Most profit / biggest rip off in gear?

[mondeo]

Interesting read, first few paragraphs being most pertinent: http://www.telemarktips.com/SkinRev.html

Lower end skis are a fairly simple construction in comparison. Just a laminate of fiberglass, wood, plastic, and metal. You have to get the curing process right, and directional fiberglass layup takes some specialized machinery, but it's a known process not unique to the ski industry.

 

[Geoff]

i wish i knew more about the production process and steps involved with skins...I'd shed some light if I did.. I do know from my past life as a retail buyer that G3 skins were not a high margin item...low 40% margin...we did a lot better on lip balm, turtle fur and hand warmers. If we sold skins to a season pass holder our margin was toast...employee sale...fuggetaboutit,not even worth stocking...

Hard goods aren't the profit center, it's soft goods and accessories. You do tunes and hard goods to get the foot traffic in your shop. Even better, rentals are gold since those people almost always load up on accessories.

 

[eastcoastpowderhound]

Hard goods aren't the profit center,.

you can say that again! I think thats one of the biggest misconceptions ski consumers have. Not only is it not the profit center, its typically the lowest margin department in any ski/board shop...and in the last two years its unfortunately become the loss leader for many retailers. Below is an article from 2008, based on 0708 sales that illustrates some of what we've been talking about...and as you can imagine the situation has only gotten worse since 0708. Pre-season alpine ski orders from retailers to the companies have decreased 25% yr/yr from last year to this year.

Retailers Eye Other Categories
as Ski and Board Sales Go Downhill


As more Americans opt to rent rather than buy their own alpine skis and snowboards, outdoor retailers are reassessing their commitment to snowsports gear.



The 2007 OIA Specialty Retailer Operational Report estimated 56% of outdoor retailers sold snowports equipment. Recent interviews indicate they are becoming increasingly weary of competing against growing rental and demo fleets that allow alpine skiers not only to avoid $50 airline baggage fees, but pick from the latest gear to suit conditions on the mountain. Many resorts have expanded their rental fleets or demo programs to allow downhillers to rent inline retail product.



The ratios of alpine skis and snowboards sold into retail vs. rental channels have been steady the last five years, according to other industry research at about 5 to 1 for skis and 10 to 1 for snowboards. Some retailers, however, claim the number belies the fact that a growing number of resort ski shops are expanding their rental and demo fleets. Rental fleet expansion is definitely thinning the ranks of ski and board retailers, according to the head of a buying group that has seen its membership decline 18% in the last five years.



The trend has hit retailers in the South particularly hard since their clientele must fly out to reach their ski destinations.



“The big thing for us is the airlines,” said a manager with a small chain of outdoor stores serving one major Southern city. “Where we are, everybody flies to get to the resort, and the cost associated with bringing their own skis or snowboard has gotten out of control. Even if they own equipment, it is staying here and they are now renting. It has basically killed the ski business for us.”



The retailer, who said they are the number two snowsports retailer in their market, said the business began turning south in the last three years after airlines began charging $25 one-way for skis and snowboards. To make things worse, the company had to mark down most of its skis and snowboards the last two years to compete with internet channels.



“The margins were not there,” the manager said. “The demand was not climbing and it just did not seem like a viable business to be in. Last year, the bottom just fell out.”



The retailer has ordered no skis or snowboards for the upcoming season. It will continue to carry snowsports apparel and accessories, including helmets, which have been among the fastest growing snowsports items the past few years. It will sell carry-over boot inventory and may reorder boots for winter 2010/11 depending on results.



Roughly 300 square feet of space dedicated to two ski and snowboard shops will be used to store fixtures and hangers now warehoused off site. Another 500 square feet of floor space will be used to improve sell through via more visual merchandizing and deeper or broader assortment of winter footwear and other products. The retailers will also shift focus toward outfitting customers traveling to Mexico and Costa Rica.



On average, outdoor retailers who sell snowsports equipment dedicate 1,252 square feet to the category, according to OIA research.



Below are some factors and tips to consider when evaluating your own snowsports equipment business.

While snowsports equipment – including backcountry gear – produced the fourth highest sales per square foot for outdoor retailers, it ranked third to last among 17 categories when measured for average gross margin at 37.3%, according to the report. That was 10 points below apparel and accessories.
Snowsports equipment turned 1.8 times per year on average, well below the 2.9 average for outdoor retailers, according to the 2007 study.
Margins are also lower with online sales because skis and snowboards require special packaging, which makes them more expensive to ship.
Skiers and snowboarders still need to buy outerwear, base layers, socks, gloves, helmets and other high-margin apparel and accessories.
Southern retailers can shift their winter emphasis to paddle sports, hiking, fishing and other activities that can be pursued in their local market year round.
Consider polling some of your top snowsports customers on where they’d like to see you shift your dollars – cycling, outdoor furniture, fishing, paddlesports, travel, etc.
Consider offering customers who buy skis or snowboards at your store a $50 gift certificate or store credit to compensate them for airline fees this season.

 

[marcski]

Skis. It's crazy how much a ski shop will rape you for a pair of skis and bindings. Nuts! With production in the thousands....it just doesn't cost hundreds of dollars to make a ski. All of the cheap prices online reinforces this. I spent less on skis and bindings for myself and my wife online than I think I spent on the last pair of skis I got at a ski shop.

Gotta love the ignorant and monoptic views that are posted on the internet.

I still stand by what I said. It holds true regardless of the ski manufacturer's profit margin. The title of this thread is Most profit/Biggest ripoff in gear.

If you go out and spend top dollar and pay MSRP for a pair of skis...its a huge rip-off....as you can get the same product at about a 1/3-1/2 of the price. And I'm not talking about last years equipment bought during the summer. You can find deals online on current season's equipment in early February.

Obviously, through the tone of his post, Phil has a plug somewhere.

 

[Geoff]

I still stand by what I said. It holds true regardless of the ski manufacturer's profit margin. The title of this thread is Most profit/Biggest ripoff in gear.

If you go out and spend top dollar and pay MSRP for a pair of skis...its a huge rip-off....as you can get the same product at about a 1/3-1/2 of the price. And I'm not talking about last years equipment bought during the summer. You can find deals online on current season's equipment in early February.

Obviously, through the tone of his post, Phil has a plug somewhere.

I haven't been around the business for a while but there used to be great margins in the beginner/intermediate packages. You'd have around $150.00 into that $400 package. That was down in the flatlands where most of your customer business was the 5 to 10 day per year skier. It's the same thing with the rental fleet. You break even on it after 10 days of rentals and the rest is gravy. That class of customer also needs hat, gloves, goggles, socks, long underwear, .... When I was doing it, we were trained to upsell the accessories as much as we could. While you're fitting somebody with rental boots or the beginner package deal, you're asking them what they have for gloves and telling them how you swear by the ski socks you use since they don't chaffe like athletic tube socks.

 

[mondeo]

I still stand by what I said. It holds true regardless of the ski manufacturer's profit margin. The title of this thread is Most profit/Biggest ripoff in gear.

If you go out and spend top dollar and pay MSRP for a pair of skis...its a huge rip-off....as you can get the same product at about a 1/3-1/2 of the price. And I'm not talking about last years equipment bought during the summer. You can find deals online on current season's equipment in early February.

Obviously, through the tone of his post, Phil has a plug somewhere.

http://en.wikipedia.org/wiki/Supply_and_demand

 

[marcski]

I haven't been around the business for a while but there used to be great margins in the beginner/intermediate packages. You'd have around $150.00 into that $400 package. That was down in the flatlands where most of your customer business was the 5 to 10 day per year skier. It's the same thing with the rental fleet. You break even on it after 10 days of rentals and the rest is gravy. That class of customer also needs hat, gloves, goggles, socks, long underwear, .... When I was doing it, we were trained to upsell the accessories as much as we could. While you're fitting somebody with rental boots or the beginner package deal, you're asking them what they have for gloves and telling them how you swear by the ski socks you use since they don't chaffe like athletic tube socks.

Agreed! But this goes on in all businesses...its not just germane to the Ski industry. Drug stores....do you know what the most profitable portion of a drug store is...(even chain stores...)? The photolab. They make way more money printing photo prints than selling shampoo.

 

[riverc0il]

Interesting article regarding rental shop expansion coinciding with retail shop declining. Especially in regards to southern shops that rely on airline skiers and riders. It makes a lot of sense for those folks to rent. Most recent gear, choose ski to match the conditions, don't pay extra bag fees, and one less thing to lug around on a trip. For the airline skier or rider, this makes amazing sense and obviously those skiers and riders that only participate in the activity a few times a year on big trips will enjoy many benefits and few draw backs. Kind of the "lease" model of ski equipment in a way... a model that does not work for hard core and frequent drivers but works great for someone that wants to get the latest and greatest for a minimal cost and doesn't drive distances.

 

[Philpug]

I still stand by what I said. It holds true regardless of the ski manufacturer's profit margin. The title of this thread is Most profit/Biggest ripoff in gear.

If you go out and spend top dollar and pay MSRP for a pair of skis...its a huge rip-off....as you can get the same product at about a 1/3-1/2 of the price. And I'm not talking about last years equipment bought during the summer. You can find deals online on current season's equipment in early February.

Obviously, through the tone of his post, Phil has a plug somewhere.

First of all, there are less than .01% of equipment that goes out at MSRP, maybe at some resort area. Yes you will see gear at 50% off of retail after February, thats when dealers come off MAP (Minimum Advertised Price), that is industry wide. The only plug I have is used to fill the holes in your argument.

 

[riverc0il]

First of all, there are less than .01% of equipment that goes out at MSRP, maybe at some resort area. Yes you will see gear at 50% off of retail after February, thats when dealers come off MAP (Minimum Advertised Price), that is industry wide. The only plug I have is used to fill the holes in your argument.

I think the perspective is that it would be a rip off to pay full price for hard goods when you could just wait until late season for deals or shop around other retailers that offer the same product for 33-50% less. "Rip off" may be an inappropriate term as the connotation is that the retailer is ripping off the consumer which is not the case when charging a fair margin that barely even sustains the business. Perhaps a better term would be a "bad buy" such as that it would be a bad buy to purchase something at full MSRP or even close to it.

 

[Philpug]

I think the perspective is that it would be a rip off to pay full price for hard goods when you could just wait until late season for deals or shop around other retailers that offer the same product for 33-50% less. "Rip off" may be an inappropriate term as the connotation is that the retailer is ripping off the consumer which is not the case when charging a fair margin that barely even sustains the business. Perhaps a better term would be a "bad buy" such as that it would be a bad buy to purchase something at full MSRP or even close to it.

Thank you. When terms like "rip off" and "rape" are used it really limits the validity of the persons argument. For some people who want and can afford to buy the gear early in the year, that is their business and for some of these people they get to enjoy the gear for another 2-4 months more than someone who waits. People can choose to purchase gear early or later for a lower price, that is fine either way. Both cases have their own argument. It is not always about the money.

 

[deadheadskier]

If my term 'rip off' in the title of the thread offends................sorry. That or the term 'rape' however, does not limit the validity of someone's argument AT ALL. Buying a $9 beer at a Red Sox game is a RIP OFF. It's effing gouging.......there's no doubt to it.

I'm in sales. 60% of the time I try and give a fair price to maintain customer relationships through fair pricing. 20% of the time I dump product for no margin at all. 20% of the time I most definitely Rip Off people to make the numbers my employers ask of me. I have to prey on the ignorant to survive professionally.

The point of this thread is that from the outside looking in, there are certain market segments within the ski retail industry that operate at what I perceive to be disgusting margins. Skins, gloves, sunglasses, Arc'tyrex clothing, etc....appear that way to me.

I sell Italian White Truffles in winter at 3 thousand fucking dollars a pound. It's a rip off.........

 

[marcski]

If my term 'rip off' in the title of the thread offends................sorry. That or the term 'rape' however, does not limit the validity of someone's argument AT ALL. Buying a $9 beer at a Red Sox game is a RIP OFF. It's effing gouging.......there's no doubt to it.

I'm in sales. 60% of the time I try and give a fair price to maintain customer relationships through fair pricing. 20% of the time I dump product for no margin at all. 20% of the time I most definitely Rip Off people to make the numbers my employers ask of me. I have to prey on the ignorant to survive professionally.

The point of this thread is that from the outside looking in, there are certain market segments within the ski retail industry that operate at what I perceive to be disgusting margins. Skins, gloves, sunglasses, Arc'tyrex clothing, etc....appear that way to me.

I sell Italian White Truffles in winter at 3 thousand fucking dollars a pound. It's a rip off.........

I agree. (Although, one of the best dishes I've ever had was this truffle rissotto appetizer....(which was quite pricey!).

I think you have to be an educated consumer when it comes to skiing and purchasing both hard and soft goods. As this thread demonstrates there are huge price differentials in skiing related goods. Do you pay retail for gloves, DHS? I don't think so. You and I and most people on this board know how to find skiing related items at much better than retail costs out of a specialty ski shop.

I do think that the price differences in skiing are quire large....perhaps larger than most other industries. Whether you're talking soft or hard goods. I mean you can wait till the end of summer and get good deals on a new car that is the year ending model. But, at least it seems to me that the % difference from the beginning of the car year to the end is not as great as the % in skiing.

 

[deadheadskier]

I But, at least it seems to me that the % difference from the beginning of the car year to the end is not as great as the % in skiing.

exactly

In my business, I don't ever give such a good deal that a customer will look at the initial retail price and say man, you were gouging me at that price.

IMO It's BAD business to see last years skis selling at 50-60% off MSRP one summer later. It's been that way for the last five years it seems too, so this is not a function of over production in a bad economy.

 

[Trekchick]

I can't believe I'm saying this but I agree with GSS on the Turtle neck gaiters.
I understand the wool and tech fabric gaiters being a bit more expensive, but the turtle fur ones that are made of basic fleece are cheap to make and cost 15.00.

BUT.......since I was willing to shell out 15.00 for a turtle fur on a sub zero night when I left my gaiter at home, it was not a rip off, it was a life saver and I'm glad I had the opportunity to spend my hard earned $$ to add the extra comfort.

 

[GrilledSteezeSandwich]

exactly

In my business, I don't ever give such a good deal that a customer will look at the initial retail price and say man, you were gouging me at that price.

IMO It's BAD business to see last years skis selling at 50-60% off MSRP one summer later. It's been that way for the last five years it seems too, so this is not a function of over production in a bad economy.

Exactly..everyonce in a while when a customer screws up and gives us the wrong dates and signs off on the proof.....and we have to replace the monument, we tell them we'll do the replacement for them at cost but we really give it to them for like half price which might be double the cost because if we charged them cost..they would see how high our profit margin is..

 

[riverc0il]

IMO It's BAD business to see last years skis selling at 50-60% off MSRP one summer later. It's been that way for the last five years it seems too, so this is not a function of over production in a bad economy.

I figured this was due to over production and over optimistic numbers. But if it is over production, then either the manufacturers never decided to cut back production or retailers are not cutting back on purchases. Either way, you wouldn't see gear going for 50-60% off at the end of the season if shops sold through most of their inventory (or at least the best models) by the end of the season or even better by the end of February. But you can usually find some of the best boards brand new from a year or even two or three years ago with minimal effort. I wouldn't buy a brand new ski for anything more than $400 at this point and I tend to make a solid effort to wait until I see new items drop down to $300 or less before pulling the trigger. I just don't know how the industry keeps letting this situation happen but I ain't complaining!!! In retail, you always want to have a clearance rack, but you never want your best product to be on it. Skiing has too much supply on the market right now with not enough demand, it seems.

 

[mondeo]

I figured this was due to over production and over optimistic numbers. But if it is over production, then either the manufacturers never decided to cut back production or retailers are not cutting back on purchases. Either way, you wouldn't see gear going for 50-60% off at the end of the season if shops sold through most of their inventory (or at least the best models) by the end of the season or even better by the end of February. But you can usually find some of the best boards brand new from a year or even two or three years ago with minimal effort. I wouldn't buy a brand new ski for anything more than $400 at this point and I tend to make a solid effort to wait until I see new items drop down to $300 or less before pulling the trigger. I just don't know how the industry keeps letting this situation happen but I ain't complaining!!! In retail, you always want to have a clearance rack, but you never want your best product to be on it. Skiing has too much supply on the market right now with not enough demand, it seems.

My guess is it's planned overproduction. Manufacturers are basically making the call that it's better to make 10% extra and sell it at cost than make 10% less and just miss out on those sales.

 

[Philpug]

Everyone wants a bigger market share..it is just not there in a shrinking (or even stable) market. It has to come from somewhere.

 

[Trekchick]

Another thing that has effected the mass marketers in Skis is that the lunatic fringe like us is more aware of the boutique skis and shows some interest in experimenting a bit outside the box.

However, we are a small lunatic fringe, an most of the skiing world that buys will buy the mass marketed ski, but only once every few years, where we may buy several pair a year.