Snowboard Industry Evolution; Is It the Survival of the Fattest?

The snowboard industry is changing so quickly that I find myself looking back at articles that haven’t been published yet and wondering if I’ll agree with what I wrote by the time it’s in print. When Adidas buys Salomon, Quicksilver buys Mervin, Elan talks about putting its own name on a board, and Nike makes a deal for hard goods with DNR, last month’s immortal truth can become this month’s fatuous blather faster than you can say “Isn’t Animal cute!”

Valid business principals don’t change. But the arena in which you have to apply those principals is changing rapidly with growth, new players, and the challenges of consolidation. In a strategic sense, what are these changes, why are they happening and what are your choices in dealing with them?
The first time Elan, to pick a convenient example, put their name on a snowboard and it didn’t sell well we all smiled and said, “They don’t get it.”   And they didn’t. It wasn’t just about sliding down the mountain, but about lifestyle and attitude as well. You could make a good product but if you weren’t connected to the culture it wasn’t going to sell.
That at least hasn’t changed. It’s still about lifestyle marketing and we can hang our hats on it. But as the sport has grown and its energy become diffused, the lifestyle it represents is being interpreted and caricatured into a mass-market phenomenon. Witness Fila’s two page outerwear ad in the November, 1997 issue of Freeze with the punch line “BE CORE in two inch letters.
Nike, Solomon, Fila, etc. are going to show us what lifestyle marketing is all about by going after and attempting to tie together the pieces of that market in a way few companies in the snowboard industry can match. The ski business has finally remembered its roots, and is trying to regain some its previous energy and focus by reintroducing the youth market to skiing, recreating their own core market.
The big players aren’t going to dominate the core snowboard market (The core market consists of enthusiasts for whom participation in the activity of snowboarding is an integral and validating part of their lifestyle and self image.). But it won’t matter. They will try, and to some extent succeed in redefining and expanding “core.” Fila wants you to believe that if you “Buy Fila Skiwear” you’ll “BE CORE.”
 Nike’s sales alone, remember, are something more than 10 times those of the entire snowboard industry at wholesale. The traditional industry’s combined marketing and promotional budget could probably be doubled if we just had the cash from the experiments and false starts Nike probably made and is making in figuring out what to do with, to, and about snowboarding.
The second strategic change, then, is that we’ve got the attention of the big boys. The “they don’t get it” barrier to entry is diminishing because the market has gotten so much bigger. It’s now on the radar screen and worth a few missteps to decipher. And if they can’t decipher it, no problem; they’ll change it.
The third strategic change is that the borders of what is the snowboard business and what is not are getting less distinctive. As ski companies start marketing to the youth market, big companies try to grab a piece of and redefine the snowboarding vibe, and resorts have accepted (become dependent on?) snowboarding, the business we’re in and the customer we’re after is less clear than it use to be. Whether that’s good or bad depends on what you do with it.
Get yourself a little perspective. The March-April 1997 issue of The Harvard Business Review has an article by George S. Day called “Strategies for Surviving a Shakeout.”   I spoke with Professor Day, who has basically never heard of snowboarding. But if you changed a few words, his article could be about our industry cycle (damn-why didn’t I think of that sooner). I described our industry’s circumstances and the only thing that surprised him was the speed with which the consolidation was occurring. Somehow it wasn’t very comforting to learn that we were exceptional only in that way.
The good news is that though the sport will inevitably get homogenized, it will also grow and be legitimized to a whole new group of participants. The uncertainty is in how existing companies will participate in that growth. The newcomers to snowboarding won’t be completely successful in the traditional core market. Nobody can please all of the people all of the time, and it is exactly these inevitable inefficiencies in larger companies that result in the market niches where smaller players can thrive.
As the large players change the market, who are the new snowboarders going to be? To what extent will they care about the values of the core market? Can the core market grow and still be a core market? If it doesn’t grow, what are the growth prospects for existing companies who have positioned their brands to appeal to that market?
Traditional business strategy suggests that snowboard companies have two choices. They either can get big, or they can attempt to dominate a niche. Dominating a niche implies reduced growth prospects. Getting big in the snowboard industry, where big implies an ability to compete with the very large players, is probably unrealistic for many snowboard companies. The solution, if you’re unwilling to accept a niche position, even a profitable one, is growing in product areas related to snowboarding. I am anticipating, as a result, that snowboard companies will focus on making acquisitions in related action sports industries or will end up as subsidiaries or divisions of larger companies. There will, of course, be the exceptions that are satisfied with and can defend a profitable niche.
But how many niches are there? The one everybody has seemed to focus on are “high end boards to specialty shops.”   Others may be in leading edge technology and in image (Mervin?).
Don’t despair; there’s room for more than one company in a niche. But there’s not room for 300 and that’s one fundamental reason so many companies have fallen by the wayside. The competition to claim a piece of the most obvious and attractive market niches has been, and continues to be, intense.
I’m afraid that snowboarding is a bit of a flea on an elephant. The elephant is going to go where it wants and the flea can only ride along, get a tasty meal, and try not to be in the wrong place when the elephant roles in the dust. But fleas always get enough to eat, breed like crazy, are notoriously tough to kill, and can be really annoying to their host. In fact, the reason the elephant roles in the dust is to try and get rid of them.
But he never does.