The European Outdoor Summit in Barcelona marked the start of intensified discussions with retailers in the European Outdoor Group (EOG), after the appointment of two specialists who are to reinforce the productive partnership between suppliers and retailers in the association.
The EOG started working together with retail members two years ago. It has drawn 19 retailers including the largest European outdoor retail group, A.S. Adventure, along with several national players and online retailers.
So the association has teamed up with Anny Cardinahl, who spent more than two decades at Globetrotter Ausrüstung and was the German retail group's head buyer before its full acquisition by the Fenix Outdoor International group; and Andy Airey, who recently stepped down from his position as director of George Fisher, the iconic English outdoor retailer that was indirectly taken over by the JD Sports Fashion group when it bought the Tiso Group three years ago.
Airey, who was also very active on the board of the Outdoor Industries Association (OIA) of the U.K., has established his own consultancy on retail-related matters. He is is also engaging in charity work.
The two consultants held a meeting with retailers in Barcelona to help develop services that are relevant to retail members and thus help to drive the market. This new retail group discussed ways to provide input for board members, to obtain more detailed retail market data and to improve data efficiency in exchanges with the brands. More broadly, the retailers want to better understand the changing nature of retail and new ways to reach consumers, and they hoped that the EOG could help inform and encourage its members to adapt to the new retail situation. The next steps should be discussed in more detail at Ispo Munich.
In his own presentation at the summit, Frederic Hufkens, chief executive of the A.S. Adventure group, called for outdoor brands to provide stronger support to retailers who invest in stationary stores to help them compete with online-only players – and not only with reasonable commercial conditions.
A.S. Adventure is the group that encompasses the eponymous retailer in Belgium, along with Bever in the Netherlands, Cotswold Outdoor and Snow & Rock in the British market. Hufkens explained that the group has more than doubled its retail surface since 2007 and invested more than €100 million to properly showcase the brands - including store openings, relocations, refurbishment and maintenance.
The A.S. Adventure group has also taken advantage of online retailing to support its growth. Online sales made up about 4 percent of the group's turnover in 2011, and that mostly came from Cotswold Outdoor. But the share has increased to 15 percent so far this year, and it was Bever that boasted the largest percentage of online sales – despite the density of Bever stores in the Netherlands.
The pattern of consumption at Bever strongly reflects the complementary aspects of offline and online retailing. Based on a survey conducted at Bever, only 1 percent of the customers who bought products at least six times from the Dutch retailer in 2012 did so only online. Another 52 percent could be described as omni-channel consumers, while the remaining 47 percent bought products only in stores. A.S. Adventure has been supporting the development of omni-channel retailing by setting up digital monitors in its stores, where consumers can order products that aren't available at the location and collect them the next day or later for products from the extended range.
However, Hufkens predicts increasing competition, judging from projections about the growth of online retailing. They show that the share of online retailing in the fashion market stands to increase to 40 percent in 2025. Hufkens added that the current share is lower for outdoor retailing but he predicted that it could grow to about 30 percent in the next five years.
Hufkens summed up the benefits of physical stores, starting with their theatrical aspects. A.S. Adventure often measures “dwell time,” showing exactly how much time people spend in the store, which supposedly increases their inspiration to buy. Another gratifying aspect of the shopping experience is that customers can feel and touch the fabrics.
Customers also come to the stores to speak with real people and get personal advice, which has relatively strong value in outdoor retailing. Hufkens thus pointed to the importance of having a well-balanced mix of store employees, including men and women as well as younger and older staff. The more practical aspects of outdoor stores relate to instant delivery and easy returns – Hufkens pointed out that about 85 percent of returns from Bever's online shop go to the stores.
When it comes to online retailing, the benefits include the extensive content, advice provided online (albeit often not so personal), user reviews, the access to a global network, and efficiency. Then there are the low prices: they are clearly a bone of contention for A.S. Adventure, where prices are the same online and offline.
As Hufkens explained, the latest retail developments may have a strongly detrimental impact on the availability of inspiring retail locations. The example he used was London, a city with 10 million and plenty of millionaires, where he claimed it's hard to find an inspiring multi-brand shop with performance sports products (the British market being dominated by Sports Direct and JD Sports, which focuses on athleisure). This example clearly resonated with several middle-aged members of the audience, who have fond memories of shopping at Lillywhites on Piccadilly Circus before its acquisition by Sports Direct, and have yet to find a replacement.
As part of his strong plea for more support from the brands, Hufkens argued that brand equity was upheld by omni-channel retailers more than by pure online players. He finds it infuriating that stores providing service on behalf of the brands, for example bicycle stores with a workshop, do not always get proper support for categories in which they face online competition, such as apparel.
Hufkens insisted that his request for support was not focused on purchasing prices, saying that the margins were satisfactory. He requested that brand owners help stationary retailers with more exclusive product launches and provide access to an extended product range. Hufkens encouraged them to provide training and support in product innovation, which is very popular with the retailer's staff.
Perhaps more controversially, Hufkens also called for brand owners to be more selective with their online retail partners. More broadly, he appealed to brand owners to make sustainable growth plans and to address the issue of lead times. He added later that the EOG could be a platform to voice such concerns.
As previously reported, the A.S. Adventure group reached pro forma annual sales in the range of €550 million in 2015, when it acquired Snow & Rock, and reported turnover amounted to about €470 million, with only part of the year at the newly-acquired British retail group included. Hufkens said after his presentation in Barcelona that the group's sales were up at a mid-single-digit rate in the first half of 2016 and that comparable sales were slightly up excluding Snow & Rock. However, the start to the second half was weaker, from the second half of August and leading up to a double-digit sales decline in September. The comparison should be easier in October, when sales were weak in 2015.
The retail group has continued to grow at double-digit rate in the Netherlands in the first half of this year, while results were also positive in Belgium and the U.K excluding Snow & Rock. The new owner has been making significant adjustments in buying and it should take another year for the retailer to get traction again. Dion Taylor, the former CEO at Snow & Rock who led a management buy-out of the retailer in 2010, has returned to advise on a part-time basis. The stores are getting refurbished with a predominantly red and black color code, and the positioning has been adjusted to become more high-end.
Hufkens confirmed that a lease has been signed for a second A.S. Adventure store in France, in the Polygone Riviera mall at Cagnes-sur-Mer, near Nice, which should lead to an opening around March. The group intends to open two or three stores in France in 2017. It already had two French stores until recently, but only the store in Reims was profitable and the other in Metz was closed down. Hufkens denied that another store was in the works near Paris, saying nothing had been finalized.