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Christy Sports Responds to Increased Online Activity with Promotional Direct to Consumer Brands


Christy Sports, the largest privately-held specialty retailer of ski and snowboard equipment, apparel, accessories and related custom fitting, mounting, tuning and repair services in the Rocky Mountain region, responds to recent increased online activity involving promotional direct to consumer (DTC) brands within its industry.

With over 45 stores in Colorado and Utah and a supporting online store, Christy Sports has decided that it would be advantageous to share similar changes they have made in their approach to online retail which has been spurred by the realities of the internet retail environment and the strategic reactions of many of their vendors. Christy Sports’ concern is supported by a recent article published by SportsOneSource Media¹ which highlights online and brick-and-mortar retailer Rock/Creek’s announcement of their decision to make dramatic changes in its own online strategy.

For the past 18 months, Christy Sports has dramatically rebalanced its online marketing spend, focusing on full-margin goods and no longer seeking sales that yield no return. Christy has refocused their online efforts to become the ultimate support to their brick-and-mortar operations. Last season marked the launch of the company’s first omnichannel marketing and sales feature, allowing each location to sell items beyond their floors. As long as an item is in corporate stock, the online fulfillment center will seamlessly deliver that item wherever the customer chooses.

New for this season, Buy Online-Pickup in Store (BOPiS) has become a reality for Christy Sports. “Online retailing has always been challenging and never lacks its fast-paced competitive elements, but, as Dawson Wheeler from Rock/Creek so clearly points out in the SportsOneSource Media article, the reality is that most brands have established an online presence and many will opt to go DTC,” stated Gordon Wade, Director of Internet Commerce for Christy Sports. “There are those who have managed to do this in a way that has minimized impact on their retail customers. Most recently however, and notably during this last November’s Black Friday/Cyber Monday, some of our most successful brands revealed a newly introduced, full-blown DTC promotional push in direct competition with their retailers. Supported by manufacturer-level margins, these brands justified an increased budget to engage in every digital marketing solution available and effectively take sales from their own retailers.”

Thomas O’Winter, Vice President of Merchandise for Christy Sports explains, “As so many brands have been acquired by larger multi-brand groups, pressures to grow increase. We understand that, of course, however we also understand that we must do what is best for our company’s long-term growth and sustainability as a specialty retailer. We are committed to seek growth opportunities with the companies that demonstrate allegiance to the long-term health of specialty retailers, and we will be more focused on only buying select pieces we know will sell from the promotional DTC brands. We have a 57-year history of providing our customers with great advice and selling them the best products to best suit their needs. I don’t believe we will have an issue finding brands eager to suit our needs.”

As Rock/Creek’s Dawson pointed out, they pulled their Amazon store because it no longer made bottom-line sense. “For every snowboard we sell, we pay Amazon 15 percent. This means we would take a 10 to 20 percent hit to our margin to sell through Amazon. With many brands now using tiered markdown schedules, at the point they move to 20 percent, we would need to pull those goods from Amazon or lose money on each sale,” further explained O’Winter.

Wade added, “It is our opinion that specialty brands are making a serious branding mistake selling on Amazon. Even though a retailer is behind the listing, if I were to ask a customer who purchased a snowboard through Amazon where they bought it, their response would likely be ‘I bought it on Amazon,’ not XYZ store through Amazon. This ultimately dilutes the brand equity for both the snowboard company and the retailer. The moment a specialty brand submits to sell products on Amazon, they slide closer to becoming a commodity product. Historically, most specialty vendors have been diligent with their distribution strategies to prevent an over-saturation of their brand within certain geographic regions. It is our opinion that a brand’s decision to sell DTC and manipulate minimum advertised price (MAP) restrictions to their sole advantage or sell through the likes of Amazon, will effectively nullify their distribution agreements.”

Christy Sports agrees with Rock/Creek’s Dawson that the real winners here are Amazon and Google, and many of the vendors originally put on the map by specialty retailers are heading down a path that is unsustainable and a potential detriment to their brand and the very industries in which they operate.

Rock/Creek Shifts Focus to Brick-and-Mortar Expansion

SportsOneSource Media Posted: 12/4/2015 Rock/Creek announced that it will part ways with its e-commerce guru after 12 years, punctuating a steady and intentional decline in the retailer’s online marketing budget prompted in large part by a surge in online discounting by some outdoor brands.

The news is significant because Rock/Creek is considered among the savviest e-commerce marketers in the independent outdoor specialty channel and because Marketing Director Mark McKnight was among a trio of long-time Rock/Creek employees slated to buy the retailer over the next decade.

But on Dec. 1, Rock/Creek and McKnight jointly announced that McKnight will leave the company at year’s end to join RootsRated, a content marketing venture he co-founded in 2012 and where he will continue to play a role retooling Rock/Creek’s e-commerce strategy as it puts more emphasis on its brick-and-mortar expansion.

Rock/Creek principal Dawson Wheeler, 56, and partner Marvin Webb, 57, plan to sell the company to long-time employees Chad Wykle and Jonathan Scott remains intact.

A timely funding round

McKnight’s decision to move on was triggered in early November when RootsRated closed on a $2.5 million Series A funding round that gives it the wherewithal to hire him full-time. Given that Rock/Creek has dramatically reduced its online presence in the last year as part of a shift toward brick-and-mortar expansion, the funding round was timely for both McKnight and Rock/Creek.

“With Mark’s support, we will use RootsRated as an agency and we will be able to reduce costs internally,” explained Wheeler, who sits on RootsRated board of directors. “We will get better strategy and better content quicker and at lower cost to us.”

Rock/Creek’s online sales will come in at about 20 percent of total sales this year, down from 45 percent two years ago, when the company shut down its store on Amazon after determining it was not making enough profits. After margins at its other online channels continued to deteriorate in 2014, it slashed its online marketing spending by about 75 percent.

“In the last 36 months, and particularly the last 18 months, we’ve seen a promotional cadence from some manufacturers and vendors that has gone past encroaching on our business to really taking our business away,” Dawson said. “To compete at that promotional level is not possible for Rock/Creek and – honestly – I don’t think it’s viable for anyone long-term. We don’t want to be in the promotional space. We don’t want to be in the transactional business. We want to be in the building-customer-relationships business with a full-price omni-channel model.”

A shift toward brick-and-mortar expansion

This year, Rock/Creek upgraded its e-commerce site to optimize it for smartphones, which now drive about 40 percent of traffic on shopping search engines. Going forward it will shift more of its online marketing dollars to RootsRated.

“We will continue to spend money to drive traffic to the web, but the majority of the focus will be on supporting markets within 100 to 200 miles of our stores,” said Dawson. ”From a storefront point of view, we will manage RockCreek.com like any other storefront, which is to say it has to pay for itself and be sustainable.”

Rock/Creek plans to open an 8,000-square-foot store in Nashville next year that will mark its seventh brick-and-mortar location and its first store outside the Chattanooga market. It opened is sixth store this fall in Cleveland, TN, 34 miles northeast of Chattanooga.

McKnight co-founded RootsRated with its current CEO Flynn Glover and encouragement from Wheeler and other retail members of the Grassroots Outdoor Association eager to reach people online.

Initially, RootsRated focused on using content created by local retailers on the best local outdoor destinations and adventures in their markets to enhance their ranking in local search engines. Today it provides sponsored content written by professional writers and subscription-based content licensing to major brand partners in the outdoor, travel, and healthcare industries, including Marmot, Merrell, Outdoor Research, Utah Office of Tourism, BlueCross BlueShield of Alabama.

Wheeler is hopeful outdoor brands that have adopted a more promotional online model will see the error of their ways and move back toward a full-price model. But he’s not willing to bet his business on it.

“There are full-price direct-to-consumer vendors out there like The North Face, Patagonia and Marmot,” Dawson said. “That’s not going to go away. What I’m talking about is vendors that have developed a promotional model. We think those vendors are going to look up in two years and begin questioning that model. “The people winning the game are Amazon, Google and the contractors they are hiring to run their platforms. Their acquisition costs are huge and their conversion rates are way under 1 percent and they are undermining their full-price dealers.”

–Charlie Lunan