TRAVEL GOODS SUPPLIERS JOIN FORCES IN THE AGE OF CONSOLIDATION

Mergers, acquisitions, partnerships and industry consolidation are a fascinating and unnerving part of today’s global economy. In the last decade, we in the travel goods industry have tracked the number of domestic U.S. airlines as they went from 18 carriers to 10. Four of the remaining airlines (American, United, Delta and Southwest) now make up 80% of domestic capacity. The remaining six regional (Alaska, JetBlue, Hawaiian) and budget carriers (Spirit, Frontier, Allegiant) each command less than 5% of the market. While the smaller players may reshuffle, most experts believe that no additional mergers are possible for the big four carriers without violating anti-trust regulations. This, to everyone’s best guess, is the final, mature form of the airline industry, post-consolidation – and we all watched it take shape.

But the airline industry is not the travel goods industry, even if we feel like close cousins. Looking around the travel goods industry, it’s clear that some supplier consolidation is occurring (and has been going on for a while), side-by-side with more unusual and creative partnership. This places us squarely in line with the rest of the global economy, which has seen a surge in mergers and acquisitions (M&A). According to a Forbes article, “The 4 Biggest Trends in Mergers and Acquisitions For 2017,” 2015 was the largest year on record for M&A, with 2016 following as the third largest year on record. The record for most mergers in a month was set in October of 2016.

While it’s widely believed that all mature industries go through a consolidation phase (as with the airline industry), what is driving this current cross-industry international trend? The largest factor is also the simplest: because they can. Companies that survived the recession have been conservatively stockpiling cash. But now that the economy feels more stable and interest rates remain low, executives are looking to put that money into circulation. How much money? Cash balances for the S&P 500 (excluding financial companies) were widely estimated to be at $1.5 trillion at the beginning of 2017. In an informative survey of 1,000 corporate executives by Deloitte, “M&A Trends Report 2016, Year-End Edition,” respondents detail their motivation, strategy and plans for 2017. Executives at 65% of the companies surveyed said their cash reserves have increased, up from 58% at the end of the second quarter of 2016. With those increasing war chests, 75% forecast more deal activity, and 64% believe deal size will also be larger. What is driving these deals? Predictably, expanding and diversifying products and services is the number one reason for M&A activity, at 22%. Right behind it, 19% report technology acquisition as their primary driver, up from 7% in 2015. Also at 19%, executives hope to expand their customer base in a specific, strategically important geographic location. Talent acquisition comes in at 8%, a number that has doubled from the previous year.

While international business trends are fascinating to study, they don’t necessarily apply to our industry, or predict our future. We’re a mature industry with a twist, where new technology, traveler and airline requirements have the power to shake up the status quo. And while our industry has seen its share of traditional M&A activity, travel goods companies seem unusually partnership-oriented. Whether it’s expansion and diversification or technology and talent acquisition, our industry is full of creative collaborations that are successfully achieving M&A goals – without the merger.

mutually assured success

While everyone in the travel goods industry knows Magi Raible, not everyone knows that LifeGear Design was originally conceived of as a quiet, low-profile, private-label design and sourcing company. After founding LifeGear in the summer of 2013, Raible stuck to her private-label plan for a matter of weeks. Then a successful sales pitch to TravelSmith became a gear bag featured on the cover of the 2014 TravelSmith Gear Guide Summer Insert, which in turn inspired a collection, which only six months later was launched at The 2014 International Travel Goods Show.

Raible credits part of her success with seeing unmet market demand at a middle price point for lightweight, recycled-fabric bags. She was one of the first to identify and design specifically for personal-item requirements and under-the-seat space, so as budget airlines began charging for a carry-on, travelers could beat the system. Raible describes that first Show in 2014, when “people were thanking me for developing the products their customers wanted. It was an incredible feeling, getting hugged and getting orders at the same time.” Perhaps as important as finding a niche in the marketplace, Raible’s career at The North Face and Kiva gave her 30 years of innovation inspiration to draw on, working with materials, fabrics and engineering techniques found in the outdoor but not in the travel industry. Talking to Raible does give the sense that her restless curiosity could find inspiration from any source: “One day I got into a conversation with the phone-repair guy about his tool bag. I took pictures, I can see a personal item that we can develop out of that.”

Raible has continued to fuel the success of LifeGear with unconventional inspiration from development partnerships. Private label projects in the last year include an L.A.-stylish luggage collection produced in Italy, an anti-theft tote bag, and a fashionable millennial-focused collection of casual acid-wash denim, canvas and leather bags. LifeGear has also been a silent force behind some of the most technologically creative products in recent years. LifeGear was responsible for the first production runs for industry newbie and 2015 Buzz Award winner ShelfPack by McKaba Luggage. Lifegear also introduced a fledgling Aero-Tray (now aSTAND) to factories and helped them with distribution. As Aero-Tray became more self-sufficient, LifeGear continues to support them with some operational duties. Last year LifeGear signed an agreement to distribute high-technology luggage brand Numinous London™. While development projects provide inspiration and a diversified income stream, as these partnerships evolve LifeGear receives the very benefits sought by the executives in the Deloitte survey: diversification, new technology, and access to new markets and talent. “When Numinous was setting up their distribution I went to China with them, so I could work on building my own distribution network to bring LiteGear product to China’s emerging middle class,” Raible explains. “In addition, Numinous now keeps me in the loop with the most advanced technology on the market.” Finding the benefits of M&As in relationships that are closer to best-friendship than marriage is possible because Raible is able to look at these relationships more creatively. As Raible reports: “Return on my investment is good, but it’s not merely financial, it’s in the form of knowledge, technical know-how, shared talent and connections. The knowledge flow is not one-way, these are mutually beneficial partnerships.”

a winning partnership plan

LCI Brands got its start in the travel goods industry in 1971, with the production of a wheeled luggage trolley. Since those early years, LCI Brands has developed a full accessory line, changed ownership, introduced the Lewis N. Clark brand name, began offering a private label and product development service, and started distributing partner accessory brands. Throughout its evolution, LCI Brands has stayed focused on becoming a complete supplier of travel goods accessories.

In order to achieve their healthy rate of growth, LCI Brands could have chosen to pursue an M&A model rather than a distribution model. (In fact, there is some confusion in the marketplace about which brands belong to LCI and which ones are partners. Only LCI’s two house brands, Lewis N. Clark and UrbanGear, are owned by LCI, while Cabeau, GoGirl, Humangear (GoTube), MosRepel, No-Jet-Lag, Pomchies, and Wrinkle Wiz are distributed to various markets by LCI Brands.) Why has LCI not purchased any of its smaller partners? The answer lies somewhere between a respect for the integrity of the other business, and a shrewd understanding of the psychology of the industry. Travel goods retailers accurately see themselves as travel connoisseurs, curating a collection for their customers. A catalogue full of nothing but Lewis N. Clark-owned product is an anathema to that self-understanding. As Franz Wieshuber, SVP sales and marketing explains, “this is real ‘expert’ business. GoGirl is a great example. If we made that product, it wouldn’t be as cool.”

For a travel goods retailer, the only thing cooler than discovering an unusual niche product is a private label accessory, produced to match the unique value proposition of their specific customer base. And this is where sometimes, with luck, the magic happens. Wieshuber says, “while we do a good business in basic promotional products, like a private-label 3-dial combination lock, there have been times when our retailers’ market-savvy forced us into a different design and development paradigm, and ended up proving concept for us and opening up a whole new area of product development.”

And as with Raible’s experience at LifeGear, LCI Brands as a distributor has received the same technology know-how as a company which pursues an M&A strategy for technology acquisition. Wieshuber observes, “they’re getting the distribution, but we’re getting experience with both technology and the frequent updates to go with technology. I guess we could hire a team to develop that knowledge in-house, but this works so much better for everyone.” Over the course of nearly a half-century of partnerships, LCI Brands has developed a reputation for fairness and integrity that often results in getting the first-pick of interesting new travel accessories. “A lot of people come to us with ideas,” observes Wieshuber. “We could be bigger but we want to choose our partners wisely. We’re in this for the long haul.”

aquiring diversity

Movers and Shakers

While the travel good industry is full of interesting collaborations, it also has experienced its share of recent M&A activity. In the last year, French luxury group LVMH (Louis Vuitton) purchased an 80% stake in Rimowa. Advantus acquired Mercury Luggage in August of last year, attending The International Travel Goods Show for the first time with their new brand in 2017. In May of last year, private equity firm MidOcean Partners picked up Travelpro, including previous Travelpro acquisition Atlantic Luggage. At the beginning of this year, Voltage Valet was purchased by the owner of the Bergman’s Luggage chain of specialty stores, Hardial Gill. These isolated acquisitions represent the recognition of a unique opportunity, rather than a dedicated acquisition strategy. But that also exists in our industry, as practiced by Samsonite, the world’s largest travel luggage company – the largest, and still growing.

Samsonite Takes All?

Samsonite was founded in 1910, and has grown to encompass the Samsonite®, Tumi®, American Tourister®, Hartmann®, High Sierra®, Gregory®, Speck®, and Lipault® brands. American Tourister was acquired in 1993, with a break in acquisitions until 2012, when Samsonite purchased High Sierra and Hartmann. In 2014 Samsonite added Lipault and Speck, and in 2016 Samsonite rounded out its collection of brands with premium luggage leader Tumi.

Samsonite’s latest and most creative acquisition is the largest online luggage retailer, eBags. “As the number one online luggage and bag specialist in the U.S., eBags is an excellent complement to Samsonite’s existing business,” said Ramesh Tainwala, Chief Executive Officer of Samsonite. “The acquisition provides us with a strong platform to significantly expand our direct-to-consumer online presence, not just in North America but around the world. With eBags’ immediate resources and digital expertise, we are able to expand our online retail capabilities in a meaningful way, driving stronger sales growth across all the brands in Samsonite’s portfolio. E-commerce is fast becoming a vital part of our business, and will continue to be central in our strategy moving forward.”

With their most recent acquisitions of eBags and Tumi, Samsonite checked off both the primary reasons for A&M cited in the Deloitte report. They expanded and diversified products and services, and acquired key technology. “Our recent acquisitions of Tumi and e-bags has furthered our capabilities in both e-commerce, direct to consumer and the breadth of our offering to include a more premium price point,” says Tainwala. “Our acquisition strategy has always been led with the success of our global reputation in mind. We choose firms with a similar outlook that complement all our portfolio of brands without ever compromising on quality. With these new additions, we are now very excited by what the future holds.”

While Samsonite’s accelerating purchasing strategy has provoked discussion, some industry insiders are saying that such strategies are not new to the travel goods industry, and are of themselves not necessarily bad for brands or retailers. If handled correctly, an aggressive M&A can improve logistics and increase profits.

putting consolidation in perspective

Ten years ago, VFC (Vanity Fair) bought Eagle Creek. It was the last in a head-spinning series of acquisitions of key outdoor and travel brands over the previous five years, including JanSport, Eastpak, The North Face, and Kipling.

“We forget that one of the most significant events of the past, VF’s acquisition of Eagle Creek, from a retailer perspective was totally seamless,” says Guy Paquette, director of corporate operations, Bagot Leather Goods, Luggage Plus. “In fact, VF made a substantive improvement for us, by allowing me to pay in Canadian dollars.”

Industry observers are nearly unanimous in concluding that the VF long-term strategy has yielded positive benefits to brands and retailers. VF’s divisions run on their own, and brands are allowed a large degree of autonomy. VF backroom support has yielded efficiencies that are estimated to have reduced operating expenses by as much as 10%, increasing profits that are split between VF and retailer margins.

But at the time the acquisitions were taking place, VF M&A were the stuff of legends.

Tim McGuire, director of sales, North America for Eagle Creek, does not dispute this industry assessment. McGuire had a unique front-row view of the path to VF acquisition followed by Eastpak, JanSport, and Northface.

“While I was at Eastpak, we were sold to Coleman,” McGuire explains. “’Chainsaw Al’ Dunlap, author of Mean Business, was then the CEO of Sunbeam. When Sunbeam, in turn, purchased Coleman, I jumped on a flight to meet with Dunlap to see if I could save the jobs of the people at Eastpak, or if I needed to tell everyone to polish their resumé, pronto.” Tucked in McGuire’s briefcase was a copy of Mean Business hastily highlighted by his wife, who admonished him, “don’t say any of these things or he’ll fire you immediately.” Seeing Dunlap’s obvious disinterest in Eastpak, McGuire made a career move to JanSport (which had been recently purchased by VF), and from there led the acquisition team that rescued Eastpak from “The Chainsaw.”

McGuire summarizes VF’s culture, saying “they only pursue conservative brands with slow steady growth, and don’t interfere with their core competency. Eagle Creek today is very autonomous, we can compete with JanSport and The North Face if we want to.” McGuire believes “the beauty of VF lies in their back-office functions and supply chain. VF Asia has enabled us to qualify for green manufacturing certifications.”

His overall assessment? “Acquisition can be extremely positive, it certainly was for Eagle Creek. VF has supported us while allowing us to stay true to our DNA, to tell our story.”

This story originally appeared in the Fall 2017 issue of Travel Goods Showcase

Supply Chain Management in the Age of Unreal Experience

The Internet has conditioned consumers to expect huge selection and instant gratification, while obsessive online research into available options has created major purchasing and inventory dilemmas for travel goods retailers. Retailers have to carry a larger range of products (more dollars tied up in inventory), with lower average turns, to maintain the same sales volume. Marilyn Janisch of Going in Style, in Palo Alto, CA, shares what seems to be a universal experience, that “retail has become more of a challenge because of online shopping and consumer expectations.” There’s a lot more pressure on everyone’s forecasting ability, as well as the perception of less margin to go around – less margin and more risk – which makes SKU control an increasingly valuable skill for retailers and manufacturers alike.

Market Intelligence: Winning Through Sharing

When manufacturers and retailers share market intelligence, forecasting and purchasing get less risky and everyone wins. Brian Thompson, general manager of ExOfficio, believes that for a retailer, “new product introductions don’t need to be a shot in the dark,” and the key component of researching new product and new department options for a store is asking manufacturers for intel, based on what they’ve seen succeed. Robert Williams, president at BOCONI Bags & Leather, puts in a plug for experimenting with revolutionary product. “We understand firsthand how important it is to manage inventory and to turn stock, however if retailers do not try new products with fresh ideas they will miss new incremental business opportunities. Case in point: BOCONI was the first trade-up brand to introduce RFID protection in premium wallets and bags…now, we have introduced Kylie with RFID, so that women can have the same RFID protection without losing style or quality. Simply put, if you don’t try it…you will lose it.”

Market intelligence is not just finding a new best-seller, it’s understanding what it takes to expand a department, or create a new one. Is that a choice that is right for your store? Thompson gives an example of the market intelligence a manufacturer can share with a retailer. “If you are going to do apparel you have to be serious about it. You need to stock apparel for both genders, train employees to cross sell to the other gender (generally male employees need the most help learning to sell to women), fitting rooms, mannequins, and merchandising that tells a story. Canvas your customer base. Are they looking to you for travel clothing? What’s your competition in your local market, and is that a battle you want to fight? Can you build a partnership with another specialty retailer and cross promote, do some events together?”

Everyone agrees that today’s technology-driven, rapidly changing retail climate is a challenge, even for the most seasoned retailer. Thompson’s key message to retailers: “don’t think you have to go it alone. This is the time to challenge your suppliers and ask ‘what are you going to do help me sell this product?’ You need to know, are you engaging with a partner? Or engaging with someone who will just sell you stuff?”

Cooperative Forecasting

Specialty items have more sales variability than core items, and the Internet is only making it worse. One obsessed consumer’s hunt for an unusual size, color, or model online can create the artificial perception of a trend, as a sizeable percentage of those retailers contacted go back to their manufacturer and ask about availability. Lisa Heth Rappley, of Groskopf’s Luggage & Gifts, in Grand Rapids, MI gives the retailer perspective: “the Internet and Amazon are our big competitors, and we’re always battling them.” But the internet is not merely a different sales funnel for brands, it also distorts the appearance of demand, introducing pure noise into manufacturers’ forecasts. If only the manufacturer could see real-time sales data, they could see that all those inquiries only resulted in one sale, and they could avoid the very human tendency to forecast based on chatter.

When manufacturers are able to make the right product at the right time, it’s a win for both suppliers and retailers. “If we only had that ‘crystal ball,’ life would be good” says Marcy Schackne, vice president of marketing at 24-7 International. “Some manufacturers are really good at closely monitoring warehouse programs, and then you see other boutique brands selling off-price to liquidate seasonal and in-and-out colorways to make room for the next trending color.” While no one can see the future, knowing what is happening in the present is almost as good. Seeing what is turning and what is sitting at retail is a tremendous advantage to a manufacturer trying to forecast demand and plan production. There is a wide range of access to real-time retail sales data found in the travel goods industry. Many manufacturers want to be able to see actual retail sales as they happen, and they despair of a system where the best they can do is go to The International Travel Goods Show, analyze every word and reaction of their retailers to new product – like a junior high school girl with a crush – and then go home and wait for the phone to ring, i.e., the pre-book orders to come in. And then the pre-books ship, and they wait again. What’s selling? When is it selling? Who knows? They have to order from their factories without knowing what is really happening at the consumer level.

The predictable outcome of all this uncertainty is that manufacturers, spooked by a lack insight into what is selling now and in the future, have pulled back on stocking inventory. Heth Rappley expressed a common observation; “every year more and more companies are not keeping inventory in their warehouse like they used to. We definitely have had to adjust to that, but it’s a big change.”

Looking for inspiration outside the industry, mega-retailer Walmart has embraced complete sales and inventory openness with its manufacturers by adopting a Vendor Managed Inventory (VMI) system: real-time sales reports from all stores, plus warehouse inventory levels are all fed into a centralized database. The data is pushed out to suppliers who are responsible for analyzing it and deciding when to ship more product. Most supply chain experts believe that just-in-time inventory IS possible – but only with the use of VMI systems. So why isn’t this holy grail of supply chain management more prevalent in the travel goods industry? James Krueger, CEO of EPIC Travelgear, cautions that “retailer and manufacturer integration demands really good systems and follow up.” A true VMI system requires a substantial up-front investment, both in technology and in trust. Of the two, coming to a shared agenda is a bigger upfront challenge than installing and developing hardware and software.

Some travel goods manufacturers have achieved a nearly open system, albeit with only a handful of their top customers. Krueger is an evangelist for trust and radical transparency. “We need to get really naked and say O.K., everyone needs to make some margins. With our very best clients – everything is open. They know what our costs are for the goods. We forecast together. We don’t have a true Vendor Managed Inventory (VMI) system but we get close to it: we have several big clients where we receive weekly inventory reports. And everyone shares the risk.”

Other suppliers have evolved in the opposite direction, pushing risk onto their partners, and taking most of the profit. An example is a brand that hedges its bets by opening its own factory luggage boutiques, assuming the forecasting and inventory risk for those factory stores. Industry response seems to depend on how transparent the brand is about its intentions, and whether travel goods retailers are competing on a level playing field with the factory stores. At the extreme end, one industry manufacturer reportedly requires retailers to lock in orders 14 months in advance. Because this manufacturer no longer warehouses inventory for travel goods retailers, fill-in orders take eight weeks, putting all the risk associated with that product on the retailer. In response, some retailers have apparently dropped the brand they helped build, resulting in the gradual transition of the brand to a factory-store sales model. Krueger thinks this is the wrong approach. “We have the perfect word for this in Sweden, ängslan. It’s a combination of fear, anxiety, pain. When we structure our business to push the ängslan onto our retailer, then we haven’t defeated it. It still exists.”

Retailer Forecasting: The Rise of the Geek

The good news is that the data needed by manufacturers to improve forecasting efficiency is already being gathered, crunched, graphed, and sorted by an army of travel goods retailers. Schackne has seen the transformation first-hand. “Since I’ve started, the industry has drastically changed. Whole networks of mom and pop stores are gone, and in the last 10 years even some big, influential retailers have gone out of business. When I first started with Travelpro 17 years ago, we had a rebate program and that’s when I realized stores still handwrote receipts. But they all had great customer service skills.”

The retailers that have thrived in the last two decades have great customer service skills, just like the stores who closed. But they have also developed extraordinary inventory tracking and sales reporting tools, which allow them to carefully manage the risk, without going under.

Case Study: Guy Paquette, Director of Corporate Operations, Bagot, Leather Goods, Luggage Plus Kingston, ON

Perhaps the quintessential retailer/geek, Guy Paquette is the tech-savvy director of corporate operations at Bagot Leather Goods, Luggage Plus in Kingston, ON, who says the inventory management system at Bagot has been automated for approximately “forever.” Paquette describes their point of sale (POS) system as being very simple to use: “it reports top unit volume, and top dollar volume. It helps us manage what’s hot and what’s not. Our POS system answers those questions for us on a daily, weekly and monthly basis.”

Inventory management and SKU control are critical to remaining profitable in an uncertain retail market. Paquette shares that “last year, we had the worst year in our 20-year history.” Keeping the doors open in a challenging business climate is only possible by keeping tight control of ordering and inventory.

“Tradeshows are the time to see new products launch, take advantage of incentive order programs and book preseason orders. When we write preseason orders at a show, we’re helping make the inventory plan for our vendor. And in most cases preseason orders just put you in the cue to receive new merchandise. I had two reps in the store yesterday, and wrote fill-in orders for both. That’s typical, we do more immediate inventory orders than pre-book orders” explains Paquette. But online technology can hurt as well as help. “It’s an unacknowledged fact that we are the showroom for some brands. Customers look in our store to see the product in person, and then buy online. It’s the direct result of a brand’s decision to sell online to consumers, and it doesn’t feel like a partnership.”

Case Study: AAA Allied Group, Cincinnati, OH

Sue Lanter, AAA auto travel product coordinator, Cincinnati, OH, describes her businesses’ highly organized buying system. “AAA Allied Group consists of 45 offices that each have a travel store. They are all unique in size, configuration, etc. We even have some that are located in car repair facilities. Our offices are located in parts of seven states – Connecticut, West Virginia, Virginia, Kentucky, Ohio, Indiana, and Kansas – so we have very diverse regions. We do not have a central warehouse, so each office is responsible for placing their own orders. We have a list of approved items that they may order from and we customize the order forms from our vendors so that the offices only can order the items that we have approved for sale. We group our stores into A, B, and C categories based on sales and store size. We also have broken our items into ordering classifications so that the stores know the core items that they need to be stocking, as well as some others that give them options based on their location, demographics, etc. We have three classifications – Required, Recommended, and Optional – and the items vary depending on whether the store is an A, B, or C. Required items are our best sellers or they are items that are key to our business lines. They would be considered core products. Recommended items are good sellers, but not the top sellers; they can be Required in an A store, but based on size maybe not in a B or C. We tell the offices that once they have the Required items for their office in stock, to look at the Recommended items if they have space to add them. Optional items are newer, unproven items and should only be stocked if the offices are stocked on other things and have room. Often Optional items are seasonal colors or items, or specialty items.

“This has not been an easy system to manage. It is hard to measure turns because some offices will pick up new items right away and others may not pick them up for a couple of months, if at all. We have annually reviewed the entire list to determine items that would continue to be sold as well as items that will no longer be ordered and will be phased out. We look at margin, quantity sold, how long we have been carrying the item, and how many offices have sold the item in making our determination. It isn’t the most efficient process in terms of timeliness, but it has worked for us.”

Case Study: Lisa Heth Rappley, Manager, Groskopf’s Luggage & Gifts, Grand Rapids, MI

Lisa Heth Rappley is a third-generation manager at family-owned Groskopf’s Luggage & Gifts, in Grand Rapids, MI. “We have an overall budget, right now I’m working off a specific budget for the holiday catalogue, and we reserve a certain percentage for miscellaneous and special orders. We track every single one of our SKUs by company and we do regular reporting on each SKU, in order to make sure we’re not ordering too heavily. If we didn’t regularly track our SKUs we’d risk over ordering, and then we wouldn’t be able to provide variety. We run and review our reports before we go to shows, and set a budget for our core items, leaving a chunk of cash as wiggle-room for new stuff. It’s fun to take gambles with new merchandise! It’s always trial and error for new items, but then we set a budget.

The reality is that we have to project our orders out and turn them in by a certain date or they just won’t ship. Besides the International Travel Goods Show, the NLDA Summer show at Navy Pier is a big buying show for us. It happens at the end of June, and we just sent or orders in [in mid-July]. Getting orders in early assures we get product, versus someone who puts in a holiday order in November.

Case Study: Marilyn Janisch, Owner, Going in Style, Palo Alto, CA

Despite being the owner of Going in Style, a Palo Alto, CA, store with a highly regarded clothing department, Marilyn Janisch still finds clothing preseason orders “kind of painful. It’s hard to accurately predict what customers will want next season, or what the demand will be.”

Janisch shares that “one thing I do to increase our sales and to enhance our customer service is special-order items we do not stock, or just items we happen to be out of. If a customer is looking for a specific style, color, or size of an item we do not have, I offer to order it and either have it shipped to the customer, or preferably to have them come in to pick up in the store. There are several vendors who are very good to work with and turn these special orders around quickly — they are Baggallini, ExOfficio and Royal Robbins. Some vendors are not that easy to work with — if I want to special order just one item for a customer, I have to place a minimum order. Otherwise, I get charged an ‘under-minimum’ fee, and pay excessive shipping fees – which I have done just to satisfy the customer. It would be nice if more vendors (especially luggage vendors) would sympathize with small retailers and the challenging retail climate we are in and offer reasonable shipping fees for special orders and quick turnarounds.”

Beyond SKU Control: Competing in the Age of Physical Experience, and Online sales

How does a brick-and-mortar retailer compete against online sales? Retailers can also provide a fun, informative shopping experience and a personal relationship that is positive but not intrusive. Technology-driven change can also work for a brick-and-mortar retailer. Vancouver is swept up in Pokémon fever, and Bagot Leather Goods, Luggage Plus is taking full advantage. “We have battery backup packs for cell phones, which have become a rare and precious commodity among battery-draining PokémonGo players. We created a Pokémon poster for our window advertising battery backups, and activated a Pokémon lure in the store.” Local television station CKWS featured a recent on-air interview with Paquette about the craze, on location in Bagot Leather Goods. While talking to Travel Goods Showcase, Paquette looked out the window and reported: “tourists are taking selfies of themselves in front of our PokémonGo poster!”

Multiple manufacturers also made the case for embracing repairs and warranties. Krueger states “retailers need to touch repairs, because of how it builds good will. A friend of mine told me ‘anything good you do, no matter how nice it is, you’re doing it for yourself.’” In retail, this is never more the case than when a store is handling consumer warranties and repairs. Again looking outside of travel goods, the car industry is famous (and notorious) for experimenting with every possible path to a sale. There is a reason car dealerships have service departments. That way they can guarantee that their customer is standing on their lot at the very moment when they find out it’s finally time to get a new car. Schackne provides this important caveat: “from the retailer’s perspective, partnering with a seasoned manufacturer who honors warranty and repair service is critical. Otherwise, those issues become the retailers’ headaches and jeopardize customer loyalty.”

A brick-and-mortar retailer can also combat internet sales by providing a unique product that’s not available online. Some manufacturers who allow retailers to order a custom color or spec, in sufficient quantity (typically with some type of one-season exclusivity agreement). Krueger cautions that “if you order a custom product, you do need to respect the fact consumers now need to see and research a product online before buying in person, and they may even get anxious if they aren’t able to do that.” Any retailer-specific product should be represented on the retailer’s website, and if possible also on the brand website, with a link back to the retailer.

The paradox of today’s retail age is that even as consumers have gone digital for business, entertainment and relationships, they still hunger for physical, authentic, unplugged experiences. Besides the strong analytic skills and the customer service chops of travel goods industry retailers, the travel goods industry has a significant advantage over most other retail sectors. Consumers, especially young consumers, are focused on collecting experiences rather than things. Thompson defines the winning paradox of the travel goods industry: “while travel is an experience, travel requires new investment. Retailers who can help their customers have an experience rather than focusing on ‘how do I sell you stuff’ are the retailers who will thrive.”

This story originally appeared in the Fall 2016 issue of Travel Goods Showcase

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