It's fitting that a conversation among friends led to the birth of the Outdoor Gear Exchange 10 years ago. After all, the concepts of "friendship" and "family" remain at the heart of this outdoor specialty store in Burlington, Vt.
A decade ago, Outdoor Gear Exchange owner and founder Marc Sherman joined a group of friends for a weekend camping trip. "I think we were all wearing jeans," said Sherman, describing the scene where he and his friends sat and talked about how there must be many others like them, unable to afford quality clothing and equipment.
"We were saying there are a lot of people trying to do this, but they have the wrong gear. Or, because it's expensive, they try to make do, and that's not safe and fun," Sherman said.
After that trip, Sherman decided to launch an outdoor store that would offer high-quality gear at low prices so that entry into outdoor activities would be more accessible and affordable. His store would not only carry closeout gear and over-runs, but also have a consignment component so customers could sell their used gear and trade-up for newer products.
The concept of a high-end discount store was unusual, though not totally unheard of at the time. "One of my friends had gone to school in San Francisco, and had been in the Wilderness Exchange store in Berkeley, Calif.," said Sherman. Unhappy in his sales job with The Vermont Teddy Bear Company, Sherman called the owner of Wilderness Exchange and spoke with him for three hours, obtaining all the contact information needed to lay the groundwork for a new store.
In 1995, Sherman and friend Mike Donohue compiled $36,000 in capital to launch the Outdoor Gear Exchange (OGE), an 800-square-foot shop on Main Street in Burlington. They projected they would make about $3,000 the first month, but when sales reached nearly $15,000, they knew they were onto something good.
Now that good thing has blossomed into a 10,000-square-foot store that has become a leader in the Northeast for sales of hiking, skiing, climbing and camping gear. The success of OGE and a handful of other stores that followed the Wilderness Exchange model demonstrate that the discount store concept is sound. But the success of OGE lies not only in low prices, but also in its close-knit staff. Sherman's 22 employees certainly work together closely, but many have also lived together and they all regularly spend time with each other outdoors. The staff shares a closeness that creates a casual vibe in the store that customers notice and appreciate.
"The store is a very friendly place to go into," said Lew Apgar, general manager. He said customers and employees can feel free to bring in their dogs, and Apgar said, "There are always about five dogs roaming around the place."
"It's a great social environment," said manager Scottie Raymond, who first began working at the store six and a half years ago. Raymond said he left the job for a while to get married and pursue other opportunities, but returned seven months ago when he realized that the family atmosphere of the store was "irreplaceable."
"When I looked around at my wedding, most of the people I cared to have there were people I worked with (at the store)," said Raymond. "It seemed like it was logical to just go home.
"For me, one of the huge benefits is my wife and kids can stop in here for 20 minutes to visit, and I can trust that I can put my daughter on the floor and let her run around," he said.
The atmosphere begins at the top
OGE's atmosphere stems greatly from Sherman. "It's my general approach in the world. I try to maintain an amicable relationship with everyone I deal with," said Sherman. "I don't want to be the boss of people who are unhappy."
Employees are particularly happy with the benefits Sherman offers. Staff members can receive up to five weeks of paid vacation a year. The store pays for 50 percent of health care, and employees can participate in a company funded retirement plan after they've been with the store four years.
Sherman also makes an effort to pay his employees fairly. He says the business has given him a good life that he enjoys, and he said, "I don't want to feel like I'm doing that on the backs of people who are struggling and can't make ends meet." Eight people on staff earn more than $30,000 a year, and the bulk of the full-time staff earns over $20,000.
Beyond the pay, Apgar and Raymond really appreciate that employees feel empowered. "Every decision that gets made around here seems to get made by more than one person," said Raymond.
Sherman said he encourages all staff members to offer ideas on how to improve the business. "We have a brainstorming meeting off-site at least once a year to get people's opinions and ask where they want to see this business going. I can't take 100 percent of that. I can't cater to idealists who want to take every Thursday off to go ice climbing, but more often it's people saying our ski department needs to be 50 percent bigger because people are asking for these things and we need to have them."
Through thick and thin
The strong bond between Sherman and his employees met a tough test in the late '90s when OGE suffered a financial setback. In 1997, Sherman opened a second store in Lake Placid and launched a web site, gearx.com. Then, in 1998 he moved the original shop into a 4,000-square-foot building. With the expansion, the company did not properly plan for the great increase in inventory and sales could not finance the growth. The store fell behind in its bills, and manufacturers began to no longer offer favorable discounts. Compounding the problem, the store's accounting books were not in order due to a computer software problem.
The store fixed the computer problem, and Sherman came up with a plan to put the store on the right track. He gathered his employees and announced to them that for up to three years he would put off all raises and bonuses, except for profit sharing. In addition, Sherman himself would take a pay cut. Remarkably, every employee not only agreed to the terms, but offered strong support.
"With the salary freeze there was never any question that we wouldn't stay," said Raymond. "There was never a question that we wouldn't come out of the situation and pull through. Back then it was even more of a tight family unit. There were 10 of us working at the store, and five of us lived in one house. We were all in it for the long haul."
The plan worked, and by 2001 the store was once again profitable. Even in the tough years following 9/11, OGE thrived, repeatedly making 7 percent net profits. "By 2002 we had recouped all the unexpected losses," said Sherman. The company has taken other measures to remain on a steady course, such as closing the Lake Placid store and rebuilding relationships with manufacturers.
"We've had relationships with most vendors six to eight years," said Sherman. "Even with the ones we didn't pay for 60, 90, even in one case 360 days, we've never defaulted on a bill. And we've never had problems with delivery, even in tough times."
The formula for success
According to Sherman, OGE is "one of the only locally owned shops in the Northeast that's still growing and making money." When asked why his store is faring so well, he said this is due in large part to the fact that the store has increased its selection of products. Once primarily a camping store, it now carries equipment for a wide range of activities, such as ice climbing, paddling and skiing. The shop is now a leader in the area for telemark ski gear. "Our telemark department has expanded from 100 square feet four years ago to 800 square feet," said Sherman.
Hardgoods still make up the majority of sales. "We have a huge wall of backpacks, probably 100 different SKUs stocked deep, with about 10 brands. Our backpack department is bigger than our first store," said Sherman. But clothing is becoming more important, now representing 40 to 50 percent of sales, and the store has an expanding women's department with gear and clothing.
While product selection has played an important role, Sherman said that as the operation has grown and finances have improved, manufacturers are offering better deals. "We just bought the fall '05 sample set from one company, and it was $140,000 worth of stuff," said Sherman. We got it for $40 grand, and we have product on our shelves for 50 percent off that won't be on anyone else's shelves until next fall."
The store has also benefited from its solid reputation. These days, more vendors understand and appreciate that OGE not only offers good deals, but it serves the market with a quality staff and excellent service.
"Manufacturers know that their productâ€”even thought it's a closeout and it's overstockâ€”is being represented properly. So if you buy a closeout from us, it's being sold on the features and benefits."
Now the store has evolved to include a greater percentage of full-priced items. Sherman said he's more concerned that his customers be able to find exactly what they need. About 50 percent of product is full price, 10 percent is consignment (mostly clothing, ski boots, skis and packs), while 40 percent is made up of sales samples, closeouts or reduced-price items.
The gearx.com web site has also become a key part of the equation. "It's five percent of the business right now, and in three years it might be 20 percent," said Sherman. But he emphasized that the strength of OGE will always be its face-to-face sales. As Raymond put it, the store's atmosphere and its affect on folks who walk through the door is irreplaceable. It tugs on people and brings them back.