Touring the Outdoor Retailer trade show last week, I was struck again by how much of the industry is littered with small, enthusiast run companies that are just copying others. Stand up paddle boards (SUP) were the most egregious example of a bunch of lemmings (Webster’s definition: a member of any large group following an unthinking course towards self destruction) who were all thinking that the explosion of this sport was going to continue unabated. Looking back at the history of many other once hot categories like snowboards, inline skates and Razor scooters, I can already predict what the SUP paddle board industry will look like in a few years. The bigger question is why does this seem to happen so frequently. I believe there are a few key drivers of this behavior.
1. Lack of barriers to entry: the ability to get a new product built in factories throughout Asia has made it so easy for anyone with a design to get a product made.
2. Enthusiast driven industry: the good news about the Outdoor industry is that it’s full of companies run by highly passionate people who are in tune with what consumers want because they are enthusiasts themselves. The bad news is that the industry is full of enthusiasts who often don’t think about it as a business but rather a chance to get some free gear.
So, how can a company compete with these dynamics. First, it can create first mover advantage by creating a new category or a new product or service that meets the needs of consumers better than what’s out there today. Examples include Vibram Five Fingers shoes, PowerBar, Leatherman, to name a few. Yet, just being first to market isn’t often enough of an advantage to survive. Brand building, I would argue, is the single most important thing a company needs to do in the consumer space. It’s very hard for most consumers to truly know the difference between the products they buy, whether it’s shoes, clothes, cars or cereal. One of the main reasons companies like Nike, The North Face and others top brands are able to sell similar products at a premium price is the brand association that they have created for consumers. The most successful of these brands have been able to transcend their sport and appeal to an even larger consumer population.
So, the next time you’re thinking about jumping onto the next hot trend, ask yourself two questions. First, what could you do differently to create sustainable competitive advantage? Second, as a consumer, should I buy this hot product now or wait, to get it at 50% next year, when the fad starts to fade? Happy shopping….