Interview: Hans Falkenburg
After 18 years at the helm of UK outdoor clothing retailer Cotswold Outdoor, Hans Falkenburg is well-placed to comment on the challenges facing the market today.
With fierce competition in the outdoor leisure sector Hans Falkenburg says market conditions have probably never been harder.
“Prices in the Far East are going up, here in the UK the pound is losing value against the dollar which puts margins under pressure, and then consumers are more price-sensitive than ever. Brands and retailers are having to share the pain and, to a degree, absorb the price increases.”
However unless companies keep innovating and investing in their businesses they run the risk of standing still and losing the battle. “Today more than ever retailers and brands need to continue improving their ranges and servicing their customers to the best of their ability. At Cotswold Outdoor we were always incredibly focused on servicing the outdoor consumer and that is why we remained successful.”
Retailers and brands
Falkenburg admits that’s easier said than done in today’s fast moving industry, where there is the blurring of boundaries between retailers doing more and more own label, and brands retailing direct through either their own shops or websites.
He believes that in a competitive retail landscape there is room for both stores and pure online players provided there is always a raison d’être for the latter. He cites the example of online player SportPursuit where he is chairman. “This company provides a solution for brands to clear surplus assortment in a discreet way.”
As for stores he says they not only need to make their environment fit for purpose and exciting but also make their offering compelling, ensuring that customers receive a very personal service which is particularly relevant to the outdoor industry.
“This then needs to be supported by a strong website which makes their offer a true multi-channel experience allowing the shopper to research, browse and shop where and when he or she wants.”
Outdoor as lifestyle
Falkenburg says brands have to determine the best route for each specific market they operate in. That means deciding whether to sell direct to retailers/etailers, through distributors and/or agents, through licence agreements, or via their own direct to consumer channels.
“As they expand their business they need to decide whether they want to stick to the same categories but target new customers in new territories, or whether to widen their assortment targeting both existing and new customers.”
He says the move into lifestyle by many leading outdoor brands, as well as the ‘athleisure’ trend, are examples of this. However he cautions that brands have to be very careful that they don’t stray too far from their core DNA.
He cites the examples of British brands Rab and Mountain Equipment which he says understand this balance. He says both completely understand their technical customer but have also added an offering of lifestyle options.
“You also have Scandinavian brand Fjällräven which has gone against the lightweight trend and provides a completely different technology offering amazingly durable clothing with a sense of lifestyle.”
Falkenburg says in order for brands to stay compelling to their customers they must continue to innovate. “New materials are constantly being brought to market with the clothing and equipment market being now all about lighter weight breathable materials that are fit for purpose and, wherever possible, offer ‘green’ solutions.”
Meanwhile Falkenburg says although the UK remains the most competitive European market for outdoor clothing and equipment, the market is becoming more and more international. As such the M&A scene is also increasingly active.
“We will see stronger brands grow at the expense of weaker brands and there are considerable M&A opportunities for private equity and trade buyers alike. Niche players need to be sufficiently strong with good cashflow to flourish in this competitive marketplace. However in order to increase their market share they may wish to find a financial partner.
“What is crucial for the growth of both retail and wholesale brands is that they focus on the end consumer, completely understanding their motivation and behaviour. Big data has an important role to play and is an area where retailers and brands have a real opportunity to work together if they want to stay ahead of the game.”