PADDLING BUSINESSstream: How Paddlesports Manufacturers And Specialty Stores Compete With Box Stores | Adventure Kayak Magazine | Rapid Media
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The battle between price, quality, and customer service

PADDLING BUSINESSstream
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By now you’ve probably seen Perception’s Yak-Off video. The viral advertisement pokes fun at low-cost kayaks in faux-confessional style. Actors urge viewers not to get “yakked-off ” by cheap box store kayaks.

You’ve seen it because just about everyone in the paddlesports industry has shared the clip on social media, sending it back into the ether with comments like “LOL, so true,” or earnest industry analyses boiling down to pretty much the same thing.

After all, the video is funny. funny, and there’s some truth in the underlying premise.

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Specialty retailer Sean Creary provides expert advice in his New Brunswick retailer store, River and Trail Outdoor Company Photo: Mark Hemmings 

About 60 percent of North American kayak sales are opening price point purchases, says Todd King, Vice President of Marketing at Confluence Outdoor, the parent company of Perception and seven other paddlesports brands. Most of those kayaks are sold in box stores with little or no specialized support.

“It’s not a healthy balance for the consumer or the retailer,” King says.

The surge in box store kayak sales has changed the way people are first exposed to the sport. Rather than learning through club outings or classes organized by local specialty stores, many new paddlers simply find themselves beside a river or lake with a inexpensive kayak and no clue what to do with it. And as the saying goes, you never get a second chance to make a first impression.

“My fear is the quality, performance, stability and the overall experience with many of these boats is so poor we are actually turning people away from the sport,” says David Hadden, Watercraft Brand Director at Johnson Outdoors.

But Pierre Arsenault, CEO of price point behemoth Pelican International, says opening price point kayaks fill an important role in the paddlesports ecosystem.

“A huge proportion of entry-level customers are just looking to spend a few hours a month kayaking and are simply looking for a good, light and very stable kayak,” he says.

While box store boats typically fall short of mid-range recreational kayaks on a number of objective measures—from speed and tracking to safety features—most kayaks look alike to novice paddlers. All the performance factors together are less important to the initial paddling experience than the weather during a new paddler’s first outing.

And though the reasons to buy from a specialty retailer are not always readily apparent to new buyers, the best argument to purchase a box store boat is heralded in big red numerals, often adding up to less than $300. This trend will only continue, says Arsenault. “The industry is changing, and the average retail price for a good or very good kayak is on its way down,” he says.

The influx of low-cost kayaks is forcing manufacturers and specialty retailers to up their game, says Marc Pelland, owner of Kayak Distribution, which manufactures Riot and Boréal brand kayaks. “Box stores put an enormous amount of pressure on manufacturers to deliver real value in their products, and specialty retailers to explain the value in the products they carry.”

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Quality boats and expert instruction are the key to sustained growth. Photo: Courtesy Trak Kayaks

That’s especially true for brands competing with opening price point offerings, which is why you’re seeing the Yak-Off video from Perception— a storied brand with a fleet of mid-to-high-level kayaks, which also makes price-point boats that go head-to-head with so-called box store brands such as Pelican, Sun Dolphin and Lifetime.

Perception’s Yak-Off video is the most visible thrust of Confluence Outdoor’s three-pronged effort to help specialty retailers compete with box stores. The company’s Specialty Advantage Program also includes a dealer financing program and an online partnership designed to refer Internet sales leads to local retailers.

Clicking the “buy now” button on the website of a Confluence brand now connects customers to the participating specialty shop nearest their location. Early adapter Appomattox River Company in Farmville, Virginia, has seen a dramatic improvement in online sales with the program, says general manager Tom Detrick.

“In April 2017, we had 15 referrals from the Perception website. This year it was almost 600,” Detrick says.

Confluence also offers a consumer financing program to give specialty shops a ready answer to cash conscious shoppers offering customers 90 days of interest-free financing, and 15.99-percent interest thereafter. The Paddle Now, Pay Later program is designed to reduce consumer sticker shock, and appeal to retailers by offering a one percent transaction fee— about half what most credit card companies charge.

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You can't teach paddling in a warehouse. Photo: Courtesy Trak Kayaks

Paddlesports manufacturers recognize their symbiotic relationship with specialty retailers, and know it’s in their own best interest to support the stores, says NRS chief executive Bryan Dingel. For NRS, those programs include a robust minimum advertised pricing policy (MAP) and flexibility in the ordering process.

“We have a lot of tools allowing the brick-and-mortar stores to place pre-season orders with us, and if they don’t sell through or if they find the market goes a different direction we allow them to trade it out, return it or add more without penalty or price changes throughout the year,” Dingel says.

“Everybody wants to help retailers,” says Darren Bush, owner of Rutabaga Paddlesports in Madison, Wisconsin. “A lot of companies are changing their pricing programs so you can get smaller shipments more often and not tie up cash flow,” he says.

In the tug-of-war between price and quality, Johnson Outdoor’s Hadden stresses the importance of the product. “We feel the best way to support our specialty dealers is to give them great product and protect with MAP,” he says. “We’ve actually exited from some of our box business, because we don’t want to play in the opening price point market. We just want to compete with better product, with margins everyone can survive the future with.” Sometimes this means avoiding the warehouse stores, but not outdoor chains like REI, Dick’s and Cabela’s.

The big outdoor retailers style themselves as specialty chains, but to smaller retailers they’re just a higher breed of box.

“Everybody knows Dick’s is a box store.There are a lot of them and they don’t really care what they sell,” Bush says. “But is REI a box store? To me it’s about quality of experience. You can have a really good experience at REI or you can have a horrible experience at REI. The thing about specialty is it should be consistent.”

With 60 percent of paddlesports sales happening at opening price point, there’s a powerful temptation—some might say a business imperative—for manufacturers to compete in the segment. For specialty retailers it means their customers frequently have the option of buying the same boat for less. Retailers are confronted with a choice: Match the price or lose the sale.

Mike Ong, owner of Southwind Kayaks in Orange County, California, does his best to match box store prices. A sale—even at razor-thin margins—is better than watching a customer walk out the door, he says.

Bush has a different philosophy. When a customer asked him to match the REI sale price of a kayak he’d just test-paddled, Bush has found a memorable way to explain why the customer should pay more to buy from him.

“I pulled the REI ad up on my phone, set it on the floor and said, ‘Here, step on. See how you like it,’” Bush says. When the customer said he’d already tried the boat, Bush pounced.

“I said, ‘No. You didn’t try that boat. You tried our boat. Sure, it’s the same model, but our boat is different because it comes with us.’” It was his opening to explain the advantage a specialty store provides, from customer service to product knowledge and the opportunity to test paddle the boat. The man nodded his understanding and bought the kayak from Bush, paying a bit more than he would have at REI.

“We won’t price match,” Bush says simply. “I would rather send the customer out the door saying, in a nice way, ‘Thanks for wasting all of our time.’” This of course is easy for Bush to say. He’s been selling kayaks for 28 years and Rutabaga is his shop. If he loses a sale he has no one to answer to but himself. A new sales associate might not be able to follow the same script without alienating the customer. And that’s the rub.

To beat the big box you have to do more than provide expert advice and better products. You also have to let the customer know you’re going the extra mile, and you have to do it without talking down.

That’s where the Yak-Off video is so brilliant. It makes the case all specialty retailers need to make—their service is better and the products they sell are superior—without coming off as preachy or condescending.

The video invites the viewer to laugh along and invites them into the club of savvy kayak buyers. The kind of person who doesn’t get yakked-off.

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