Outdoor brand Salewa: “Lockdown initiated important strategic changes”
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Business |Interview
Covid-19 has not only changed the retail landscape. With it, the industry has to also adjust to completely changed parameters. The Italian Oberalp Group has taken the pandemic as an opportunity to set a new strategic course.
The Italian Oberalp Group is a heavyweight in the European outdoor segment. With its six outdoor brands Salewa, Dynafit, Wild Country, Evolv, Pomoca and LaMunt (the launch of the women's mountain sports brand is planned for the winter season 2021/22), the company supplies around 5,600 retailers worldwide and 251 monobrand stores. In 2019, the group achieved a total turnover of around 235 million euros (around 290 million US dollars / 200 British pounds). The group made headlines last spring when, in view of the pandemic, it was one of the first companies in the outdoor industry to openly communicate the measures it would take to adapt to the changed situation. This involved much more than just postponing a few items in a collection for two seasons. FashionUnited spoke with Stefan Rainer, Chief Sales Officer of the Oberalp Group, about the impact of Covid-19, the group’s measures and how they have worked out.
Mr. Rainer, at the beginning of the 2020 pandemic, yours was one of the first brands to openly communicate that you wanted to build up your summer collection for the longer term and would push back articles by a year. Has that worked?
We didn't just postpone a season in response to the pandemic, but used the pandemic as an opportunity to initiate important strategic processes and long-term changes in the company. We now have a 75 percent throughput rate in the collections. Our customers don't want a completely new product every year and, above all, they don't want to feel that their product is only worth half at the end of December. Our retail partners have clearly signalled that this strategy has a positive impact on value retention, and thus our brands have been able to achieve a higher gross profit on average.
What does that mean in regards to building up the collection and the rhythm?
At the same time, we are also revising our seasonal concept: we are gradually changing from the classic 2-season concept to a 4-season rhythm. Smaller collections, with products specially developed for the respective season, fill the valuable shop space much better, bring added value to the customer and the retail partner and also relieve the entire value chain by spreading the workload over time. Overall, we are striving to reduce the total size of the collection.
This also sounds like you want to align the collection more with the needs of your own retail stores?
We have experienced the pandemic as a mover of unforeseeable changes, and we must now adjust our company to this. In the future, we will increasingly expand the D2C business. To this end, we will more than double the number of our own shops in Europe. We will add more than 50 new stores by 2025. Secondly, we want to further expand our own digital sales channels. Our medium-term goal is to generate almost half of our sales through our own channels.
This move is linked to a new mindset: our goal is not to sell as much as possible from the retail stores, but to understand our customers and their needs in depth and to support the work of our retail partners in the best possible way.
Apart from the benefits for retailers, does this change have any more advantages?
For us, this strategic change has the additional important effect that we can focus on real innovations. We can also plan more long-term with our production partners. This change is now in its third season, and the goal is to achieve a split of 80 percent all-season wear and 20 percent real innovation. That is quite sufficient. It also takes strength to bring these innovations to the shelf and to communicate them properly there.
How was the order season FW21/22? What are retailers buying?
Retailers have learned that the bike and trail running segments in summer and ski touring and mountaineering in winter have developed at above-average rates. The market is currently experiencing significant growth in these areas. We are in the fortunate position of being able to take additional market share with our brands. Our distribution strategy is selective, we focus on making sure we position the right products in the right sales channels. After 2020, 2021 will also be a good year, but it is still important to be cautious, because the hard effects of the lockdown will only come at the end of 2021 / beginning of 2022, once the government aid for companies and the short-time work support for employees will expire.
What trends are you seeing in 2021?
Mountain sports and outdoor are clearly in vogue. Being outdoors in nature, the simple life on the mountain, the desire for a healthy and meaningful lifestyle, these are all macro trends that play into the hands of our industry. People want to feel fit and free, and the mountain is the perfect platform for that. The biggest competitor for us is not the direct competitor from the same segment, but online gaming. We see a clear mandate for us as one of the leaders to continue to help inspire the next generations for mountain sports and an active lifestyle.
This article was originally published on FashionUnited.de. Edited and translated by Simone Preuss.