There are always pros and cons to timing, and perfect timing is only ever recognized in hindsight. But there are some very interesting things happening in the outdoor industry right now that if leveraged properly, will be a huge advantage for small and upstart outdoor brands.
The industry
The outdoor industry has not had a fun past couple of years, it’s been rough to say the least. That is a whole article in itself but I’ll try to break it down as fast as I can:
- Spring 2020 - The world goes into Covid lockdown, retail shuts down, and as a result retail stores cancel all their orders for outdoor products
- Summer 2020 - Realizing that in fact everyone wants to get outdoors to enjoy nature (and avoid each other) the outdoor industry skyrockets, and stores quickly triple or quadruple their orders.
- Fall 2020 through 2021 - Fuelled by a new found love of the outdoors (and Covid benefit cheques) consumer demand reaches an all time high, but snarled overseas supply chains and quadrupled freight costs cause massive delays in production, preventing product from arriving.
- 2022 - 2023 - Consumer demand for outdoor products levels off, but now with supply chain sorted out an enormous over supply of product builds up, so brands and stores are left with huge stock levels of old, expensive, un-innovative, outdoor products weighing on their inventory (and balance sheets).
Oh and right in the middle of all this brands were notified that the material that keeps their products water resistant (DWR) and in many cases fuels their entire product line (Gore-Tex) will soon be illegal.
Now we’re seeing stories like this - where VF (the parent company to The North Face, Timberland, Vans, Icebreaker, Jansport, and more) is reporting a 17% revenue decline with every one of their large brands recording a double-digit revenue decline. And this article on how REI, one of the outdoor industries largest retailers posted a net loss of $311 million for 2023, which is even worse than the $164 million loss from the year prior.
So where is the opportunity in all this? Let’s dive in
Consumer demand
First and foremost consumer demand may have leveled off recently, but it’s still incredibly high - much higher than it was pre-pandemic. So while sales are down in 2023 compared to 2022, the outdoor industry is up a massive 37% in 2023 compared to 2019. Customers still want to get outside, and they still need products to help them do that.
Consumers want innovation
During the craziness of the pandemic, established brands were busy trying to keep up. With demand far outstripping supply, outdoor brands were left scrambling to simply produce enough product. As a result innovation slipped as companies focused on getting enough of their old product on store shelves instead of developing new innovative products. With slow buying seasons and cumbersome overseas supply chains that take years to bring new products to market, big brands are falling behind - and innovation driven, agile upstarts have the advantage.
Material Suppliers
We were recently at the Functional Fabric Fair, and there was a very interesting shift from last year. In spring 2023 when we would talk to fabric mills about production minimums we got the same answer over and over: 3,000 / 1,000 - as in the minimum order quantity is 3,000 yards per fabric style and 1,000 yards per colour (which is the industry standard). The vibe from mills was don’t talk to me unless you’re Nike or lululemon, but this year was a very different feeling. With order volumes cratering, fabric mills are much more open to upstarts. We talked to countless mills that (with small upcharges) would be happy to make a single roll of custom fabric (50-100 yards) - one mill we talked to would do custom colour starting at only 35 yards!
The exciting thing is that this isn’t just for fabric, we talked to trim suppliers (zippers, snaps, labels, etc.) with no MOQ’s - as in they would make half a dozen custom zippers for you!
The entire supply chain expanded to accommodate the Covid bubble of 2020/2021 - and now that demand from big brands is collapsing, a lot of fabric mills, trim suppliers, and production factories that wouldn’t have given small brands the time of day a couple years ago are now eager to talk.
PFAS Ban
We’ve talked about this subject at length so if you want to read more about PFAS, what they are and why they’re being banned check out our other article here - but here’s the basics:
The inexpensive product that has kept outdoor materials water resistant for half a century are now becoming illegal.
The tough part is that there really isn’t an alternative to PFAS at the moment, at least not anything nearly as easy and effective.
Big outdoor brands with their slow cumbersome supply chains have gotten comfortable relying on PFAS, and now they’re scrambling to change. Their products aren’t designed to be waterproof without it, so they’re switching to ineffective water-resistant treatments that won't last even a whole season. But because small upstarts haven’t relied on PFAS for 50 years they will have a much easier time developing new strategies and designs without PFAS than industry stalwarts.
Conclusion
Now is an amazing time for small and upstart brands in the outdoor space. Consumer demand for outdoor products and apparel is as high as ever, but the entrenched buying and supply chain systems of old have meant a rough ride for established brands. Consumers are looking for new and innovative outdoor gear, and retailers are desperate for those same innovative products that will draw people in-store and fly off the shelves. Plus both consumers and stores will be looking more and more for products that don’t contain PFAS.
So if you’re a small or upstart brand now is your time. You have access to materials and factories that previously might not have given you the time of day. You aren’t bogged down by a slow, entrenched buying cycle and supply chain and can quickly shift and adapt to new challenges (like the PFAS ban). And your fresh, innovative approach and products are exactly what both consumers and retail stores are looking for right now.
Now is your time, rock on!
