After attending the Outdoor Retailer tradeshow in August ’12, I posted one of my first blogs that suggested that there would be consolidation in the near future in the stand up paddleboard (SUP) category. There were many telltale signs that consolidation was on the horizon; limited barriers to entry, little product differentiation about brands, product in multiple distribution channels, ranging from specialty retailers to value channel players like Costco.
While I don’t usually like to toot my own horn, I’m proud to note that I got this trend right. Just last week, one of the leading brands, Surftech, was acquired by an investment company out of Thailand. Another competitor, Boardworks, was also recently acquired. http://www.sportsonesource.com/news/spec/spec_article.asp?section=8&Prod=2&id=54278 More noticeable has been the reduction in the number of SUP brands at trade shows and in the marketplace.
So what can we learn from this dynamic? First, the importance of differentiation, both product and brand, is critical for any company to survive in these consumer segments. Second, it’s important for any company to anticipate industry shifts and react before they happen. Lastly, when the ground shifts beneath a company, understanding what your brand stands for and how it can evolve will help determine whether a brand can survive such a shakeout.
While I know I didn’t predict Apple’s turnaround or predicted the decline of the Walkman but there are always lessons to be learned and patterns to recognize for the future.
A while back, I posted an article deriding the lack of creativity and “sameness” in the outdoor industry. After having spent the past week in the US and Europe visiting Outdoor Retailer and ISPO in Munich, I’m saddened to report that the Land of Lemings has not changed and even worse, there are more brands and excess product in Europe.
Most striking that how few global or pan European brands there are in the outdoor industry in Europe. Outside of The North Face, Patagonia and the emergence of Arc’Teryx, most popular brands remain small, regional players. There continues the belief that only product matters but we all know, from personal experience, it’s often hard to tell the difference between two items. That’s why you see many more BMW’s vs. Hyundai’s on the road throughout Europe. What these companies don’t truly comprehend is that success is not about features and benefits but rather creating an emotional connection to the consumer.
This dynamic is slowing starting to change as competition heats up from US brands and capital remains tight for these smaller brands to expand. Like many other consumer industries, consolidation is starting to occur in the outdoor industry as well. Once the floodgates open, there will likely be the decline of many of these brands. Hopefully, those that survive will learn that just being “me too” isn’t a long term recipe for success
This week’s Wall Street Journal has run a great series on the decline of Japan’s consumer electronic brands like Sony, Toshiba, Sharp, etc. While the electronics industry is extremely competitive with frequently changing technology, no one would have predicted 10 -15 years ago that Sony would be surpassed by it’s Korean competitor, Samsung. For those who grew up in the 80’s, the Sony Walkman was our generations version of the iPod. No longer did we have to carry around a transistor radio or “boom box”. We could cruise around with our Walkman in our back pocket and listen to cassette tapes or the radio.
What Sony and many other consumer brands get wrong is to assume that their consumers will be happy with improved versions of their existing products. Naturally, continual improvement is an important part of any business but is not the key to long term success. It’s been said that Steve Jobs didn’t believe in consumer research because most consumers could only tell them what their needs are today. Part of this is true yet I would argue that the best brands are able to interpret what consumers are saying to not only understand what issues they face and but also understand how those needs are going to evolve. Continue reading →