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August 13, 2018

Summer Outdoor Retailer (“OR”) Wrap Up

MHT Partners  | Consumer Investment Bank

Denver hosted its first summer, and only second overall, OR the last full week of July. The OR show moved to the Mile High City last year after a long run in Salt Lake City given its growth and some of the key participants not seeing eye-to-eye with the State of Utah and its approach to the use of public lands. Denver was a great host, and attendance robust. Thousands of companies, from large to small, came to show off their wares and point the way forward for the outdoor industry. From my consumer investment banker point of view, interest and participation by corporate development teams and private equity firms was high, demonstrating the continued enthusiasm institutional investors have for this highly attractive space. Here are a few takeaways from my time on the floor:

The Cooler Wars – We all remember the cola wars, right? We’ve now entered the era of the Cooler Wars. Yeti’s astounding rise awakened people to the realization that the market for $350+ coolers is a lot larger than one might think (or, in fact, that a market for $350+ coolers even exists). The fast followers are legion. From old stalwarts including Igloo and Coleman, to brands expanding into the fast-growing segment from ancillary markets like Otter Box, to newcomers like Rovr and Kysek, the conference room floor was dotted with plastic and metal boxes that keep food and drinks cold for days on end. Is there room at the top for another one, two, or three leaders in the high-end cooler market? That remains to be seen but given how similar many of the product ‘innovations’ seem to be copied from competitors, we may well be approaching ‘peak cooler.’

Kids Are Off Trend – That isn’t to say we’re having a population decline in children, but the number of child-focused companies and offerings at OR seemed significantly down from prior years. There remained the usual presence of kids’ shoes and clothing, but the number of toys and accessories for children has declined. One area of relative strength and innovation is flexible play structures – think slack lines with flexible ladders, trampolines to be tied between trees, and the like.

Target Market Expansion in Clothing – As clothing companies strive to find new avenues of growth, many have turned to simply targeting a different audience with the same, or similar, gear, but through different marketing channels and messages. One of the first to do this, arguably, was Carhartt. Long known for rugged work wear, consumers are now just as likely to see the well-known logo at a summer BBQ or ball game. Dickies has followed a similar path broadening its offerings to include more casual wear. We also noted some highly specialized brands, think fishing and hunting, testing the waters in hiking and camping lines, and vice versa. It’s worthy to note, however, Under Armor attempted to tap into the hunting market by offering a line of its clothing in camouflage patterns, though the results have not been overwhelmingly successful.

Venture Out – One of our favorite areas to see up-and-comers and do some trend spotting continues to be the Venture Out section of the floor. Conceptualized to concentrate smaller, fast-growing companies in one area, Venture Out is a great place to spend a few hours looking for innovation. Indeed, many of the product enhancements seen upstairs may well have germinated in the Venture Out area.

While the current economic expansion is quite long in the tooth, there is no doubt things continue to hum along at a robust pace. With unemployment rates very low, steady economic growth, and wages beginning to rise, Americans are able to both engage in outdoor hobbies and interests and have the money to spend on the goods which facilitate those pursuits. This summer’s OR reflects that state of affairs with more energy and engagement than we’ve seen in a couple of years. Fingers crossed the good times continue to roll.

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