Logistics, customer acquisition weigh on outdoor industry

BOULDER — Economic fallout from the COVID-19 pandemic continues to affect the outdoor industry, which faces challenges related to logistics and customer acquisition, as well as tariffs and other geopolitical issues.

That was the consensus Tuesday at BizWest’s CEO Roundtable on the Outdoor Industry, conducted at the offices of Berg Hill Greenleaf Ruscitti LLP in Boulder and moderated by BizWest editor and publisher Christopher Wood.

For many CEOs, problems related to logistics, such as shipping costs and supply-chain delays, were at the top of mind. Chris Klinke, president of climbing gear company Trango, said that getting product into the United States is much more expensive and takes much longer than it did before the pandemic. For example, it used to take about six to eight weeks to manufacture carabiners, then another six to eight weeks to ship them. Now, that process takes more than 14 months.

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“Brand loyalty is not being built right now,” Klinke said. “People are buying what they can get. Whoever gets a shipment in will sell out of that commodity quickly. People are going for what is available, not necessarily what they want … We are trying to lock in prices for products we won’t see until August 2023.”

Soraya Smith, president of freeze-dried backpacking food company Backpacker’s Pantry, based in Boulder, echoed that sentiment. Her company sources ingredients from all over the world. She said that the lead time for getting products from Asia has increased from six weeks to six months.

“You’d think that finding domestic sources would be cheaper, but it’s not,” Smith said.

For businesses that want to operate sustainably, the supply-chain issues present an even bigger problem: sustainable products, particularly recycled ones, are becoming increasingly difficult to acquire. 

“We’ve had to evolve our thinking and some of the places we wanted to go [to buy materials from],” said Trent Bush, founder and co-CEO of performance apparel company Artilect Studio. 

Kim Pierpoint, founder of Prickly Pear Sports LLC, said even when sustainable materials are available, they can sometimes be cost-prohibitive. Her company designs and manufactures outdoor products for women who have bladder issues, so sustainability is a major concern.

“We want to get women off of disposable products,” Pierpoint said. “Because I’m a startup with limited inventory, it’s less an issue of getting materials but more moving onto the next step. The price points for some recycled products are too high.”

Scott Sternberg, executive director of the Boulder Economic Council, said it’s hard to address supply-chain issues because of how many factors are contributing to them.

“Supply-chain issues are integrated across so many dimensions,” Sternberg said. 

Geopolitical issues have also been impacting supply chains. Smith said that Backpacker’s Pantry sources peppers from Aleppo, Syria, which has seen intense fighting since the Syrian civil war broke out in 2011. The company also gets pasta from Europe, for which Ukraine is one of the main wheat suppliers. Since the start of the Russo-Ukrainian War, Smith said, she “cannot get our pasta supplier on the phone” because they are so busy.

Tariffs have also had a major effect, said Dave Schaeffer, founder and president of performance apparel company Himali. 

“The tariffs have really hurt our bottom line,” Schaeffer said. “We’re not comfortable passing those costs along to the consumer yet. We’re holding our breath for tariffs to be eased … I don’t know how to feel about it, except they said they were attacking big business with the tariffs, and we’re certainly not that.”

Even easing the tariffs may not make the situation any better, given already-constricted supply chains.

“The challenge with tariffs for us is once they ease up, shipping lanes will be even further jammed,” Klinke said. “How will that impact shipping times?”

Amid all of this, it is becoming harder and harder for outdoor businesses to attract customers. Seth Haber, owner of outdoor lifestyle brand Trek Light Gear, said marketing to consumers is becoming cost-prohibitive, even when it works. 

“It boils down to cost,” Haber said. “It’s very frustrating for me as a founder to know that we have nothing but happy customers, yet still struggle … We can pay to grow, but that’s not what you want to do. We have a good product, but we’re still paying to get them in the door.”

At Himali, the company experienced 450% revenue growth year-over-year last year and expects similar results in 2022. Schaeffer said that a large part of his company’s growth has been through word-of-mouth among outdoor enthusiasts.

Pierpoint said that Prickly Pear Sports also relies on a lot of word-of-mouth marketing. She added that they face the additional challenges of selling a product that addresses an issue no one wants to talk about.

“Even though half of women deal with [bladder leakage], 87% of them will not talk to anyone about it, even a doctor,” Pierpoint said. “I’ve got additional barriers to get word-of-mouth advertising.”

Pierpoint said she tries to make up for this by doing pop-up stores at as many athletic events as possible.

Even for companies that don’t primarily sell direct-to-consumer, the way they acquire customers is changing. Klinke said that 85% of Trango’s sales are still through dealers and wholesalers, but that the company has expanded to sell more products to climbing gyms as gyms have become the “center of the climbing universe.”

Backpacker’s Pantry has also traditionally not sold direct-to-consumer, but Smith said that is changing as more and more companies enter the backpacking food market.

“We were a legacy brand,” Smith said. “It was like turning the Titanic around to get us on board. We’re not a young, digital native company… It’s been an ongoing challenge to hold firm and not stray from who we are.”

And as outdoor companies deal with all of these factors, the industry around them is changing; in March, the Outdoor Retailer expo announced that it would move from Denver to Salt Lake City, a move that angered many in the industry and left many businesses wanting more-robust local support.

Chris Winter, executive director of The Access Fund, a national climbing advocacy organization, said the industry will need another event to fill its shoes.

“It’s obviously a bummer to lose that,” Winter said. “I think the question is, ‘What do we really need as the next version of that?’ We’re losing it, but it’s already gone. What do we need as a business and advocacy community that’s not Outdoor Retailer, but might serve that same space? Instead of lamenting the loss of Outdoor Retailer, we should be thinking about what comes next.”

Klinke agreed, noting that something to build community among outdoor businesses and help get leaders together to help solve collective issues would be very beneficial as the industry endures this tumultuous period. 

“We’re riding the wave, not causing it, and it might build into a tsunami, Klinke said.”

The CEO Roundtable program is sponsored by Plante Moran, Berg Hill Greenleaf Ruscitti and Bank of Colorado. Attending were Brad McQueen, Plante Moran; and Ashley Cawthorn and Ben Wilson, Berg Hill Greenleaf Ruscitti.