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IASC Skateboarding Summit – Have We Found a More Valuable Way to Talk With Each Other?

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So there I was sitting in the conference room of the Embassy Suites for day one of the IASC Skateboarding Summit waiting for the dreaded retailer panel to start.

You all know the panel I mean.  They have one at every industry trade show and conference I’ve ever been to.  Three or four retailers sit up on stage, a moderator feeds them questions they often have in advance (well, that’s what I always did) and they give cautious answers that aren’t that useful, typically aren’t a reflection of actual business conditions, and make unrealistic requests of the industry and the brands to “fix” skateboarding, or snowboarding, or whatever.

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The IASC Skate Industry Conference

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The International Association of Skateboard Company’s conference week was, as usual, well attended by the people you want to see there. That’s a lot of what makes it worth attending for me. I enjoyed the Hall of Fame awards. It was great to see and hear some of these people I’ve only read about. I left before the bitter end, but heard that there was no hotel bowling or arrests this year. Oh well.

There wasn’t a presentation I didn’t learn something from, but I’ve highlighted some below where something they said struck a particular chord with me.

Transworld Business’ Mike Lewis started the conference with a review of data Transworld had collected on skating. Two things stood out for me. The first was the graph that showed the decline in skate participation in recent years in spite of the growth of longboarding. While the data is a bit controversial, the trend is clear. Partly, it’s the result of demographics, and the good news is that those demographics are starting to turn around. There’s a group of kids moving into the age at which kids take up skating. 
 
The success of long boards was highlighted by the presence at the conference of Concrete Wave publisher Michael Brooke, and by the appointment to the IASC Board of Directors of Sector 9 cofounder Steve Lake. Seems to me that long board representation at IASC is overdue.
 
Longboarding has succeeded not only because it appeals to a broader demographic, but because it’s been nonjudgmental about how you should have fun on a skateboard and its participants are very interested in new technology. I wrote about this after I visited the Interbike show and compared the bike industry to longboarding.
 
The second thing that stood out in Mike’s presentation was one of the answers to the question, “What’s selling?” One comment was “Anything longboarding!!”
 
From what I hear, that’s probably true. But there’s always a market top.  For any industry. The sheer exuberance of that statement reminded me a bit of the projections of the DOW going to 30,000 or the attitude of the 300 or so snowboard hard goods companies at the SIA show in 1995.
 
It’s not time to cut back on longboards as either a retailer or brand. But there will be a time when growth will at least slow and I doubt its five years away. So watch your inventory, control your distribution, maintain a strong balance sheet and keep innovating. That way, when the downturn does come, whenever that is, your company will be in a position to benefit from your competitors’ troubles.
 
SIA President David Ingemie discussed how SIA helps its members with a particular emphasis on quality research. An important part of David’s message was not to ignore the research because you don’t like what it concludes. Research, for all its flaws, is always better than anecdotal evidence. Just because you don’t believe it doesn’t mean it’s wrong.
 
University of Utah Economist Dr. Peter Philips kept us entertained and focused even while he gave us some sobering economic news. I’d seen it before, but the highlight of his presentation for me was the chart that shows employment decline and recovery in all recessions since the Great Depression. The message was that employment in the Great Recession has declined further and is taking longer to recover than any recession since World War II. Not news we want, but something we need to be aware of.
 
That, by the way, is how it’s always been in recessions caused by too much debt.
 
He also reminded everybody of the inevitability of the business cycle, and urged us to keep innovating as a way to push that cycle out as much as it can be.
 
The last speaker at the conference was Oliver Percovich, the founder of Skateistan in Afghanistan. The story of the five years he’s spent so far (he’s committed to ten) using skateboarding to give kids in Kabul, Afghanistan some fun, hope, education, and opportunity kind of makes whatever problems we in the skateboard industry think we have pale in significance. The industry has supported his program and I am sure it will continue to do so as he expands into other countries.  

 

 

Notes from the Skateboard Industry Conference

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It was, by any measure, a successful conference and IASC did a great job putting it on. Attendance, at around 95, was up over last year, which was also up over the first year of the conference the previous year. The attendees were the senior people from the right companies. The food continues to improve (breakfast still needs work) and the skating at Woodward West is outstanding. Getting there from Seattle is a bit of an effort and I made the drive from Burbank this time without getting lost (the first year, the sign that said “Paved road ends in two miles” sort of threw me.

IASC kept us busy for two full days on interesting topics that included a key note address by George Powell, social media and action sports, why athletes go broke (I’m still sorry I missed the chance to invest in the rafts that inflate under furniture to protect them from flood waters), ethical sourcing, Shop- Eat- Surf’s Tiffany Montgomery’s interview with former DC Shoes CEO Nick Adcock, and a retail discussion.

Angelo Ponzi from Board Trac was given the thankless task of making the last presentation that summed up everything that had been discussed during the whole conference. Word is he pulled it off and people wanted more time with him, but I had to leave for the airport and didn’t see it. That’s representative of why it can suck to be the last presenter.
 
I talked before Angelo, focusing on the action of some major brands (see my most recent articles on Billabong, Zumiez and Genesco on my web site) with regards to their efforts in retail and relationships with core shops.   I suggested that the decline in the number of core shops, the financial model that needs to be pursued given the economic conditions (lower sales growth, focus on gross margin dollars), and the evolving retail environment suggested some pretty obvious steps that skate companies needed to take to be competitive. I spent a few minutes discussing those steps.
 
I guess if I’d been planning the agenda I would have scheduled discussions that focused more on those steps. They include effective use of your management information systems, focusing on inventory turns- not just gross margin percentages, distribution (“The Industry” is not going to “fix” distribution, but most companies can manage their distribution better if they have better information), and the role of the existing skate distributors. Those topics are clearly not as much fun, but they might be more important to the long term health of the industry.
 
Skateboarding as a sport/activity/lifestyle- whatever you want to call it- seems to be doing just fine, though the individual companies have challenges. I thought skate’s problems and strengths were best framed by a brief exchange between an executive from a major retailer and a hard goods brand owner. The retailer bemoaned team riders showing up drunk,  showing up late or not at all, and not interacting with the kids. The owner said, more or less, “That’s the way it is. If you don’t like it, don’t invite them back.”
 
I’ve never managed skateboard team riders, but I have had some dealing with snowboard team riders. What I’ve always said is that I’d rather have the kid who was personable, professional, and showed up on time (sober) even if he wasn’t quite as good as some other rider so I probably tend to come down on the retailer’s side on this one. Yet the brand owner (a former pro skater like most of them) was defending something that is important about skateboarding and that has allowed it to maintain its edge and underground image even as it has mainstreamed.
 
That edge and image were also handily maintained by something called “hall bowling” the first night and by a report of somebody riding a rollaway bed down the driveway the second. That the bed was ridden was denied in the morning (but there was a mattress under a tree). But as I was printing out my boarding pass I did hear the lodge staff discussing how much to charge for a rollaway and wondering why anybody would allow this group an open bar. I of course, being the sober serious fellow I am, had nothing to do with any of this. Except for the part where I woke up at 4:30 to find that somebody had turned off the power to my room (and to others) and it was about 45 degrees. It’s cold at this camp at 4,000 feet elevation.
 
I can’t wait for next year!

 

 

The BRA/IASC Roundtable at ASR

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As they do every ASR, IASC and BRA hosted a round table meeting by invitation only to discuss issues of mutual interest and, as usual, I attended. The meeting was well attended and the exchange lively.

The first issue on the table was Manufacturers’ Suggested Retail Pricing (MSRP) and Minimum Advertised Pricing (MAP). I’ll assume you know what those things are. People in the room were generally in favor of both and I’d have to admit that I’m not necessarily against them. Though as I mentioned in the meeting, managing distribution well is perhaps more important in keeping prices up.
What concerns me about both MAP and MSRP is that they feel like potential excuses not to manage your business well. I was impressed with the retailer in the meeting who said, more or less, “We got some belts with price tags on them but we ripped them off and priced those belts $5.00 higher because we knew that’s what we could sell them for. MAP? MSRP? How about knowing your customer, your market, and your inventory? Don’t let these kinds of tools, which may have their uses, have too much influence on your thinking.
Honestly, I’m not quite sure what the second issue was, but it ended up with the usual hand ringing about margins on skate hard goods needing to be higher.
I worked up some righteous anger, but then Don Brown ended the meeting before I could get a word in. Probably just as well.
But after the meeting I reminded everybody who would listen that the previous ASR, IASC had sponsored a seminar where a major topic of discussion was Gross Margin Return on Inventory Investment (GMROII). Cary Allington from Action Watch had presented some very interesting numbers showing that if you took inventory turns into account, the margins on skate decks were not nearly as bad as people thought.
I had been arguing for a while that our new economic circumstances required a focus on gross margin dollars- not just gross margin percentages. Actually, I first suggested that years ago.   Cary brought GMROII to me attention and I wrote an article about it. I knew that inventory turns and inventory dollars were important, but GMROII gave me an elegant and effective way to put them together and compare how profitable it to sell a skate deck compared to, say, a pair of skate shoes.
So the source of my pissedoffness was that here we were again lobbying for higher margins, while ignoring turns and margin dollars and data suggesting that on a GMROII basis, margins on skate decks weren’t half bad. And I’m sure we’ll have the same discussion at the next ASR.
The article is on my web site and has a date of August 15, 2009 on it.  Cary’s numbers are in there and I think they will surprise some of you.