As you probably know, Emerald Expositions (EE) is the owner and manager of Surf Expo, Outdoor Retailer, and now what was formerly SIA’s Snow Show. Overall, they operate over 50 shows as well as other events. They’ve grown by acquisition, and expect to continue to do so. Their shows are in many industries and include the International Drone Conference and Exposition (kind of cool!), the National Pavement Expo (who knew there was one?), American Craft Retailers’ Expo, and the Digital Dealer Conference and Expo (no idea what they do there). These, along with the Snow Show, are among their most recent acquisitions.
Trade shows were created to bring buyers and sellers, that is brands and retailers, together to do business. Everything else that goes on at trade shows, beneficial as it may be, has been secondary to that goal.
But there are fewer smaller retailers and fewer retailers overall. The consensus is that the number will continue to drop (see the articles referenced at the end of this). Larger retailers have less reason to attend, as their most important suppliers reach them outside of the trade show venue. Meanwhile, changes in logistics, technology and the supply chain have introduced some chaos into the formerly more or less reliable buy sell cycle around which we scheduled shows.
To me, this means there’s less value in attending traditional shows. The return on investment is harder to justify for buyers and sellers. Meanwhile, brands and retailers are generally competitors at a greater or lesser level. Are they perhaps a bit more cautious in how they work together and share?
What’s the result? Neither buyers or sellers need to send as many people to trade show for as long. Smaller booths, shorter shows, fewer attendees. Consolidation of shows. I haven’t had any retailer or brand tell me that putting OR together with SIA is a bad idea. If you are one who thinks it is, I’d love to hear why. Ultimately, I expect fewer shows though, as is always the case in consolidation, everybody will struggle to survive hoping it’s the other guy who goes away.
There will be more focus on consumers. It’s the best way to cover overhead. There will be some smaller, focused, curated shows. Interestingly, it feels like there will be room for big shows and for small shows. As usual, the ones caught in the middle will have the most trouble. I wonder if there might somehow be some local, “popup” shows.
The fundamental reason trade shows were created has declined in importance. A lot. That’s the thought I want you to have top of mind as you consider the show landscape. Given the change, how has what you get out of the shows changed?
The Outdoor Industry
Boardsport Source is a good magazine. It’s generally thoughtful, and helps me know what’s going on in Europe. I was looking at “The Great Outdoors SS18 Retail Buyer’s Guide” in the July issue. I can’t find the picture on line, but in the Camping Gear section of the magazine, there was a picture of a campfire. Nothing unusual about the fire. But it was on some kind of curved metal grate or holder just for the fire. Stuck into the ground next to it was a black metal pole with a couple of adjustable rods coming off it.
One of those rods held a large metal pot with a lid that was cooking something over the fire. The other, higher up on the pole and not over the fire, held a tray with what appeared to be a coffee pot and mug as well as a plate with food on it.
So, I used to do some serious back packing. A week to two weeks out in the back country over mountain passes carrying everything we needed on our backs. Sometimes we caught some fish. My “friends” let me clean them so I would be the one the bear was attracted to.
When you do that kind of camping, you are always concerned with the weight of your pack. First, you are concerned that it is too heavy. Later in the hike, as the food goes away and if the fish aren’t biting, you worry it’s too light.
I want you to know that none the equipment I described around the fire ever made it into any back-country camper’s pack. Not for a minute did we consider trying, as the article says, to “bring your kitchen outdoors.” Comfort was measured ounce by ounce, as you strove obsessively to minimize the weight of what you had to carry. Or to put it in somebody else’s pack.
I’m not against drive up camping and having your comforts. Certainly, rigorous backpacking isn’t for everybody. But the picture and description of the gear made me think about the “outdoor” target market. For the reasons I’ve described this kind of equipment specifically excludes serious backcountry campers. Unless they have it flown in by helicopter I suppose.
The elite athletes in skateboarding, snowboarding and surfing always used more or less the same equipment the typical participant used, though of course they did things with it that most of us were never going to try.
Suddenly, in this particular case at least, that doesn’t seem to be the case. I don’t quite know what to make of it. Is the “outdoor” market defined as anybody who’s not “indoors?” Is there a “core” to be connected to? Does that matter? Do the customers, whoever they are, care about the product or do they just take product for granted and focus on an associated experience?
What does it mean to be a brand in the “outdoor” market and how do you identify your customers? If you think it’s everybody who’s not indoors, it’s nobody. I guess it helps a little if you say, “active outdoors,” but it hardly solves the problem.
Perhaps, as we’ve become more and dependent on the public and private equity markets for financing, you have to define your brand’s potential in a way that at least appears to place it in a market where there’s enough growth opportunity- even if that’s destructive of the brand in the longer term.
This first article, “Over Storing America,” gives some insight into how retail got to be so overbuilt that perhaps you hadn’t thought about.
The second, called “Retail Shift,” was sent to me by a friend. Thanks friend. The article says:
“the market make-up has been shifting and continues to shift from a fairly homogeneous composition of primarily baby boomers into a significantly splintered compilation consisting of Gen X, milliennials, Gen Z and the boomers. Multiple sub-segments exist within each of these large segments that have their own defining characteristics. This complex segmentation is compounded by the fact that the vast majority of retail platforms today have erroneously been founded and built on the strategic premise that large homogeneous groups of people generally desire the same things.”
Both are worthy of a read.
As usual, the Agenda trade show, Long Beach version, was held July 13 and 14. What was unusual was that it was followed, on Saturday the 15th, in the same space with the same brands attending, by its first consumer show. Having no intention of spending three whole days in the Long Beach Convention Center, I arrived late Thursday afternoon. I walked the show Friday and spent four or five hours in the consumer show Saturday.
We are all aware of the long, ongoing conversation about the changing role of trade shows, their relevance, and role. The consensus, as far as I can determine, is 1) we need some, 2) face time is important, 3) we’re not completely sure how to improve them and 4) there are too many of them. I applauded the combination of the SIA show with Outdoor Retailer. Step in the right direction.
Finally, some positive movement in the trade show space. I’ve hung back on writing about this for a few days but SIA President Nick Sargent sent out an email to all SIA members announcing and describing the deal, which is subject to approval by SIA’s premium members.
The email from Nick was labeled “CONFIDENTIAL: DO NOT SHARE OR FORWARD,” so naturally everybody in the industry who’s not in a coma now knows about it and has a copy.
Last Week Emerald Exhibition (EE) filed the S-1 that includes the first draft of its prospectus to go public. Because it’s the first draft a lot of information (like price per share and number to be sold) is missing. Still, it’s worth a review. We’ll summarize the company’s history and activities, look at the financial results, talk about their market and how they see themselves competing, and discuss why they are going public. I also want to point out a risk factor they seem to ignore.
Who’s Emerald Exhibitions?
What is now called EE was acquired from The Nielsen Company by Onex in 2013.
Life was simpler when I wrote my first article on trade shows in the mid-90s. We went to trade shows because it was the only place to see, and to make, complete product presentations, and discover new, meaningful, features and products. There were also a lot more specialty retailers. The shows were the only place they and brands could efficiently connect and do business- by which I mean write orders.
All that’s changed. It’s not that it doesn’t still go on, but it doesn’t have to happen at trade shows like it used to. There are other choices caused by consolidation, the internet, and changing consumer behavior.
What I most liked about Agenda this time was how refreshingly inviting it was. Lots of open space and perhaps wider aisles. Maybe lighter? Especially on Wednesday, there appeared to be a lot of traffic and people seemed upbeat. Apparently that might have had something to do with getting a few days of sun after a pretty gloomy late June.
Still, I wondered if the openness wasn’t an indication of fewer brands taking booths or maybe taking smaller booths. I didn’t talk to anybody who told me straight up how great business was and certainly the role of trade shows (not just Agenda) continues to evolve.
So there I was sitting in the conference room of the Embassy Suites for day one of the IASC Skateboarding Summit waiting for the dreaded retailer panel to start.
You all know the panel I mean. They have one at every industry trade show and conference I’ve ever been to. Three or four retailers sit up on stage, a moderator feeds them questions they often have in advance (well, that’s what I always did) and they give cautious answers that aren’t that useful, typically aren’t a reflection of actual business conditions, and make unrealistic requests of the industry and the brands to “fix” skateboarding, or snowboarding, or whatever.
I’ve almost shoveled my desk off after the always enjoyable SIA show in Denver. That shoveling process always includes reviewing the various catalogs and magazines I’ve picked up during trade show season and, as always, one of those was Transworld Business. I’d had it since Agenda, but hadn’t finished reading it. I particularly liked Annie Fast’s article on personal progression in snowboarding.
It also had an article called “What Does Snowboarding Need?” which I stole for my title here.
Coming back from SIA, I find myself reflecting on how the industry has changed or, maybe more importantly, not changed. I’ve cautioned before on the dangers of being too incestuous as an industry and spending too much time talking to people we’ve known way too long and who are likely to validate what we already think.
Well, I guess we might as well get right to it. The date change for the SIA show to three week days in early December starting in 2017 was a major topic of conversation at the show. I got a point of view. Several, actually.
The New Dates
First, I’ve been through this twice before. Or is three, including the move from Las Vegas to Denver? Now, as then, a bunch of people hated it, a bunch of people liked it, and some shrugged their shoulders. I suppose there were people it benefited and those it didn’t. But a year after the change, nobody was even talking about it. Well, maybe except me. I love Denver, but miss playing blackjack. No idea why I’d miss something that usually cost me money.
I guess what I’m trying to say is I’m pretty sure it’s a done deal for better or worse. So let’s get over it and focus on running our businesses better in what are surely challenging times for pretty much everybody.
What did I hear from people? The specialty retailers hate the idea of being out of their shops for three or four days in early December when they are busy selling and don’t know what their inventory position will be like. The large apparel brands are thrilled and I guess pushed for the change. The hard good snowboard brands mostly said, “If the retailers come, we’ll be here. If not, we won’t be or if we are, it will be with a booth one third our current size.”
Now, if it wasn’t a done deal, what I’d like to see is a merger of Outdoor Retailer and SIA into one show. No, it’s not impossible. Yes, it would be difficult, maybe expensive, highly charged, and have lots of obstacles. But not impossible and, I think, responsive to the realities of our market. It might even be easier to accomplish than it would have been a year or two ago.
My next point of view- how did Nick Sargent find himself taking over just as this was happening? The timing seems, I don’t know, not well coordinated maybe? Or- maybe it’s perfect. Anyway, it’s a lot of change at one time. What doesn’t kill you makes you stronger, Nick. There must be a story I’ll never hear. Damn.
That’s enough on the change of dates. Let’s move on.
Outstanding Industry Data
Wednesday I went to the SIA intelligence day and heard Goddess of Research (not her actual title) Kelly Davis lay out all kinds of interesting market data for hard goods and apparel. You all need to be aware that the quality of the research SIA is doing and making available has gotten really good and way more valuable, hence I’ve bestowed the title “Goddess.”
Both presentations are available as PDFs to members. They are full of good information and I suggest you get them. The single stat that hit me hardest was the weather slide in the hard goods presentation. What it said on the slide was, “Weather explains ¾ of the variance on snow sports participation and sales.”
Interestingly, I didn’t hear audience members wailing and keeling over when that slide came up. Maybe we’re all just too used to that idea. I have to have a long talk with Kelly about just what that means, and I’ll report back. Notice she said 75% of the variance- not 75% of sales. Still, it implies a certain lack of control over your results in this most seasonal of businesses even when you do things right. And it seems to validate the approach I’ve been pushing for years- only buy (or produce) what you reasonably believe you can sell at good margin in an average year and carry over as little inventory as possible. It’s never worth more the following season.
I’d always rather you were bemoaning the sales you missed rather than the inventory you can’t sell.
The second research related item I want to tell you about is the Downhill Consumer Intelligence Project (DCIP). This coordinated effort collected way better data from way more consumers than SIA has ever collected before. It tries to tell you not just how consumers have acted, but why.
You can see some of the data in Kelly’s presentations. But, perhaps more importantly, you also have access to and have the ability manipulate this data in something called the DCIP dashboard. I’m not sure who gets what access and who has to pay and who doesn’t (I only get access to the top line data) but go check it out.
Below is a sample page from that program which, I think, shows some of the variables you can manipulate. Anybody who doesn’t focus like a laser when they see that 49% of skiers and 60% of snowboarders don’t own their equipment is not in touch with reality. That’s either a problem or an opportunity. I imagine it’s both.
You know what I found out at the show? Among all the hundreds of people who have free access to this program and data, literally nobody has used it to write a report that slices and dices their market. That makes me want to tell you a story about a sister industry.
Skateboarding: A Cautionary Tale for Snow
Even before 2003, skateboarding had been through its cycles. But it was around then that its popularity really took off and the Chinese decided it might be worth making some skateboards because the market had gotten big enough to be interesting.
There were maybe half a dozen “core” skateboard companies at the time mostly founded by former pro skaters. They enjoyed a great business model where they sold their product mostly to “core” skate shops. That provided retailers and brands with enough margin to fund traditional marketing programs focused on their team riders. There hadn’t been much (any?) product change in a long time. The industry had convinced skaters that a skate board was made from seven or eight laminated plies of Canadian hardwood maple and not any other way.
After some fits and starts, the Chinese (and now others) learned to make a skateboard that was the same as that made by the core brands. But they made and sold it at a much lower price and skaters (and skaters’ parents who were footing the bill) realized that there was nothing wrong with paying less for a product that tended to wear out anyway (When wood contacts concrete or asphalt, wood loses).
I’d characterize the core brands as having resisted this major change in their business model, though eventually they started to adjust.
Meanwhile, the former riders who’s started these brands got a little older (it happens). Pretty soon they were in their 40s or more. Somehow, though they still thought they could be the arbiters of the skate industry. So when longboards, and plastic boards, and scooters came along (not necessarily in that order) they said, “Nah, that’s not skateboarding and it’s not cool.” But of course, the 14 year olds didn’t much care what these older gentlemen thought and went by on their longboards, plastic boards, and scooters and said, “Yeah, well, whatever.” With one or maybe two exceptions, the “core” brands have lost most of their relevance to the market. They didn’t change when the market changed.
And We Snow Sliders Care Why?
In skateboarding, there are always new brands popping up. Getting 100 good decks made is easy, and the kids (amazing how many people I call kids these days) are having so much fun having their own brand they don’t care that they aren’t paying themselves.
It’s not that easy in snowboarding, and I noted I didn’t see the usual 6 to 10 new brands I’ve become used to seeing there. Yes, there were a couple, but not many. That kind of bothered me.
It bothered me because even though there isn’t the kind of disruption China and longboards brought to the skate industry, there is certainly the issue of the management of leading companies (ski and snowboard, resorts, brands, retailers) getting older and, whether they admit it or not, inevitably less in touch with their core customer who, Kelly Davis tells us, is young. Only 6% are baby boomers (though they spend a lot of money).
Last year I made a presentation at the show and said, “Hire some 14 year olds.” I wasn’t kidding. We’re faced with a slow economy that’s been, and continues to be, particularly hard on our primary customers. It’s also changing faster than the people in senior industry management positions have ever seen. It’s making traditional organizational structures and management processes less relevant. I’m not quite ready to say “obsolete” but maybe I should be.
You have to follow your customers not lead them. Your business will be more reactionary than you are comfortable with (or at least more than I’m comfortable with- that’s why I want the 14 year olds). I expect successful companies will be taking little risks every day in their advertising and promotion, and long term print campaigns will become a thing of the past. The way younger employees work is going to befuddle and annoy you, but you’re the one who will have to adjust.
A senior manager (or owner’s) job has always been to hire the right people and let them do their job. What I’m concerned about is senior managers (or owners) not being clear on just what that job is and how they will know if the employee is or is not doing it. The skate brands got stuck in the past. My perception is that the past is receding way more quickly in snow in 2016 than it did in skate starting in 2003.
I continued to hear too many anecdotal stories at the show about brands, retailers, resorts that won’t make even small, but fundamental changes to the way they run their businesses. We’ve all watched as brands, retailers, resorts have gone out of business.
Somebody once wrote, “The biggest risk is taking no risk at all.” Still makes sense to me. What you perceive as risky, or just as too much trouble, isn’t, but only the 14 year old can see that.
The Burton Conundrum
It isn’t any secret that Burton hasn’t been doing as well as it used to. Whether due to issues with distribution or lack of focus, it’s been through a period where it’s not as dominant as it once was. That was widely acknowledged at the show, though by all accounts they still make outstanding product.
I feel strongly both ways about this. On the one hand, there’s no doubt that some other brands have found opportunities as a result, and I like healthy competition+. But at the same time, Burton is closely identified with snowboarding, and with many non-riders, it may be the only pure snowboarding brand name they know. In addition, a number of Burton programs (Learn to Ride comes to mind) have been important in supporting and building snowboarding. As an industry we rely, and I imagine will continue to rely, on their efforts in these areas. A focused and successful Burton is important to the industry.
Burton also enjoys the benefit of not being a public company. As a result the company’s goals can be (and I perceive have been) not entirely focused on growing revenue every quarter.
So what do I want? My cake and to eat it too of course. I want Burton strong and prosperous. Just not too strong and prosperous.
A Brand Model I Liked
Karakoram has been around six years, but this is the first time I’d had a chance to talk with them. They make high end, split board bindings for use in the backcountry. What do I like about them?
They told me their product improves the way split boards function and the explanation made sense. They sell an expensive, high end product that meets a clear need. They know their target customer group. That group will not be turned off by the price. In fact, I’d guess they associate it with the quality and reliability they require.
Their product development is clearly focused; they only make changes that improve performance. Feels like that might take some costs out of the annual product cycle. Split boards and backcountry seem to be growth markets. Finally, they’ve got a bunch (six?) of patents on their product.
There’s nothing better than a high end product with some barriers to entry in a clearly defined and growing market. How many of those factors does your business have going for it?
Get over the show date change. Use SIA’s data. Don’t follow in the skate industry’s footsteps. Follow your customer. Embrace change since you have no choice. Identify your business’ strengths. Yeah, I know. Easier to say than to do.
I enjoy hearing from you, even when you disagree. The exchange means that I learn something, too. Leave a comment on any of my posts to contact me directly.
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Market Watch updates
- More Ideas About the Future of RetailSeptember 19, 2017 - 3:24 pm
- The Details We Don’t See; Zumiez’s July 29 QuarterSeptember 13, 2017 - 1:40 pm
- Not Too Bad, But Not Too Good. And Generally Uninformative. Globe’s Annual ResultsSeptember 9, 2017 - 11:53 am
- More of the Same; Billabong’s Results for the YearSeptember 4, 2017 - 12:58 pm