The mystery of the high margin snow monster
What investors need to know here is that the high-end outdoor industry Thompson works in is a rare bright spot in today's Dark Age 2.0. According to the Outdoor Industry Association, the Boulder, Colo.-based industry trade group, last year Americans spent $646 billion on outdoor recreation, roughly double what they spent on pharmaceuticals.
And while investors publicly may roll their eyes at President Barack Obama nominating Seattle-based specialty outdoor retailer REI Chief Executive Sally Jewell to be the next secretary of the interior, she runs what amounts to a commonly owned $1.8 billion kibbutz. (And privately, they are scheming to find a way to invest.) Despite max effort competition from monsters including Wal-Mart (WMT), Sears (SHLD) and Amazon (AMZN), Jewell crushes them flat in essentially every measure of profit margin and expense management, even while employees get sabbaticals and millions are donated to outdoor charities.
What's even more remarkable is just how little a role the digital age plays in this sector at all.
Despite being a natural fit for the near-socialist Web and social media, REI and other outdoor industry powerhouses such as L.L. Bean and Cabela's (CAB) have followed an almost deny-the-Web strategy of aggressive bricks-and-mortar retail store expansion. REI has bulked up to more than 125 stores over the past 10 years with two new outlets opening in Oxnard, Calif., and Jacksonville, Fla., this year. And L.L. Bean has grown to some 30 outlets in the same decade, with a new store opening in Danbury, Conn., last year.Ski industry veterans backed up Thompson's dubiousness over the selling power of the Web. "For me it's a lot of face-to-face interaction to create legitimacy," is what Mike Kilchenstein emailed me when I asked him about Shaggy's. He's the CEO of Ramp Sports, a similar Park City, Utah-based start-up ski maker, who also has 32 years of outdoor industry experience at companies such a Rossignol. For him, social media is an extension of what his company does face-to-face, not a replacement. "Things like consumer shows, demo days, concerts where we get to speak with people so they hear our story from us," he wrote. Which all means to Thompson, and Shaggy's Skis, that there is no magic Web bullet there to make Shaggy's grow. Rather, he faces just another round of trial and error, slowly and steadily gaining credibility inside his newfound industry. "I don't want to go begging to any of the big chains," he said. "At the end of the day I want to put out a good product. The rest will take care of itself." Right on, Shaggy. Right on!
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