(This story was updated 8/10/2023.)
The current performance of the outdoor retail market can be summarized by two simple facts: Outdoor apparel is selling well, and outdoor equipment sales are down.
That’s according to industry analysts The Daily spoke with to get a sense of the overall outdoor industry heading into next week’s Outdoor Retailer Summer show June 19-21 at the Salt Palace Convention Center in Salt Lake City, Utah.
“It is the best of times and the worst of times,” said Nathan Pund, managing director at Houlihan Lokey, a Los Angeles-based multinational independent investment bank and financial services company. Pund leads the company’s outdoor and active lifestyle banking practice as part of its consumer food and retail group.
The best of times is that “COVID accelerated what was already a very strong trend to come into the outdoors and open the aperture for more people to participate, in terms of trying new things, whether that’s skiing or cycling or what have you,” Pund said.
The worst of times is that “because of the supply chain challenges, and people’s inability to predict the future consumer demand, we are now in a situation where we are just absolutely glutted on inventory and that is making it a very challenging retail environment as well as very challenging conditions for the brands,” he added.
A lot of that inventory is either getting discounted or sent back to the brands. The brands are struggling to figure out what to do with those goods. Some are able to work through that inventory, as the interest in outdoor activities remains strong.
“It’s going to take at least through this year and perhaps early into next year to work through all of that inventory and those challenges,” Pund said.
Sales in the overall outdoor industry are down about 1% for the 12 months ending March 31, 2023—according to the most recent data from sports category consumer behavior research firm Circana, formerly The NPD Group.
Many of the categories Circana tracks showed a similar pattern: Sales were up in 2021 and 2022 and have flattened off for 2023 but are still above 2020 totals.
“During COVID, we were buying equipment, because we were buying anything to get us out of the house,” said Julia Day, executive director of business development for Circana. “Whether it was an e-bike, a canoe, or a stand-up paddleboard.”
Consumers pivoted in the past year and went on vacations and to sporting events, “all that pent up demand for activities that we hadn’t done,” she added.
The good news is outdoor specialty brick-and–mortar sales are up, Day said.
Breaking down retail into three channels, the sporting goods channel is down about 1.6%, outdoor specialty brick-and-mortar is up 3%, and e-commerce is down 4%.
Footwear sales are down almost 5% year-over-year across all retail channels, including outdoor specialty retail and sporting goods.
Apparel sales are up 2.5% for the same period. Of the entire outdoor market, which recorded $28 billion in sales for the past 12 months, apparel comprised $16 billion of it, Day said.
The accessories category is up $42 million to $1.74 billion, a 32% increase, meaning that as Americans start to travel again, they’re buying more backpacks and luggage.
Compared to March 2020, backpack sales have risen to $566 million, an 8% increase compared to pre-pandemic times.
Compared to March 2020, equipment sales have increased 31% to $5.4 billion.
For the past 12 months ended in April 2023, segments connected to outdoor living grew including camp sets (19%); camp wagons (3%); outdoor blankets (3%); tent vestibules (49%); portable power banks (5%); insulated cups, mugs, and tumblers (44%), and large containers, water coolers, and jugs (10%).
Hardgoods a Harder Sell Than Apparel
Hardgoods like a bike or a kayak usually lead a boom in outdoor activities because you need the equipment to get started in the activity, Pund said. As people feel the effects of inflation and other rising costs, spending $5,000 on a bike isn’t as easy as it is to replace the clothing you need to fit the part of cyclist or kayaker.
“During the pandemic, you might have bought two stand-up paddleboards for your family, you might have bought an e-bike, or even two or three e-bikes,” Day said. “Those things we bought just to get out of the house.”
A bike typically lasts a lot longer than a pair of hiking shoes and isn’t subject to fads changing as quickly as they do for clothing. From his research, Pund said bikes have been the hardest hit subcategory of hardgoods in terms of sales.
The bike category also has one of the longest time frames for supply chain manufacturing, in terms of getting all the parts of a bike put together, according to Pund.
“The bike industry is really struggling with a glut of inventory at the moment,” he said.
The skiing category is doing better, as ski brands were better at managing their inventory, he said.
Pund has observed some retailers biting the bullet and aggressively promoting items to get them cleared out. Others have pushed excess inventory back to the brands.
REI, for example, has asked some brands to deal with inventory glut, he said. Dick’s Sporting Goods appears to be slower in promoting or discounting items.
Pund is quick to point out that if even giant Nike, which he views as one of the most well-run and professional organizations in the outdoor active space, is having these problems, then everyone should expect difficultly managing inventory.
“There’s no right answer, unfortunately,” Pund said. “It just takes time.”
Bart Schaneman can be reached at firstname.lastname@example.org.