Columbia Sportswear Company - Industry Analysis

Company Profile Section 2: Industry Analysis

Haleigh K. Hindes

Louisiana State University Shreveport MADM 760 11 November 2018

Abstract

Columbia Sportswear Company (Columbia) competes in the apparel industry sector and is classified on the Standard Industrial Classification (SIC) code list of 2300; apparel & other finished products of fabrics and similar materials.  The paper’s objective is to conduct and analysis of the industry in which Columbia and its major competitors operate.  Main points of analysis will include a description of the products, customers and trends in the industry as well as the factors that influence the market and its opportunities and threats.  

Company Profile Section 2: Industry Analysis

Columbia Sportswear Company (Columbia) is a global leader in Division D: Manufacturing, Major Group 23: Apparel and Other Finished Products Made from Fabrics and Similar Materials ("SIC Division Structure | Occupational Safety and Health Administration," n.d.).  Columbia’s primary SIC code is 2300 which involves many of the nine Industry Groups that make up Major Group 23.  

Description of Industry

The primary market that Columbia competes in is the manufacturing and sales of sports and outdoor apparel, footwear, accessories and equipment.  Major competitors in this market are companies like The North Face, Arc’Teryx, Nike, Spyder, Obermeyer, Marmot, L.L. Bean, and Patagonia.  These companies develop, manufacture and sell outdoor or performance apparel marketed towards outdoor recreation and sports enthusiasts.  These companies are most widely known for their cold weather gear, although most of these companies have also expanded into the more recent trend of athleisure apparel, clothing designed for workouts or other athletic activities but are also acceptable for every day wear.  Their major products include; apparel for activities such as fishing, skiing, hiking, climbing, and other outdoor sports.  These companies also sell accessories such as hats, gloves, socks, etc., and equipment like luggage, packs, tents, and other sporting equipment like hiking gear, sleeping bags, climbing gear or water bottles.  

        The geographic location of this industry is divided into several regions; however, the largest markets are the United States, North America, Europe, and Asia-Pacific.  Products in the US and Europe are marketed towards the active community of all ages, while in Asia the focus is on attracting the younger population.  All outdoor apparel companies have emphasized a focus on marketing products towards women. (www.fibre2fashion.com, 2013) In 2016, the total global outdoor apparel and gear market was worth $43.6 billion, a 7.1% growth since 2011 ("Deep Dive: Outdoor Gear'A Growing Global Market with Challenges for Brick-and-Mortar Stores," n.d.).  The United States (US) market for outdoor apparel has total sales estimated at $6.5 billion, while Europe’s market sales are $12 billion (Www.fibre2fashion.com, 2013).  The industry’s global market projection is estimated to reach $237.7 billion by 2024 (GmbH, 2017).  

        The top companies in the industry provide similar product lines, where the differences lie mostly in the small details like materials or design.  A consumer that has not already developed a brand preference could switch from brand to brand for a variety of reasons.  Consumers are more often making their purchasing decisions on ethical standpoints, but also the customer experience, in addition to the obvious value of the product.  These elements result in a highly competitive industry.  In order to remain among the top brands, they must constantly develop new strategies and technologies to lock in customers.    

        Sports and outdoor apparel and gear are distributed through multiple channels.  When the industry was developing, top brands simply developed great products, manufactured them and distributed them through whole sale channels using retail partners or their own catalog.  At this point in the industry’s life cycle, there is a delicate mix of distribution channels that brands must learn to balance effectively.  Options for distribution are still through retail partnerships like department stores or specialty sporting goods retailers such as Dicks Sporting Goods or REI, but also through internet retailers or resellers like Amazon and Zappos.  A more recent development in the industry’s marketing strategy is to reach customers via direct-to-consumer (DTC) methods which means companies like Columbia continue to manufacture their products but increase efforts to sell them directly from their own ecommerce website or in their own branded stores.  While the DTC approach has driven a lot of sales for the industry, it is important to maintain the mix of distribution channels in order to reach customers.          

Industry Influences

        Todays culture has taken a massive shift towards outdoor recreation.  Consumers today are health conscious, environmentally conscious and demonstrating an increased interest in nature and the associated apparel and gear.  In the US, consumers spent $184.5 billion on outdoor products in 2017.  American’s spent more on outdoor gear than they spent on home entertainment, movie tickets and video games combined ("Why You Shouldn't Buy New Outdoor Gear," 2017).  It is estimated that half of the US population participates in some form of outdoor recreation.  The industry is growing so rapidly that in the Outdoor Recreation Jobs and Economic Impact Act of 2016 was signed into law by President Obama, which will authorize the Department of Commerce’s Bureau of Economic Analysis to measure the industry’s contribution to the nation’s gross domestic product (GDP) for the first time. (Rassler, 2016)

        Apart from L.L. Bean, all the major competitors in the industry have shifted increased emphasis on developing their DTC marketing strategies.  Unlike the other major competitors, L. L. Bean has always been solely a DTC company never involving other retailers in the distribution of their products.  Most consumers first ‘meet’ a brand in department stores or at a specialty retailer, so while many companies are building more robust DTC channels, they cannot abandon the traditional methods of distribution.  Once customers develop brand loyalty, that is the point at which consumers tend to specifically seek those brands via their ecommerce websites or their branded stores.  

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