Several weeks ago Jamie received a deluge of press coverage after the launch of Live Out There (LOT). Most of the coverage – here (Fast Company), here (GearJunkie), and here (WWD), for example - was thematically similar, touting LOT’s (i) proposed radically-transparent production, (ii) get-people-off-their-phones-and-off-their-asses-into-the-outdoors mission, and (iii) DTC-powered lower price point. We’ll come back to all of that. There’s more to this story. To Jamie’s story. That is, Jamie, for better or for worse, is a manifestation of the retail apocalypse. His experience encapsulates many of the themes pervasive in retail today.
For 14 years prior to launching LOT, Jamie owned and operated the Out There Adventure Center, an 8000 square-foot brick-and-mortar retail location in downtown Calgary. The business featured apparel and equipment for the outdoor set; it was also an early attempt at the current retail-fad-of-the-moment: experiential retail. The Center had a warehouse in back with a theater space, a travel agent kiosk and hosted events; his business sought to engender community before “community” became a trite buzzword shamelessly used by everyone. Including us.
All of this, however, simply wasn't enough to counteract today’s vicious retail reality. We discussed the notion of community, the #retailapocalypse, retail survival and more with Jamie. What follows are the highlights, edited for length and clarity.
PETITION: What’s interesting…is the experiential aspect of what you were trying to do. That’s the big deal right now and now everyone’s talking about experiential retail….
Jamie: We were in part, perhaps, ahead of our time or maybe that’s a convenient excuse to cover up that we didn’t execute property. I think maybe it’s a combination of both. That said, hosting events and having a travel agent among other things was a powerful way to really challenge the notion of retail. You’re not just here to buy things, you’re here to gain access to experiences.
PETITION: Give us some specifics…that contributed to the downfall of this brick and mortar location.
Jamie: We had big competitors who could negotiate with suppliers deeper discounts on their volume purchases which meant they could go on sale and still maintain margin. So we were constantly under margin pressure because the bigger players had better margin. Two, the transformation of late which ultimately began pounding the nails into our brick and mortar coffin was that our suppliers became competitors. Great companies that I admire and with whom we had worked for years wanted to go direct to consumer.
Here, Jamie is referring to the Arcterx, Northface and Icebreakers of the world.
PETITION: Did they offer experiential retail?
Jamie: Not to the degree that we were striving but they merchandize their stores beautifully. They were doing retail well in that old sense of retail. They looked nice. They were well lit. All the rest.
PETITION: Did you have e-commerce at all?
Jamie: We launched e-commerce seven years ago. So we were in our eighth year. As a small operator we had a hard time scaling that experience.
PETITION: Did you also have the burden of an onerous lease that you could no longer justify from a revenue perspective?
Jamie: Have you suck in behind the scenes to read my lease agreement? Yes. The number one item that made our business untenable was that you had that market pressure. There are lots of levers as entrepreneurs. You know you can manage expense. You can shift promotion. You can change the way you staff the floor. You can even change the way you buy. But every month you run this monstrous nut for a chunk of rent. Its unavoidable and it ultimately rose as a percentage of revenue. And it was untenable for us.
And so Jamie shut the doors on June 9, 2017.
Jamie: I tell you it was heartbreaking. It was definitely devastating financially. Personally.
PETITION: Is there anyone in that space now?
Jamie: Empty. I think they’re going to struggle to fill it. The landlord wants a big national with a good covenant. You’re going to have another big brand go in there and the little guy is gone.
PETITION: So you closed the brick and mortar and you got rid of those partners. You're embracing your brand as your core competency. Now you're going direct to consumer. Talk to us about the decision making process on going DTC.
Jamie: The whole partner-slash-competitor issue escalated and that’s when we had to do a monstrous pivot and really challenge the industry and make that shift from being the disrupted to the disruptor. Do we want to continue being the victim? Do we want to continue being part of the problem here which is markup and middlemen or do we want to shift our business? Do we have the courage to be part of the solution even though doing that is filled with so much unknown? And it's entirely a shift in retail and we came to that conclusion in part by desperation because we had no other choice.
We've always known that outdoor is beyond reach for many many many people. We could see it when things go on sale how quickly our revenue would jump when we put a discount. And not just hungry people looking for deals. It was because a lot of people just couldn't afford it. And couple that with our investigation we began to realize that elevated price was the issue. For instance, a down hooded jacket on the market for $329. When we began to dig in there we found that those jackets are being built for say $80. What? An $80 jacket being sold for $329? What's going on here? And that's when we realized...we are the problem. We’re the middle. We're the retailer in the middle and that jacket gets sold to us for $150. We mark it up by $150 and then sell it for $329.
It's not working. It's failing the customer. Failing people who are sitting on the couch not getting outside doing stuff. That's when we found the courage to say we know gear. We can make our own. We'll go direct to consumer. We'll take that markup out of the antiquated distribution model. And here's the kind of radical transparency that we're challenging industry with. We need to put more money into the materials so that the environment is protected. So that working conditions are improved. We need more money in the manufacturing process. Not negotiating with those manufacturers or the mill to grind them on price. We need to actually put more money into the making of those jackets so that people are paid well. So the air conditioning gets turned on. So the maternity leave is instated. All the things that are reasonable working conditions to improve manufacturing. We need to be more transparent, need to share what's going on. And that was the disruption piece. This may not work. We may go down in a barrel or ball of flames but we're going to go down swinging. This is what needs to be done.
We're proposing to pay more money for manufacturing of our product than our competitors. And in part that is a scale issue. They're just making tens of thousands of jackets and we're making hundreds. So through that alone we're paying more. Plus I'm trying to ensure that we put the best material in our product. The savings that we have on our price point is purely on the distribution side not on the manufacturing side. I got to make stuff equal to or better than the most in the market primarily because I get to use and I want to make sure it works.
PETITION: Who are your models for DTC?
Jamie: Everlane is a company in the states that is DTC and transparent. They're in the fashion industry. But we have marveled at what they were doing and the courage it took to do it and felt that that was something that we should do. There’s a company in the States called Kuju. They make high altitude hunting apparel. Clearly Contacts.
PETITION: What’s your reaction to the fact that Everlane just opened up brick and mortar store in New York City?
Jamie: For me our long-term vision will be to return to where we were 15 years ago: to create a physical space that is an experience of the brand.
PETITION: So, basically you’re going to go that direct to consumer digitally native vertical brand route like others have recently. Everlane is a great example. Away would be another good example. Warby Parker. Get the community. Get the brand recognition. Get the following. Build the brand, And then reengage in the brick and mortar for purposes of scaling further. That is that a fair synopsis of what you're thinking?
Jamie: Yes, yes exactly. I want to do what we couldn’t do originally. I want to do a smarter more efficient store, not in the old school way. We won’t carry inventory in the back. It would be more about the experience, more about a meeting place. Smaller stores. Strategically placed. And not just ‘ol New York’s a great place and need to show up there because it’s good PR.’ Use data and information. Where are our customers? Where does it make sense? It might make sense for us to be in Boulder more than downtown New York. It might make sense for us to be in Chicago or Kingston Ontario.
PETITION: Well it also sound like there’s also an aspirational element here. Our readership may be in conference rooms 15-18 hours a day. Aside from saying its a better product, you're saying 'this is attached to me. If it's good enough for me it's definitely good enough for you.'
Jamie: Yes. It sounds ego-maniacal and I’m always concerned about that. But as a consumer I want to identify with the people of a company. The soul of the company. Not a spokesperson because those can be hired. I will never abandon that personal and intimate connection to what we make, why we make it, and how we make it, and for whom. And I believe that matters.
PETITION: Why haven't you gone the blog/Wirecutter route to review gear and used your mountaineering expertise to drive affiliate revenue?
Jamie. It’s on the list for sure, but we’re a small team scaling up slowly. Between outside workouts and time with family we are slammed 7 days per week right now.
PETITION: Considering your experience as the disrupted, what advice would you have for other entrepreneurs in the consumer products space?
Jamie. Be clear on your unique offering. If you’re not offering different value—you’re dead.
PETITION: Why not crowdfund LOT gear leveraging your own personal story to get pre-orders and drive demand?
Jamie. That’s in the works for an upcoming piece of gear.
PETITION: We've seen a tremendous amount of distress in retail obviously. But even more specific than that is the sporting goods segment of retail. Sports Authority. Eastern Outfitters. Ski Chalet. Bob's Stores. Michigan Sporting Goods. Gander Mountain. There have been a number of these retailers who have gone bankrupt and or liquidated maybe some of them have managed to maintain a little bit of a footprint here and there or maybe they maintain some sort of e-commerce business post-bankruptcy but a number of them have just disappeared. What's your thought on that state of affairs?
Jamie: Well there is a there is a retail revolution afoot and with the revolution comes blood and pain and death and those are some of the victims. My brick and mortar store was one of them. And that's not just the outdoor industry, that's retail as a whole. There's a transformation afoot. But the adventurer in me which beats the same heart as the entrepreneur believe those who can endure this storm will come out stronger and smarter and better and ultimately the customer will benefit. It's long overdue; it needed to happen. It needs to change. There is the digitization of the industry afoot for certain and retail has been slow to catch up. But that time is here and there will be pain. And so be it. That's where the growth comes.
You know to be lazy is to say 'oh well you know Amazon is destroying retail.' There's a lot more going on. A lot of very interesting story lines. And lots of opportunity....