Notes from the Skateboard Industry Conference and Hotel Lobby Bowling Event
IASC and BRA did a great job putting on the annual skateboard industry conference this week at the Doubletree in Orange, CA. The attendance was good, the subjects all worthy of attention, and the beer sponsor much better than last year. Credit also has to go to Steve Van Doren and Vans for providing some food, some goodies, and use of their skate park which, happily, was within walking distance of the hotel.
There was also a floor show Tuesday night at the hotel (technically, it was Wednesday morning). I’m told it involved some conference participants, four cop cars, and a red bowling ball that was prominently displayed the next day in the conference room. My only real complaint about the conference is that if there’s going to be entertainment, could you try and schedule it before I go to sleep?
Oh- and it would have been nice to have more than five or six retailers at the conference.
I wrote last week about distribution in anticipation of running the distribution panel at the show. But we spend north of an hour on distribution in the round tables and the conference was running an hour late, so the actual panel was cancelled by acclimation. As that panel was all that was standing between the participants and food, drink, and skating and it was the last panel of the last day, I won’t be surprised if it was the favorite panel of the whole conference. Thanks to Frank Messman from Blackbox, Timothy Nickloff from Sole Technology and Darin O’Brien from Nike Skate for being ready to participate. Maybe next year.
Now, I want to get the slightest bit serious. And probably way, way too direct for some of you. Please don’t shoot the messenger. Or shoot him- but do it in a cogent and thoughtful way from which we all learn something.
These are the assumptions on which my argument is based:
1. There is way too much skate hard goods product out there and with the availability of blank skateboards and deck printing machinery, there are essentially no barriers to entry.
2. The “core’ brands continue to pursue much the same business model they have always pursued where pro riders (of which there are also too many) form the basis for differentiating the brand.
3. There’s less margin and margin dollars to go around and not enough to split between distributors and brands if the brands are going to continue to follow the same team based business model. The brands can’t afford to carry out their traditional marketing models at the level they used to.
4. Long boards are taking a certain percentage of the traditional skate market to the extent that skaters who just want to cruise are choosing longs over short. They may be less influenced by the pros.
5. Distributors allow some brands that would otherwise not be in business survive- at least for a while. This creates a cash flow dependence on the distributor.
6. Companies who had confidence that their brand was competitively distinctive in the market and who had the balance sheet to survive the transition might tend not to sell through distributors.
7. If the hard goods market isn’t healthy, the skate shoe and apparel market will suffer.
No brand has shared with me their financial statements, and no doubt there are exceptions to what I’ve described above. Each brand is different. But in general this model of doing essentially what’s been done before and hoping things get better can’t continue. How might it change in a positive way?
Demographics might start favoring skateboarding again. Angel Ponzi from Board-Trac told us that the drought of new kids of skating age is ending and that we’d see a surge in skate age kids. That’s good news, but it’s obviously a very gradual, multi-year process.
Technology may be increasingly accepted. As it was explained to me, pros who want nothing to do with new technology are finally retiring and are being replaced by riders who have grown up with it. This is also not a short term process, but I’d say we’re a couple of years anyway into it and it might start getting some traction. It’s not a panacea. It won’t work for every brand and it’s going to require some retailer rethinking and retraining by the brands. Let’s call it clinicing, like they do in the snowboard industry. That came up at one of the round tables.
Most sports (don’t mean to offend anybody by calling skate a sport) have something new every year that, even if it isn’t a major breakthrough, is at least a talking point that allows some differentiation and, hopefully, improves performance. In a lot of industries, it means higher prices and margins due to increased consumer interest and limited availability. It also increases barriers to entry. I heard one suggestion that skate boards were already so refined over many years that it was hard to improve on them. I hope that proves to be wrong.
There could also, theoretically, be some mergers among brands. That’s financially efficient because it allows you to spread your overhead, but it doesn’t solve the problems of no barriers to entry and lack of product differentiation. Along those lines, there was awareness at the conference of what Mike West, owner of the 686 brand of snow outerwear was doing. He’s recently announced that he’s going in to the fulfillment business in partnership with a Canadian company he has a long term working relationship with to help small industry brands operate more efficiently. He expects to spread his overhead and make a few bucks.
I suspect mergers are unlikely due to the long term personal relationships among brand executives. Oh hell, let’s just say egos. I am not quite certain that the owner of one brand would step aside to let his long term competitor run it, and I suspect that there is inadequate liquidity for buy outs.
My personal belief, and I’ve been saying this for some years, is that product differentiation via technology is the answer. Or at least, I don’t know another viable choice.
I do know that a small business with no barriers to entry and limited product differentiation and a business model that needs big advertising and promotion expenditures and shares its revenue with distributors over whom it has no control is unlikely to prosper in the current and foreseeable business environment- no matter how healthy skating is as an activity. I’ve been known to say that not taking a risk is the biggest risk of all. I think that might be relevant here.
Great read Jeff. Much appreciated, as I was unable to attend. I did have a conversation with Bobby from Jack’s Surfboards and he brought up the cost of the event, first thing… If Bobby mentions something like this, I listen. He was speaking about how there are just too many disjointed shows right now and that the cost and schedule is difficult for him… Now, we can be assured Bobby doesn’t skateboard but he purchases a ton of skate product from the brands attending, plus gives them prime marketing placement. Nuff said.
Lack of retailers means it is just a ego stroke fest. I have undying respect for those in attendence but without the core retail segment represented, who are we speaking to? Each other? Hmmm… Where is the incentive for retailers from both coasts and other countries to be at this event? Take the, “30 in 30” stores represented on TWBiz currently… Don’t you think their fingers are on the pulse? Can they afford to be at this event and will it make or break their quarter? Again, no disrespect to Mr. Nash, Duke or D. Nanc but… just sayin’.
Lastly, where does the “technology” come into play? How do we inhance a skateboard? Materials, design or graphics? Reinvent the wheel? I am open to the ideas…
Thanks again, sir.
Mark,
I think cost was definitely an issue and, as I said, I would have liked to have seen more retailers there. Talking to ourselves is not a new problem, nor is it limited to skate.
thanks for the comment,
j.
Nice recap Jeff…btw it was 8 police cars and the ball was orange not red
Well, you see Don, that’s what I mean by IASC not scheduling and promoting the entertainment better. I missed the event and got all my information second hand.
Thanks for commenting.
J.
Jeff,
Good seeing you at the event!
Your observations once again are spot on.. you and I could not agree more!
To Mr. Markfitzy, there are many technology enhancements needed in skateboarding, Decks, wheels, trucks, etc.. Just think of the problems/performance limitations riders face when riding today’s skateboarding products, and now think of how modern materials and manufacturing techniques can be applied to solving these problems!!
Cheers
Thanks Becket. Good to see you too.
Jeff,
Well put and spot on as usual.
Fitz, love Bobby, and most other retailers, but the summit barely (read sometimes loses) breaks even so the cost is actually pretty low. Yes there are a lot of shows/summits/bootcamps etc. but the info imparted at the IASC Summit is specific and relevant. Strange that so many retailers go to Cabo for the Sima Summit which is much more expensive and much more of an “Ego stroke fest”.
To everyone, I am sure the technology and creativity exists to build a deck that is almost indestructible and will never lose its pop. It would probably even ollie higher than any board ever made. Whats frustrating is some, not all, skateboarders (Pros) unwillingness to try new tech. For a generation of athletes that claims to be on the cutting edge of creative expression, they’re the epitome of conservative. There was actually a very relevant exchange between Jamie Thomas and retailer Donnie Dameron from Pharmacy about trying tech boards. Donnie admitted to never having tried one and Jamie called him out for it by explaining that he was of the same opinion until he gave them a real and lengthy try.
The future of hardgoods and maybe the entire sport (as Jeff suggested) hinges on getting out of 7ply maple as our pinnacle of performance.
More than one of our presenters quoted Henry Ford,
“If I gave the customer what he wanted, I would have built a faster horse”
G
Usually, I try and say something clever about most posts, but I think Glenn’s pretty much stands on its own.
J.
Over Ten years ago I made a prediction that longboards would save skateboarding. I realized thnat they would bring in new people, bring back older skaters, bring in females and of course bring in some much needed cash to retailers. I was ignored or laughed at by many in this industry. That’s cool. It is what I expected. Sometimes, the skate industry needs to go through painful convulsions before they “get it ”
It’s been almost a month since this conference and I am sure a number of the skate companies are ramping up their efforts to get even more heavily into longboards and or cruisers. The smart companies will know exactly what NOT to do. The not so smart companies will wind up jacking themselves quite badly if they aren’t careful.
Here’s the next prediction – sure to be ridiculed by most in the skate biz: this is just the beginning. In ten years, long boarding sales worlwide will be double where they are now. The number of participants will increase to numbers that hit will astound this industry.This isn’t to say that street skateboarding won’t be popular. It will still be very popular but most kids will buy shop boards or completes from China and be quite happy with their purchase.
The skate industry is changing. There are new players and new ideas bubbling. It has taken well over 15 years to get here….just watch as the seeds that were planted all those years ago finally take root and sprout mightily. These are very exciting times indeed,
Michael,
Well, you deserve to do a little chest thumping. I’d be curious how much of this growth you think will come from favorable demographics. And if long boarding grows that much, what is the skateboarding market? Will longboards still be cool or will they just be a way to get around? And that kind of growth, to me, suggests that longboarding will end up with the same kinds of competitive pressure short board skating developed around 2002-3. Unless, of course, they can continue to innovate and avoid commoditization of the product.
Thanks,
J.
Sorry, I meant to say that longboard sales will be double within five years and double that again within five.
I know I’m getting in here almost a year late, but is there any mention of bringing USA skate companies’ manufacturing home to the USA? I’ve been a huge advocate of this idea since my Dad’s job of nearly 20 years was outsourced to Mexico, and seeing the same with countless friends’ families. I and many others would love to see some shoe companies and board companies’ clothing lines with a “Made in USA” label inside. I believe as our economic situation worsens and more manufacturing jobs are outsourced (2.5 million since 2001) this will grow in popularity and our demand will be heard by the “higher-ups” in skate companies.
Hi Geoff,
The issue of bringing skateboard, or any other product, production back to the U.S. is pretty much an economic one. There are some decks made in Mexico, Watson makes decks in San Diego, and Mervin Manufacturing makes their own decks in the State of Washington. I think more longboards are still made here.
One thing you may not be aware of is that even as manufacturing jobs have gone away, manufacturing in the U.S. has continued to grow. The “problem” isn’t just that China, or whatever country, is cheaper. What’s happened is that our productivity has increased dramatically due to technology and the automation of production. Instead of a bunch of machines with one person with minimal training running each one, we’ve got one super duper wonder machine that does more than one step in the process. It takes just one person to run that machine. That employee is much more highly trained than the people who ran the less sophisticated machines and earns more, but it’s still only one job.
There was, by the way, one skate company who staked its reputation on “made in USA.” That didn’t work out too well for them. That was also true in the snowboard industry back in the 90s.
Thanks for the comment.
J.