Competitive Landscape - REI

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Competitive Landscape - REI

Information on the impact of COVID-19 on the outdoor gear and experiences industry is provided from the perspective of the impact on the retail trade and the providers of outdoor services. The overall retail industry impact is looked at from an industry and granular perspective. A brief overview of the changes made by service providers such as travel companies, outdoor advocacy groups, and parks and recreation services are also provided.

Retail Trade

Industry Impact

  • The Outdoor Industry Association (OIA) is the trade association for the outdoor industry. Among its members are the American Hiking Society, the Appalachian Trail Conservancy, Backcountry.com, Birkenstock USA, Dicks Sporting Goods, Mountain Equipment Co-op, Patagonia Inc., and REI.
  • It reported on 29 April 2020, that over half of the respondents to a survey on the business impacts of COVID-19 project declines in business between 41-100% in the first six months of 2020.
  • One quarter of respondents ceased all operations, and 54% of the remainder closed a portion of their trade. Orders and/or in transit inventory has been placed on hold by 80%.
  • Members have indicated that they intend to access government provided loans to pay payroll, mortgages, and rent.

Industry Outlook — Pre COVID-19

  • Prior to COVID-19, generational impacts, urban migration, obesity, health awareness, and growth in specific demographic sectors were the five macro-shifts that the OIA identified as potential disruptors to the industry. The five factors were forecast to change the core outdoor consumer from what it is presently. Consumer segments for the outdoor industry is broken down into the achiever, outdoor native, urban athlete, aspirational core, athleisurist, sideliner and complacent consumer profiles.
  • Generational change is expected to have positive impacts on consumers who were high outdoor achievers, outdoor natives, and outdoor aspirants, while negative changes were expected for the athleisurist, and the sideliner. Urban migration is expected to positively impact high outdoor achievers and urban athletes, while negatively impacting the athleisurist, sideliners and complacents.
  • The obesity epidemic is expected to negatively impact the high achievers and the outdoor native, while positively impacting the athleisurist, the sideliner and the complacent. Health awareness impacts positively on the high achiever and the outdoor native, and negatively on the sideliner and the complacent. Demographic change impacts positively on the high achievers and urban athletes.
  • Overall, the high achiever and urban athlete expects higher positive impacts than that of the aspirational core, while the sideliner is expected to see a greater negative impact than the athleisurist and the complacent. The outdoor native had one positive and one negative impact canceling out each other.

Industry Outlook — Post COVID-19

  • Post COVID-19, the outdoor industry faces both challenges and opportunities. Import tariffs placed on product inputs made in China has the potential to impact on the cost of outdoor gear. Goods facing a tariff of up to 25% include ski boots, fishing rods, gloves, ice skates, and inputs into outdoor apparel such as rain shells and puffy coats.
  • On 8 April 2020, the OIA requested a removal of the punitive tariffs and for all tariffs be deferred for three months. The association also requested an increase in investments and protections for outdoor places from the federal and state governments, and for outdoor recreation businesses to be considered essential.
  • A positive impact of the pandemic has been an increase in appreciation of the outdoors. A CGPR survey noted that of those persons who only discovered the outdoors during the pandemic, 82% intend to continue outdoor activities after local restrictions have been lifted.
  • Survey respondents indicated that COVID-19 had impacted how they interacted with the outdoors (60%), and that it will make them more careful outside, clean equipment more, and still practice social distancing (70%).
  • The OIA has launched #RecreateResponsibly consisting of six guidelines for being safe when outdoors. The organization is optimistic about the industry because of the rediscovery, and in some cases' discovery, of the positive impacts being outdoors can have on the body.

Granular Data

  • Impact
    • REI expects a 35% decline in revenue for 2020. On 12 May 2020, REI announced that it will be re-opening stores, some only for curbside pick-up, others for limited customers at a time.
    • Although Cotopaxi closed its two stores and 500 partner operated retail locations during the pandemic, the company has announced that it is reopening with an offer of appointment shopping with a retail guide at the store locations, or virtual shopping with retail guide via Zoom.
    • Dicks Sporting Goods furloughed an unknown number of employees when it closed its over 800 stores. The company has since re-opened some of its stores, and continues to offer contact less pickup.
  • Outlook
    • Cotopaxi has partnered with Unchartered Supply Co., a preparedness products retailer, who will use its idle warehouses. This has led to a product partnership where preparedness products will now be offered with Cotopaxi's packs.
    • Dicks Sporting Goods has exceeded growth expectations for its e-commerce business despite the closure of its stores. The company has cleared inventory in stores using ship-from-store and contact less curbside pickup.
    • REI plans to improve its returns and maintenance services to accommodate reduced physical contact, put on virtual events, and implement a virtual outfitter.
  • Operational Adjustments
    • The Grassroots Outdoor Alliance has compiled a list of items retailers need to be aware of when reopening stores. This includes adjustments to the physical store space, dressing rooms, the process for returning products, the process for product fittings, and product rentals.

Providers

  • American Hiking Society
    • The American Hiking Society has provided guidelines for persons wishing to hike or experience the outdoors. The guidelines cover social distancing while outside, whether hiking is advised where trails and parks have reopened, picnicking, and camping.
    • The society has also compiled a list of things to read, watch or listen to related to outdoor experiences, and it has taken the celebration of the national trails day virtual.
  • Appalachian Trail Conservancy
    • At the Appalachian Trail Conservancy, guidelines have been provided for trail day and overnight hikers, volunteers, and listed major closures impacting on the trail.
  • California Outdoor Recreation Partnership
    • The partnership has provided links to California and National resources for business, information about COVID-19, the impact on the outdoor supply chain, and information on outdoor trade and tariffs during COVID-19.
  • Colorado Wilderness Rides and Guides
    • The Colorado Wilderness Rides and Guides closed it offices but is accepting bookings for trips and event and orders for gift certificates from May 2020 to the end of 2021. Office staff is present in the office on a rotating basis to prepare and maintain equipment.
  • Kampgrounds of America
    • Kampgrounds of America has provided on its website a state by state list of campgrounds that are closed, It has also provided articles on camping at home, and how to properly disinfect your RV/
  • REI Adventure
    • Trips are canceled up to 5 July 2020 at REI Adventures, however the company is accepting booking for the after 5 July and for 2021. Persons who had previously booked trips during this period of cancellations due to COBVID-19 will either receive a full refund or have a trip rescheduled.
  • Unbound Travel
    • At Unbound Travel, the company has asked that persons who have already purchased trips, consider rescheduling rather than canceling. Trip scheduled up to 31 May 2020, has been postponed. Trips scheduled for after 31 May, will be decided upon with a 30 -day rolling time frame, while shorter one- or two day trips will be decided upon at 14 days before departing.

Sources
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