Last year was a great year for outdoor specialty retailer The Trail Head and boat-focused Trail Head River Sports, both located in Missoula, Montana.
While the company’s boat and rafting store will likely not match last year’s boom levels, the specialty outdoor store, which carries apparel, footwear and gear, is up nearly 10% so far this year.
That success in the outdoor specialty store is counter to what most of the outdoor industry has been reporting, with softened demand, high inflation, and excess inventory as some of the main factors hindering business.
In a conversation with The Daily at the Grassroots Outdoor Alliance Connect Show, Todd Frank, owner of the two stores, chalked up much of the strength at retail to the used gear section The Trail Head developed in its downtown store during the first year of the COVID-19 pandemic.
“Our consumers really have responded well to it in Missoula,” he said. “I talk to a lot of people here at GOA, and I think if you don’t have something like that going, you should think about figuring out how to add it.”
The Trail Head store has been around since 1974. Frank, who is the treasurer of GOA, purchased The Trail Head business in 2000. He expanded in the summer of 2019 when he opted to pull the boat category out of the downtown store to open a standalone, boat-focused location.
We spoke with Frank about how the used gear section has rejuvenated his company, what the new normal is in the boat business, how he closely monitors brands’ DTC pricing strategies, and what brands are working.
Used Gear Helps Transform Business
The idea came from Frank’s daughter, Megan, who had been inspired by a used gear store she saw in Squamish, British Columbia. The Trail Head gear exchange began on Black Friday in 2020 in the basement of the downtown location. The store took items on consignment for about a month and a half.
“We took pretty much anything we could get from people because there wasn’t any product available,” Frank said.
Fast forward to 2023 and the gear exchange has grown to around 16%-17% of Trail Head’s total business, with five dedicated employees.
Part of the popularity of the used gear business is the overall trend in the industry, with companies like Patagonia doing Worn Wear and online site Geartrade getting involved, among many others, according to Frank.
One reason for The Trail Head’s success is the store’s older, longtime customers have brought in a lot of quality vintage gear and clothing that draws the younger crowd in.
“The used thing has just completely penetrated that (younger) market,” Frank said. “There are still people who come in and they’ve got the money, they want to buy what’s best. Then there’s college kids who are like ‘we don’t have any money, but we got time. We’ll come in here every week and dig through the rack.’”
Trail Head doesn’t pay for the used gear, it’s all on consignment. Once something sells, The Trail Head offers the previous owner cash or store credit, with a higher payout amount if they choose store credit.
Thus, the gear exchange has become a winning strategy with both younger and more established customers. The used offering has brought the younger demographic back to the store in droves.
“It added an energy to our store that we hadn’t seen in 15 years because we didn’t have a lot of entry point (goods) before,” he said.
At the same time, Trail Head’s used business has given legacy customers a reason to come in – both to drop off their consignment pieces and to spend the money or store credit they receive when their goods sell.
To keep the used gear stock fresh, Trail Head will also feed samples into the selection. For example, Frank said he bought a set of Patagonia samples that they slowly feed into the basement racks to keep people curious.
“We’re managing the treasure,” Frank said.
The one downside: There’s so much cool stuff downstairs that they’re not selling as much new stuff upstairs, he said.
Watching Brand Discounting and Distribution Closely
When it comes to the rest of the outdoor specialty store, Trail Head, as a true specialty retailer, is trying to find products that aren’t available everywhere, according to Frank. And he’s tough on brands that discount too much online.
For example, they’ve “ratcheted down” Black Diamond because of the company’s online behavior. At one point, Black Diamond was Trail Head’s No. 2 vendor after Patagonia.
Frank said Black Diamond has been pushing online, direct-to-consumer discounts so customers aren’t coming in looking for the brand.
“If you get it online for 40% off, why would you buy it from me?” he said.
Trail Head has also parted ways with Cotopaxi because in his opinion, the brand widened its distribution too much, he said.
“Our myopic view of the world is that we do the best with products that are not broadly distributed, that are high quality and are growing, but they’re not growing crazy,” Frank said. “And eventually, we go with that company, and we maybe go five or six years. And then all of a sudden, they blow up. And we’re like, okay, time to go find the next thing.”
While Patagonia is sold in a lot of different places, for the most part and for the size of the company, Patagonia has the narrowest distribution and the highest-quality retailers of any brand Frank does business with, he said. Because Trail Head maintains a good relationship with Patagonia, Frank is likely to buy any new initiative the company releases.
But not everything. In particular, Patagonia’s volume pieces that are going to be in another major retailer aren’t a great fit, according to Frank.
“If the Patagonia rep came in the store and said, ‘This is going to be a volume piece. We’re going to crush it with this new jacket,’ we’d look at it and go, ‘Eh, not for us,’” Frank said.
After Patagonia, the next best seller in apparel is Prana, but the store carries a much smaller selection of the brand.
Frank struggles with Prana because the brand is very aggressive in its direct-to-consumer sales practices, he said.
“But their line is huge,” he said. “We can find places in there. Stuff you’re not going to see.”
A Miss on Vuori
Frank lamented not carrying Vuori from the get-go, and now that they’re on their rocketing upward trajectory, they won’t open Trail Head.
“It was a big miss on our part,” Frank said. “But they were on that meteoric growth curve, and we’re like, ‘Even if we do well with you guys, in a year, we’re not going to be able to sustain.’”
Sometimes buyers miss a cool category that’s up and coming, he added.
“Occasionally we blow it,” he said.
A few of the footwear brands Trail Head has been successful with:
Lowa Boots – “They’re expensive. They’re all European-made. We don’t crush it with them, but we like our business with them a lot,” Frank said.
Oboz – “They have that more generous fit. And they have a lot of choices. So, we buy select pieces and try to keep them in,” Frank said.
Bedrock Sandals – “They have the same momentum I would say that Chaco did in 1995. Core users are gravitating toward that sandal because it’s minimalist. It works really well. It’s got the right mojo.” Frank said they sold out of Bedrock’s mountain clog in weeks.
Despite the great snow conditions locally, Trail Head had one of its worst years selling skis, according to Frank. Ski sales and service make up about 20% of the company’s business. They don’t sell snowboards.
His store sells basic Nordic skis on up to metal-edged, rugged touring equipment, which makes up the bulk of Trail Head’s ski business.
But the skiers in those expert markets, including backcountry and alpine touring, are buying more online and at a 10% or 20% discount, according to Frank.
“The ski business is so broken in that sense, because everybody makes too many skis, and they all have to figure out how to get rid of last year’s,” he said. “You’re selling against this massive amount of product left over from last year and it’s like $300 cheaper.”
The other pattern he’s observed is people in these markets buying skis from small, independent ski-makers that are often sold direct-to-consumer.
Trail Head “does OK” on bindings and boots, because those need to fit correctly.
“They need to have them thermal-molded,” Frank said. “Our service is still worth money to them.”
Frank said if he buys any skis next year it will be closeouts at the end of the year.
“We’ll be like ‘we got closeouts. Our last-year’s skis are 40% off,’” he said. “If the market for skis is 40% off, I’m not going to buy them at full price.”
Navigating the Pandemic in a Hardgoods Store
During the COVID-19 pandemic, the business was hit hard by the closures in early 2020. Frank worried the crisis could put him out of business, especially since he had just invested a lot of money to open the boat store. He told his vendors to hold off on shipping any products until he had a better sense of what was happening.
Frank first knew the momentum was shifting one day at the boat store, when three customers came in one right after another to make big-ticket buys.
“We hadn’t sold three rafts in a day ever in the history of my business,” he said. “These are $7000, $8000 package purchases. We just had never had that happen before.”
Frank turned the orders back on.
“We started having this momentum going, and the vendors all had product. All the retailers had cancelled,” he said. “So the vendors were sitting on plenty of product. We were able to just continue to fill and chase the business and had a really wonderful first year with the new boat store.”
Then in 2021 when the supply chain disruptions occurred, consumers were “panic buying,” Frank said. “They just started throwing money at us for products that we weren’t going to have in the store. We didn’t know when. It could be September. It could be June. And they’re like, ‘Well, we want that boat. Here’s a $5,000 deposit. You keep the money.’”
Then surprisingly, 2022’s sales exceeded the previous year’s.
The three years of the pandemic boom allowed Frank to pay off the startup costs for the new store that he thought would take him 10 years. He still has debt from the purchase of the building, but he owns the inventory now and has a little cash in the bank.
“It was a really nice jump-start to a new business,” Frank said.
Boat Business Returns to Reality
While the beginning of 2023 was challenging in the boat store, as of June, the boat business had gained back about one-third of what it had been down for the year. And, Frank stressed, that is real demand, not the panic demand Trail Head saw during the pandemic.
“Now people are saying, ‘Well, we’re going on a trip in July. We better line up a boat in May or June.’ Because they can come into our store, and they see 40 boats on display,” Frank said. “We’re seeing the cadence of business return to a more normal bell curve.”
Yet higher-end products manufactured in the United States or Mexico are still difficult to come by, according to Frank. That’s where Trail Head does most of its business, selling brands like AIRE and Northwest River Supply’s boats.
“That’s what people come to us for,” Frank said. “Those have been the hardest ones to get.”
However, this year the inventory pipeline has improved, with cheaper boats from Asia easier to find.
Overall, the store has access to about 85%-90% of the SKUs it needs.
“There is a lot of inventory out there,” Frank said. “That has been a big challenge. In terms of managing our own stock levels, we have too much inventory in some categories.”
The business takes a few approaches to that inventory problem: Slowly work through what it has or “pull the rip cord and just liquidate it and get out of it,” Frank said.
Part of that decision is made based on how the vendor is behaving. If a vendor isn’t managing its inventory well, that will push Frank to cut the cord.
“With our better vendors we’re like, ‘Okay, we get it. You’re screwed. You got way too many of X. We’re not going to take any more of it, but we’re going to work with you,’” Frank said. “We’ll sell what we have. And if we sell what we have, we’ll buy more at a discount. But we’re not going to buy more at full price.”
Frank’s strategy is to always have not quite enough inventory.
“We’ve always done the best as a business, and been the most profitable, had the best sell-through, when we were a little bit under-inventoried,” he said.
Cutting Brands that Discount
Where Trail Head River Sports has an advantage is when its prices are the same as what’s being sold online.
“Customers want to buy it from us because they understand the advantages of buying it at a locally owned store,” Frank said. “If the price is equal, we crush online. They just don’t offer what we do. We have all the parts. All the expertise. It’s not even a fair fight.”
If a customer buys a boat online for 15% less, for example, and comes in wanting oars or other accessories, Trail Head sells them at a higher price than they offer to a customer who bought a boat from them as well.
“If you buy the boat from us, we give you a deal on the oars, and the dry boxes, and the coolers, and the seats, and the frames,” Frank said. “If you don’t buy the boat from us and you just come in and buy all the parts, we make more money.”
While Frank is predicting overall sales of boats to be down slightly this year, margins are expected to be down 2%.
“The real challenge is costs have gone up so much,” he said. “Freight costs to get boats to us have gone up a lot. Labor costs have gone up a tremendous amount. Our shop’s operational costs have gone up a tremendous amount because we’re paying them all for solvents and glues, all the things that we use to do repair work. The overall profitability is going to get more challenging.”
Bart Schaneman can be reached at email@example.com.
Tiffany Montgomery can be reached at firstname.lastname@example.org