill, most recently national sales manager for Patagonia, told us.
According to Matz, while ROI doesn't guarantee a vendor anything but access to its members, there's plenty of upside and very little potential downside for vendors to join ROI.
"In a time when most vendors see payables stretching out beyond 60 days, the opportunity to work with a credit-worthy group is a huge benefit," Matz told SNEWS®. "For smaller companies, the option of central billing through the ROI office is a huge bonus. With one phone call, they can cover a number of account issues and ROI guarantees payment. Larger companies direct bill the retailers, but the same guarantee of payment from ROI applies. We hold a letter of credit for each member that we would exercise if we needed to.
"We police our own members. If a member starts to falter, ROI acts quickly," Matz added. "We have had to expel five or six members over the years for payment problems. Some have left on their own for a variety of reasons. Several of these retailers ended up closing their businesses within 18 months."
Vendors share many of the same benefits as do the retailers, Matz told us, including access to information and the best independent retailers in the outdoor industry, feedback about product from retailers who both sell it and use it, a central contact point through Matz who can act as a secondary rep, introducing new ideas and programs to ROI members, and invited attendance to the private early buying show which provides a more focused selling opportunity.
"Vendors also enjoy a creative collaboration with our members," Matz said. "For example, ROI member Dave Baker of the Summit Hut worked with the IT departments of several vendors to create the B2B Initiative. That program allows for a streamlined, electronically transferred pre-season order process which created a free exchange of information between retailers and vendors that both had to pay for in the past."
Benefits outweigh costs for most vendors
It's not free to be a vendor member of ROI. Vendors must agree to reimburse ROI for 1 percent of members' sales plus a vendor pays $150 a season for the program book. Matz told SNEWS® that the 1 percent is collected after each quarter for sales during that quarter.
"We ask the vendors for an accounting by member so we know which member has what volume," Matz said. "At the end of year, the board looks at how much money we have in the ROI account, allots some of the money for operational expenses, and then divides the money up giving each member a percentage based on participation. ROI is not designed to make money as we would rather send those dollars out to the members because that encourages the members to spend more money with our program vendors."
In addition to the 1 percent of sales and program book costs, vendors that receive an invitation to the Early Show pay by the amount of time each wishes allotted for retail buyer visits (member vendors are not guaranteed invites as a benefit of membership). It costs $500 for 30-minute appointments or $1,000 for one-hour appointments. Booths are 15 feet by 20 feet, and ROI retail members are required to spend time visiting with each vendor, even if the vendor is not in the retailer's current buying plan.
"SmartWool has been an active participant with the ROI group for many years. They are, in our view, the 'cream of the crop' of specialty outdoor dealers, and we consider their overall health to be vital to our business and to the outdoor retail business generally," said Chip Coe, president of SmartWool. "We offer quite a bit of support to the ROI group. In return, from a vendor perspective, we are looking for several things. In no particular order they are: product feedback after the early product previews, early submission of preseason orders, strong credit standing, and feedback during the season as to what is working at retail and what is not, and why. We are getting some of this, but not all of it."
For Mark Martin, president of Marmot, a company that does not participate in any other buying groups because the company does not believe in their worth, said, "Our involvement and partnership with ROI is based upon a number of factors," including:
- The people. This is truly a great group of individuals from Dave Matz, to Phil Leeds, to Dawson Wheeler, to Mike Plant, to the Butler's, to Beezer Molten, to Mike Massey, and the list goes on. They are forward-thinking, professional businesspeople who challenge us daily to keep up with their retail activities. We draw from this group for product opportunities each season.
- The stores. ROI offers tremendous coverage in all regions of the U.S. with stores that have a solid payment history. Each gives us strong product presentation and visual merchandising initiatives.
- Full-price promotion strategy. No discounting or cute promotions. I have confidence the brand will be treated correctly and they have my commitment to drive the best maintained margin possible.
- Growth. We have seen significant growth with the ROI members since joining the group. We have confidence that the executives of ROI are working closely with the retail members to support the core brands and to outline opportunities for growth in the future. Nothing is guaranteed and we need to earn the growth, but they are always looking to help the vendor.
It's not all a love fest, though
SNEWS® interviewed many current and former ROI vendor members and several ROI retail members, including board members, and it quickly became apparent from the answers we received to emailed questions, not all was peaches and cream in ROIville.
For Mark Day, national sales manager for La Sportiva, he told us for the first time since ROI was founded, La Sportiva was discontinuing its membership, and it was an agonizing decision for him to make.
"What they stand for as a group is near and dear to my heart, but trying to get them to work together on a buying program, any buying program, is the challenge. The financial reality is that for the amount of money we spent supporting them and the deals we gave them, we did not get sufficient return on investment," Day told us.
For obvious reasons, nearly all vendor responses (from both former and current vendor members) to the question -- "What does ROI need to improve on?" -- were provided under the condition of remaining anonymous. Several themes were consistent throughout all the responses that we can cull out without singling out anyone:
1. Vendors continue to struggle to get preseason orders in by the deadline ROI members agreed to and it appears that ROI lacks the leverage to enforce those agreed deadlines. That creates additional hardship for the vendors since many utilize the ROI's early ordering feedback as a bellwether to help finalize production planning.
2. While ROI is a great group of individuals and individual shops that also underscores the group's singular weakness -- getting them to do anything together with one mind is like herding cats. ROI has trouble getting its retailers to work together to collectively support and grow member vendor businesses with them.
3. Back door negotiating and individual strong-arming both at Early Show and during other times of the year has and does continue to occur, according to numerous vendor emails. ROI members need to be adhering to the ROI member plan, not trying to work better deals on their own behalf.
4. Early Show participation and commitment. Vendors should not be asked to give "show specials," and members must commit to bringing the entire relevant buying team. It costs a vendor from $5,000 to $10,000 to attend Early Show. For that, ROI members need to be sure to have the right buyer meeting with the right vendor and then place orders well before Summer Market. If orders are not placed before Summer Market, the value of Early Show diminishes.
For its part, emails and phone interviews among current and former ROI retail members point out that for all its acknowledged faults and growing pains, ROI is the first coordinated effort to address the challenges of outdoor specialty retail. Members assert that manufacturers provide little or no incentive to be a great specialty retailer unless you have size. Meaning, unless you are a big chain, you don't qualify for any special buying program, any special kind of treatment, and, in many cases, precious little attention at all other than regular calls from national sales managers saying your store has to buy more or the vendor will have to look at expanding into other retailers in the area. There is little thought for quality and even less for providing a reason for buying a product other than the idea that if you don't buy it, the vendor might shut you down or open a chain or discounting competitor down the street who will.
One retailer wrote, "I am completely willing to acknowledge we do some bone-headed things and some of the folks who went out of business in our specialty outdoor world should have gone out of business years ago…but now what are you, vendor, going to do to stop the erosion of specialty business?"
ROI is committed to its future and the future of specialty
"We are waking up everyday to run our business, and we want to succeed as specialty independent outdoor retailers," said Baker. "We want to be important to our vendors. We want to be important to our customers."
Dawson Wheeler, president and co-owner of Rock Creek Outfitters, and a member of the ROI board, told SNEWS®, "The people who are the most sensitive about ROI are the board itself as we are well aware of what the vendors want from us. I think obviously that is more volume and that can be a difficult thing to get to. We still only make up $128 million in retail, and out of that, you have a fair amount of vendors we are all buying from that are not members. Once you start sifting through those numbers, you arrive at numbers that are certainly favorable for vendors, but it does not make or break the bottom line for them.
"Clearly, from the retail member side, we need to be much more aware of focusing more of the buys out of our program book -- no question. That should be the first place the buyer goes and looks, and every vendor should too…it improves the bottom line considerably," he said.
"We have to get better at feedback and communication," added Wheeler. "That works in both directions, with the vendor working with us and with us doing better with getting inside our membership. We do a good job already, but we could be better."
Said Matz, "We are a dynamic organization; always looking for ways to better service our customers, members and vendors. ROI is just like retail or manufacturing; you can't rest on what you did last season. You have to impress everyone all over again."
"ROI individually is super strong, retailer by retailer," Wheeler told us. "The challenge for us is to harness that same individual strength and be able to put it into a group format that is just as strong on a national level. You have to grow into that. We know that we don't want to be like any other buying group. They do good jobs in the way they do it. We want to be a lot more than somebody a vendor is giving programs through and arm wrestling with over orders and discounts."
For more information about ROI, visit www.roi-usa.com or call 828-252-0969.
SNEWS® View: The specialty industry absolutely needs a very healthy, strong and proactive ROI! And to ensure that, ROI knows full well it needs to look beyond identifying itself purely as a buying group that searches for the best deals possible. It will be interesting to hear what the organization decides upon, both in terms of a new name (which we know is being considered), as well as a new, expanded agenda. ROI needs to firmly establish what it (as a group and that means the entire group, not just most of the group) stands for (other than the best possible discount from vendors -- members are already getting this) and be overt about communicating this via partnerships with vendors that have the same interest and a nationally branded image.
More simply, ROI must begin to act as a unified group, not just a collective of very talented individual shops and leaders. To do this, the leadership must do more than simply encourage the ROI retailer community to support the brands that support them. It must make this a non-negotiable directive for all members. We would agree with vendors that if ROI continues with the Early Show, and most vendors we spoke with hope it does, then it must become a mandatory show for ALL retail buyers from EVERY ROI member. All participate or all stay home.
We believe a significant reason this group of ROI member stores continues to be so strong in the eyes of so many vendors is their independent spirit and connection to their local communities. Some have jokingly told us that ROI members are best described as "Entrepreneurs: Individuals who are forced to start their own business because they are otherwise, unemployable." That is a high compliment and so very true. We count ourselves among that lot.
Considering the scope of opinion, personality and geography that this group of free-thinkers possess, ROI has been unbelievably successful -- a tribute to the strong leadership under Dave Matz and an equally strong board. ROI's commitment to sharing knowledge, data and their valuable time with each other, the industry and their vendor members is commendable.
Sure, ROI's made some spectacular mistakes over the years -- Iron Mountain Gear among them -- but it has also established itself clearly as a retail coalition that must be reckoned with, and that bodes well for the outdoor specialty retail community as a whole. For certain, there are many GREAT specialty shops that are not currently ROI members. As this group moves itself forward with expanded marching orders, a more clearly defined and unifying mission, and a broader, national scope, we would suspect many of those current non-members would do well to consider membership.