We Win. Now What? Ruminations on the Future of Skateboarding

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The “AHAA!” moment at the ASR show came early for me. I’d just flown in from the SIA winter sports show in Vegas and literally walked in the door at ASR when I heard that the ubiquitous ASR Board Trac seminar had already started. I was fifteen minutes late. When I walked in, they were questioning ten “typical” teenagers about their buying habits and perceptions. I think it was five surfers and five skateboarders. Three or four were team riders. It was clear that being team riders skewed their points of view a bit. Nothing like getting free stuff to change your buying habits.

 
I listened for maybe thirty minutes. Then I had to turn to TransWorld Surf Biz Managing Editor Sean O’Brien and whisper, “Hey Sean, is this suppose to be just about skateboarding?”
 
Congratulations to Us
 
Skate was clearly the driver of the discussion. Surfing seemed largely a sport. Skating was somehow more. Skateboarding has, I guess, become something of an arbiter of style and fashion for a lot of kids.
 
That sounds kind of high and mighty. I wrote it pretty much from the gut and now that I think about it, it bothers me that I even had the thought. The consensus is that we’ve dodged the recession bullet with no more than a minor flesh wound (Assuming you believe it is a recession without a significant drop in consumer spending and that we’re in recovery mode. Can consumers start to spend more when they didn’t spend much less?).
 
We are skateboarding and we are immortal. Unless they cut off our head maybe? Or close all the skateparks in California. Check out the box on this page and do something.
 
What an enviable market position. What did we do to deserve it and how do we keep it- at least for a while?
 
Skate is Not Snow or Surf
 
Okay, you knew that. Perhaps I should be more specific. In snow, the top five to seven companies control maybe 85% of hard goods sales. Maybe more. Burton is first, followed, not necessarily in order, by K2, GenX, Rossignol and Salomon. Yes, I’m pretty damn sure GenX is either number two or number three by number of snowboards sold.
 
None of these companies, including Burton with its Gravis shoe brand, is one hundred per cent dependent on snowboarding for its revenues. None of these companies is under $100 million, and Salomon-Adidas is over $5 billion. They sell a significant amount of product to people who don’t participate in snowboarding. They want to grow, and are widening their distribution to do it. You can generally find their snowboard products in some places where you would have been surprised to find them a few years ago.
 
You need a mountain to snowboard (or at least a big hill). Buying all the gear you need to participate is pretty expensive (less than is use to be) and the expensive stuff is mostly special purpose. You don’t wear your snowboard boots to walk around when you’re not at the mountain, that is. You can’t do it all year around (unless you have a really big travel budget) and you are weather dependent.
 
For surfing you need an ocean. Or maybe, someday, a wave machine that generates high quality waves in an indoor facility. Let’s hope Surf Parks LLC pulls it off. You’re weather restricted (weather makes waves as I understand it). Buying what you need new probably will set you back six to eight hundred for a board, wet suit and bathing suit plus some accessories. Except for the bathing suit, its pretty much special purpose stuff.
 
It seems to me that the biggest surf companies are largely soft goods makers. Quiksilver had revenues of $615 million over its last four quarters. Vans did $353 million (I don’t know if I call Vans a surf company or not. I wonder if that’s a problem or an opportunity for them?) Surf soft goods brands are interested in pushing their distribution as well. Look, if you’re going to grow, you have to do it be expanding distribution. Once you get to a certain size, you just can’t get meaningful increases through the specialty distribution channels.
 
Meanwhile, over in our part of the world, we’re got a handful of large, multibrand skateboard companies with a primary focus on hard goods and skateboarding in general They sell some soft goods, sometimes under other brands, but it’s not their focus. The majority of f their revenue comes from selling skateboard hard goods to skaters. They have not, for the most part, expanded their distribution outside of specialty shops and smaller chains. They believe, and I think they are right, that it would kill their credibility with their core customers.
 
They aren’t giant companies. I don’t have any numbers but I’d be stunned if any of them topped $100 million in skate and skate related sales. I’ll be surprised if they are over $50 million and $20 to $30 million might be more typical. 
 
Though you can be weather constrained, you can pretty much skateboard anywhere. And, though decks wear out pretty quickly if you skate hard with existing skateboard technology, it’s a lot cheaper to buy what you need to skate then to surf or snowboard.
 
Skate shoe and softwoods companies, of course, are pushing madly into the broader distribution channels. Skate shoes are a limited market no matter how big skateboarding gets compared to casual shoes. There were 100 footwear companies exhibiting at ASR compared to around 70 six months ago.
 
So here we sit in skateboarding with a handful of hard goods companies that have been in skateboarding forever are largely run by skaters or former skaters focused, in their own best interest, on hard goods, riders, skateboarding’s vibe, and helping skateboarding progress. They are still their customers in many ways. They are still proselytizing missionaries for skateboarding.
 
That is pretty much a distant memory in snowboarding. Surf has the same problem though, in my judgment, not to the same extent as snow.
 
Shoe and soft goods companies get to sell to the general action sports, lifestyle market. Skateboard hard goods companies have to sell to skateboarders. I suspect it’s with some interest, if not envy, that the hard goods suppliers watch the shoe and clothing companies grow and diversify while they stay focused on a market that is nearly all young males.
 
ASR
 
We better hope the hard goods companies keep doing what they are doing. It is, I think, skateboarding’s unique competitive advantage over activities. ASR wasn’t able to give me the final show numbers before my deadline. What I felt was that traffic was down, things were generally a little quieter and the show was smaller. Company managers were talking about tighter budgets and “meeting reduced expectations.”
 
Given a recession, September 11th, overlap with other shows and a Super Bowl weekend, maybe that was inevitable. What troubled me more than that was my perception that the horde of new, little companies that usually come and go at ASR like the tide, weren’t anywhere to be seen. Okay, it’s probably a lousy time to be starting a business. But the presence of those companies is, to me, a barometer of just how exciting things are in skateboarding. When I don’t see them I worry. 
 
I worry that the hard goods companies that are the foundation of the industry will succumb to go big into clothing or shoes, or expand their distribution too much. I’m not quite sure that’s possible, given the start and the resources and the market positions that the shoe and soft goods companies now have. But it must be tempting.
 
It’s nice to be a big company I suppose, but it’s maybe even nicer to have a rock solid market niche that consistently earns money, keeps you close to your customer, and is a likely survivor in the event of a downturn. I hope the skateboard companies look at it that way. It would be good for all of us.
 
 
SIDEBAR
 
The law that releases California skateparks from liability expires December 31, 2002. Word is that it will be left to each skatepark manager to decide what to do and without this liability protection, a bunch seem to be saying they will close their parks. That would be a bad thing.
 
So, if you don’t want to risk having skateparks in California closed, YOU have to give California State Senator Bill Morrow, who spearheaded the original legislation, the leverage he needs to get the new law, SB 994, passed. You should tell him you appreciate what AB 1296 (the expiring law) has done by providing safe skateboarding venues for young and beginning skateboarders, and that you support SB 994, the new law.
 
You can do this at the following web site: http://republican.sen.ca.gov/web/38/feed.asp
 
Or you can write Senator Morrow at any or all of the three following addresses. Send a copy of your letter to each address for maximum impact.
 
2755 Jefferson St., #10                   State Capital Room 4048  
Carlsbad, CA 92008                       Sacramento, CA 95814
 
27126 Avenue Paseo Espapa #1621
San Juan Capistrano, CA 92675
 
This is important. Do it. Even if you don’t live in California but especially if you do.

 

 

Well, At Least It Can’t Be Any Worse Next Year; The Trade Show Schedule

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The box on this page contains, as most of you are no doubt painfully aware, this year’s trade show schedule. Pretty intimidating. But of course it doesn’t include any key account presentations suppliers might have to make. Or regional shows. Or shoe shows, or bike shows, or toy shows or whatever other shows some suppliers and retailers might need to attend. And when’s that new ASR back to school show? When’s MAGIC? Granted, these aren’t all winter sports shows, but basically all retailers and many suppliers aren’t only in the winter sports business.

  
Show                                                 Date
 
Outdoor Retailer                               January 5-6
NBS                                                    January 10-13
Supershow                                       January 19-23
Winter Sports Market                       January 27-28
SIA                                                      January 29- February 2
ASR                                                    February 2-4
ISPO                                                   February 2-5
NSIA on snow                                  February 7-8
NSIA show                                        February 10-13
SBJ (Japan)                                      February 28-March 3
 
 
Now, I guess no single person actually has to go to all of these. Well, wait a minute. I can think of one guy. The guy who gave me this schedule actually. Maybe I can talk him out of some of his frequent flier miles. He can’t possibly use them all.
 
I started writing this sometime in mid January and, at that point, it was something of an abstraction to me. Now, sitting here in Long Beach for ASR in my hotel room on a Sunday evening in early February, it’s all too real. Tomorrow will be my seventh straight day of trade shows, and I don’t even have to fly to ISPO. I had a moment of clarity as I walked into the ASR show this morning and one of the security guards looked at me and said, “Don’t worry, you’ll get through this.” Apparently, I had a bad case of trade show stare.
 
What the hell happened? How did we find ourselves in this position? What can we do about it? This number of shows of this duration this close together can’t possible be argued to be in the interest of retailers or suppliers.
 
Apportioning Guilt
 
In that great American tradition, I guess we should start by finding somebody to blame. Can’t be our fault we’re in this mess. I know- let’s blame the associations that put on all the shows.
 
I think pointing a finger there is at least partly appropriate. It’s not that all the show producers got together and decided how to make us all broke, jet lagged and exhausted. All of them, I imagine, know in their heart of hearts that there are too many shows, but it’s unlikely that any of them are going to volunteer to close themselves down. Organizations are almost organic in their tendency to survive and grow whether they should or not.
 
In a weaker economy with, as I perceive it, fewer retailers going to fewer shows and staying fewer days, the trade organizations find themselves competing with each other for “market share.” It’s no different than any other industry. In the computer industry, or the snowboard industry for that matter, too many companies fought for market share and many of those companies didn’t make it. But in the process of that fight, the customer got a constantly improving product for less and less money.
 
The customers of trade shows, of course, are the suppliers and, to a lesser extent, the retailers who attend the shows. But it’s the suppliers who pay whoever puts on the show to be there, in addition to costs for building, transporting and staffing their booth. Retailers pay to attend too, but they don’t have to build a booth or pay for space.
 
In most industries, the customers don’t rush to pay for and use more of something than they really need, want, or can afford. In the snowboarding business, where marketing is critical and many companies try to look bigger than they are, competitive pressures can make suppliers show up at trade shows, do more, and stay longer than they really want to. If they aren’t there, or their presentation isn’t what’s expected, the rumors start flying. Let’s call it the lemming affect- we all scurry in the same direction.
 
The longer shows are and the bigger the booths, the more money the organization sponsoring the show makes. Talk about a potential conflict of interest with your customers. Competition among trade show promoters doesn’t seem to result in the trade show customers getting a better, more affordable, product.
 
To the larger players, the cost, hassle, duration and number of trade shows may be a pain in the butt (an expensive pain in the butt), but it doesn’t threaten their ability to compete and survive. For smaller companies, or brands just trying to get off the ground, the need to make their presence felt at shows can be a formidable barrier to success. They just don’t have the people, booths and money to be everywhere.
 
In an industry that could use some fresh new products and brands, that’s too bad.
 
Hey, wait a minute! We can blame the economy and snow conditions. Well, that doesn’t really work. It’s true that if the economy was stronger and it was cold and dumping everywhere we might not complain as much. Cash flow covers up a variety of sins. But it wouldn’t change the existing issues with the trade show schedule.
 
This is inconvenient, but at the end of the day, I’m afraid we’re going to have to look into the mirror and accept some blame ourselves. We are, after all, the ones who show up and nobody exactly puts a gun to our head.
 
SIA and What To Do
 
Vegas is our trade show run by our association. But, as I’ve made clear above, many suppliers and most retailers have trade show responsibilities and concerns that go beyond winter sports. It’s the interplay of all the trade shows and their schedules-not just winter sports- that really creates the problems. SIA can’t fix all those problems. What might they do?
 
SIA has a board of directors run by suppliers who are also Vegas exhibitors. They are responsive to our concerns because they are us, though they may not act as quickly as we’d like. Shows like Vegas get planned and contracted years in advance, so perhaps that’s inevitable. We’re the shareholders, so money SIA takes in goes to programs that help winter sports and, according to SIA, Vegas costs us less than a comparable show put on by a for profit organization. That’s all good.
 
This year in Vegas, the number of buyers was down 10.8 percent. Given the new dates, the economy, and, maybe most importantly, a Superbowl weekend, that wasn’t too surprising. The question for me, however, isn’t how many buyers were registered. What I’d like to know (and I guess we don’t have a way to get this number) is how long they stayed. That is, if you take all the buyers who showed up, and add up the days each stayed, how many was it and how does that compare to previous years?
 
My guess is that the total number of buyer days was down and by more than the number of buyers. That’s fine because this is now a preview show. The first thing I’d like SIA to do is cut the show down to three days. That’s a number most people I spoke with seemed to think was reasonable. I understand we’re down to four days next year from January 24th through the 27th,  I further understand that existing commitments can’t be arbitrarily changed. But three days seems about right. On day four I was there and it was very quiet. On days five, I was gone but I’m told that deserted might not be too strong a term.
 
Does that mean less income for SIA? From both a financial and a management point of view, I expect suppliers would rather pay higher dues than spend two more days in Vegas.
 
Next, let’s see if SIA can merge with Outdoor Retailer. Those discussions are apparently ongoing. When OR’s numbers came out, the gossip was that SIA was in the catbird’s seat for the negotiations. At Vegas, as it became clear that show attendance would be down, the handicappers seemed to give OR the edge. If SIA had been before OR, I’m sure the opposite would have happened.
 
Anyway, I think that merger makes sense though I can imagine that reaching an agreement between a for profit and a non-profit organization will require some creative structuring.
 
OR’s on snow is January 28th and 29th next year. Their show is January 30th through February 2nd. For those who have to be at both, that’s tougher than this year unless through some miracle there’s a merger that’s effective for next year’s shows.
 
Speaking of scheduling, I hope and assume that SIA does everything it can to keep Vegas from overlapping with ISPO and ASR. In fact, ISPO is February 1-4 next year, so that’s an improvement from this year for people who want to attend Vegas and ISPO. ASR, on the other hand, is January 23rd through the 25th, offering a two day overlap with SIA compared to one this year. I’d guess that most suppliers who go to SIA don’t exhibit at ASR as well. But there are a lot of retailers who would want to go to both. They have a problem
In Vegas, I saw bigger booths. Never in my wildest dreams did I imagine I’d see that this year. In this industry, at this stage of its development, are there still companies that think that booth size correlates with sales? Maybe, and I’m only half kidding, SIA should limit booth size. Of course, that would cut into their revenue and be in the interest of the smaller companies…… Personally, I think snowboarding could stand to see success by new, fresh, smaller companies, though a viable financial model is a hard thing to achieve.
 
I just got a phone call from somebody I respect who said he thought Action Sports Retailer would start approaching the snowboard companies. In the far distant past, they all went to ASR anyway. The timing’s more or less the same as Vegas, it’s just three days, most of the retailers will be there as they also tend to do either skate or surf, and in terms of the lifestyle and demographic, snowboarding belongs with skate and surf more than with ski. Interesting idea.
 
At the end of the day, the interest of trade show producers, on the one hand, and suppliers and retailers, on the other, aren’t necessarily the same. Perhaps SIA is an exception, at least in part. Change will happen because enough attendees, at whatever show, make it clear they won’t show up if things don’t change.
 
Wouldn’t it have great if five major companies at SIA had put big tarps on their booths at the end of three days with signs that said, “We’re Done. We’re Gone.”