Outdoor Opportunities

As more Central Ohioans embrace recreational pursuits, a growing number of specialty retailers are securing a foothold in the market. Could there be too much competition?

By
From the September 2013 issue of Columbus CEO

In the shadow of the Columbus skyline sits a recreational oasis. On evenings and weekends, the Scioto Audubon Park just south of Downtown fills with rock climbers, cyclists, hikers, fishermen and kayakers, all eager to relax and recharge outdoors. In addition to a boat launch and connection to the city’s Scioto Greenway Trail system, the park features a 35-foottall climbing wall.

Opened in 2009, the 120-acre park is one of many public amenities boosting Central Ohio’s outdoor economy and drawing specialty retailers to the area.

“We’re trying to stay in line with trends and actually get ahead of the curve in some places,” says Larry Peck, deputy director of Columbus and Franklin County Metro Parks. The Scioto Audubon climbing wall is a prime example of local government embracing and boosting the popularity of outdoor recreation.

“At any given time, there’s people on the wall and they have to bring their own gear,” says Peck. “Places that sell climbing equipment, I would assume that they’ve been kind of beneficiaries of that climbing wall, because it’s very popular.”

Specialty outdoor retailers operating in Central Ohio credit the region’s growing number of hiking and biking trails and public parks forhelping to foster a strong recreation economy. Jonathan Barth, founder of Clintonville Outfitters, says his rock climbing equipment sales have increased 400 percent in the past year.

“I definitely see people getting an interest in it more and more,” says Barth. The Scioto Audubon climbing wall has increased awareness of the sport and boosted demand for gear, says. “Once you buy a few pieces of equipment, essentially you can go use it for free.”

Clintonville Outfitters added a climbing wall as part of the six-year-old store’s expansion this summer. It’s one of several new features in the upgraded 10,000-square-foot retail space. The new store sits across from its previous location on North High Street.

“We effectively more than doubled, just over doubled, our retail square footage. Then the back area, we’re going to be doing kayak rentals and rack installations … which is something we couldn’t do effectively in the smaller space,” says Barth. The new features allow Barth and minority owner Matt Latham to demonstrategear for their customers, teach classes and hold clinics to educate Central Ohioans about outdoor sports and the products that go with them.

Clintonville Outfitters had been ripe for expansion for several years. “In the first three or four years, it was all about finding the products that were selling in this market and really trying to focus on that kind of buying for the business,” says Barth. Once he was in tune with the demands of his core customers—drawn largely from and the Ohio State University campus—heegan increasing and diversifying the store’s offerings.

“The business started to expand greatly in the past year,” says Barth, though he declined to disclose 2012 revenue. “I think it was finding that product mix that worked for the people who were coming into the shop, and then expanding on those things.”

Booming Business

Expansion is certainly the current theme oflocal outdoor retail market. In addition to Clintonville Outfitters, a number of companies have opened new or expanded locations.

Columbus is “absolutely” a growth market for outdoor retailers, says Ray Dinterman, mid-Atlantic retail director for REI (Recreational Equipment Inc.). The mammoth outdoor retailer announced in June that it would open store in spring at Easton Town Center

The 75-year-old consumer cooperative primarily sells camping, hiking, boating and cycling gear; REI reported $1.9 million in net sales in its 2012 members’ financial report.With 3.5 active members, Washington-based REI touts itself as the nation’s largest consumer co-op. For a $20 fee, members earn discounts on products and services and join a profit-sharing plan. Columbus has 5,100 active REI members.

The Easton REI will be the second Ohio store Dinterman has opened in his nearly two years with the company; a Cincinnati store opened in October.REI has 129 stores in 32 states and three stores (including Columbus) under development in 2013.

For the past five or six years, REI has grown at a rate of roughly five to nine stores a year according to company spokeswoman Bethany Hawley. Th company has 11,000 employees nationwide. The Easton store will hire 50 for a total of bout 100 in Ohio.

REI grows cautiously, says Dinterman. “We look at membership, but we look at surveys of people who are actively involved in the outdoors and the availability of outdoor activitiesn Clumbus, [those factors] were very, very high in both areas.”

Retail analyst Chris Boring, principal of Boulevard Strategiesexpects the decision to locate REI at Easton will bolster the retailer’overall market share in the Buckeye State. He seession to build a larger store aston as a sign that the 21,000-square-foot Cincinnati store is a success.

“Easton is the largest tourist attraction in Central Ohio already, so it’s to try and add to that appeal,” says Boring. Since opening in 1999, Easton Town Centr has drawn 20 million visitors annually and produced sales volumes that are “among the highest in its tenants’ respective chains” according to developer Steiner& Associates’ website. Boring says the open air retail complex draws shopper from a radius of 75 100 miles.

Prime Location

Location is a key growth strategy for outdoor retailers. Publicly traded Cabela’s Inc., the self-described “world’s largest direct marketer of hunting, fishing, camping and related outdoor merchandise” opened an 80,000-square-foot store north of Polari Fashion Place in March. “Their location off of I-71 is exactly what they look for,” says Boring. “They like interstate locations that can draw from a two- three-hour radius.”

Cabela’s CEO Tommy Millner implemented athree-year retail expansion plan in 2009. Founded in 1961 and headquartered in Sydney Neb., Cabela’s strong catalog and Internet sales have been eclipsed by its retail segment, which according to company reports generated 66.5 percent of $3.1 billion total evenue in 2012, up from $2.63 billion in 2009.

During the past three years, Cabela’s (NYSE: CAB) has increased its retail square footage by 17.5 percent. In 2013, the company will have 45 retail locations nationwide with 15 more planned for development in 2014.

Cabela’s stores are “strategically sized to match their markets,” Millner wrote in his 2012 letter to shareholders. Stores range from 40,000 to 246,000 square feet. The companymedia relations department failed to respond to interview requests for this story.

But as shoppers have learned, Cabela’s Polaris store is builtin the company’s “new generation” format. It features taxidermied animals, a wild game café, hunting and fishing license sales, an indoor archery range and a gun library with a variety of firearms available for purchase.

“Ranging from 80,000 to 100,000 square feet, these stores have generated sales and profit per square foot at least 40 to 50 percent higher than our legacy stores,” Miller told investors. Central to Cabela’s development strategy is the construction of new generation stores in established retail centers such as Polaris rather than stand-alone locations.

The Polaris Cabela’s is one of seven new generation stores set to open in 2013. According to company filings, Cabela’semploys 250 people in Ohio and 15,000 nationwide. The staff is trained to channel retail customers to online and catalog sales channels for purchases they can ship the store for pickup

By category, Cabela’s $1.8 billion in 2012 retail sales was broken down into 49.5 percent hunting equipment, 28.7 general outdoor gear and 21.8 clothing and footwear.

Given the difference between Cabela’s and REI, industry watchers say, there’s likely room for both to do good business in Columbus. The two have distinctly different core customers—the hunting and fishing crowd on one hand and what Boring terms the “non-lethal” outdoor sporting enthusiasts on the other.

“Cabela’s is a slam dunk. REI, I think this market’s a little bit of a challenge for them,” says Boring. Ohio’s weather and landscape aren’t as suited to the outdoor sports that REI specializes in compared to, say, the Pacific Northwest, says.

Staying Afloat

Ohio may not have an ocean, yet for four consecutive years the state has ranked among the top 10 states in the country for registered recreational watercraft, according to the Ohio Department of National Resources (See “Ohio’s Recreational Boating Economy”).Both REI and Cabela’s focus on boating equipment and accessories, as do several smaller retailers.

“Believe it or not, we’ve actually got quite an active whitewater boating community here in Central Ohio,” says Keith Finn, president of the board of directors of Columbus Outdoor Pursuits. Founded in 1937, the club has 2,500 active members—the majority working professionals who enjoy recreational biking and boating. COP leads bike rides, kayak trips, hikes and winter sports outings locally and beyond.

Finn, a Columbus City Schools retiree, joined COP around 1987 and was elected to the all-volunteer board in the early 1990s. He attributes the increase in boating popularity to both advances in kayak design and the wider availability of gear in Central Ohio.

“Recreational kayaks, the short boats, they’re just much more available now. They’re very affordable, and they’re actually good little boats,” says Finn. Until recently, there were few retail shops serving outdoor enthusiasts in Central Ohio. “It was pretty hit and miss. A lot of times you did mail order because you didn’t really have anyplace to go.”

Finn predicts that an increase in bike paths, the removal of several low-head dams from the city’s waterways and the growing enthusiasm for outdoor recreation among the general public will sustain the new retailers as well as those established already. COP members have long patronized Clintonville Outfitters and other independent retailers, including Everest Gear and the Outdoor Source, says Finn

Other Retailers

Niche fly-fishing and apparel stores Mad River Outfitters and Orvis, the latter of which opened a location November in the Shops at Worthington Place, also operate in the Columbus market.

Everest Gear specializes in hiking, camping and climbing equipment. The Granville-based business was founded as a direct sales Internet company in 1989. In 2012, Everest Gear relocated its Columbus location to the renovated Shops at Worthington Place. The majority of the company’s business is generated from online sales, says Nicole Martin, a manager with the company, in an email interview.

Martin isn’t worried by the increased competition. “It surely will have an effect, but we believe we have a loyal customer base and will be fine,” she says.

The Outdoor Source, a locally based specialty retailer of camping, kayaking and climbing gear, relocated on of its two Columbus stores to a new Polaris location in April. Owner Andy Graham founded the Outdoor Source in 2003 after his employer, family-owned outdoor retailer Benchmark Outfitters, closed its Columbus locationGraham was unavailable for comment

Regional retailer Gander Mountain professes to be unfazed by the incoming Cabela’s, even though both of the catalog-turned-retail companies are known for selling hunting and fishing equipment. “Gander Mountain always welcomes healthy competition,” says company spokesman Jess Myers via email. Myers expressed confidence in the retailer’s ability to retain loyal shoppers.

The Minnesota-based company has nine Ohio locations, including one near Hilliard and a firearms supercenter in Reynoldsburg. Gander Mountain employs approximately 630 people in Ohio. The company would not disclose 2012 revenue.

REI and Cabela’s will pull money from shoppers beyond Central Ohio, but they could still put a strain on retailers in the Columbus market, says Boring. Still, he predicts Gander Mountain and Walmart—the world’s largest sporting goods retailer—are likely to “take a hit” from direct competitor Cabela’s in particular.

Boring predicts small outdoor retailers will have to differentiate themselves and work harder to maintain customer loyalty, although they don’t have to worry about being undercut on price by the larger specialty stores. (Neither Cabela’s nor REI are discounters.)

Though Barth expects an initial impact on business at Clintonville Outfitter with the opening of REI, he’s confident the store will maintain its loyal customer base. The store’s edge lies in its personality and its location inside the outerbelt, which is easily accessible from most of Columbus by bike trail or foot.

“I don’t really see too much of a change coming, other than a little bit, maybe, more focus on the outdoor industry in Columbus,” says Barth. “That’s just going to increase everybody’s business.”

Kitty McConnell is a reporter for Columbus CEO.

Cutlines:

The climbing wall at Scioto Audubon Park

An REI store in Olympia, Wash.

Clintonville Outfitters’ expanded store

Everest Gear

Cabela’s Columbus store includes an extensive fishing department.

Everest Gear’s new store at the Shops at Worthington Place.

File headshot of Chris Boring, May 2013, page 29.