From the source: Paul Karis, The North Face
Bio: Paul Karis is general manager of brands at True Alliance where he launched The North Face 11 years ago. Karis has worked in the surf and outdoor industry for more than 20 years where he has done everything from sewing wetsuits to selling shoes around country Victoria.
Company Profile: Outdoor retailer The North Face was first launched in 1966 by two hiking enthusiasts who opened a small mountaineering store in San Francisco. The retailer now has multiple flagships around the world and celebrated its 50th anniversary last year.
IRW: North Face turned 50 last year, so it was a big year for you guys. Tell me what that was like for the business.
PK: “I certainly found it somewhat introspective. We had an amazing three days of celebrating exploration with photos from all our expeditions and athletes and some old and new gear from over the years. We had guest speakers, films and live music and it was an amazing cross-section of the outdoor industry. For me, who has a passion for the outdoors, it was a wonderful time to mix with consumers, wholesalers, media, athletes and business owners.
It got me thinking about what we’ve achieved, not only in 50 years, but in the last 10 years since I’ve been in this role. It was very rewarding to sit back and enjoy. It’s been an amazing ride and there’s been some cool things we’ve done – we’ve supported some great adventures and expeditions and we’ve built a compelling business.”
PK: “When I look back at that period, it was all about performance. Your products needed to be cutting-edge and be able to do something in the outdoors. Something the outdoor industry has become reliant on is selling products with features. If you can tell a consumer three things about a particular product that have meaning to them and is going to change their life in some positive way, you’re going to make the sale.
“Now it’s reached the point where it’s performance function and aesthetics and to a higher degree, versatility. The big trend we’re seeing in outdoor is that Generation Y has discovered the outdoors, because they’re a new generation and you’ll now see references to ‘the new outdoors’, which I find amusing! There’s been a big move to products that are versatile that you can use in everyday life as well as the outdoors.
“In some regard, I feel that we still have to focus very strongly on activities. So for instance, if we look at mountain sports, it’s about skiing, snowboarding, hiking, climbing, trail running, etc. We still need to be exceptionally-focused that we’re making products for those consumers, but we need to be mindful that the Gen Y consumer will have different tastes and styling required compared to a more mature customer.
We still have to make sure a snow jacket for a Gen Y customer keeps them warm, dry and does all those things that are really important for that activity.”
IRW: What’s the outdoor customer like and what are they looking for when they go shopping?
PK: “When we talk about our core customers, they’re really our mountainsport consumers, people who are skiing, snowboarding, climbing, hiking, trail running, camping. They’re our target market who we make product for and we do our best to ensure that they come into our stores.
“There’s a trend with our core customers where they’ll know more about a product than you do. We may have 1,200 different products in one of our stores and when these customers come in, they will have already researched a particular tent to the nth degree and they’ll tell us more about it than we can. With those consumers, it is very much about the performance. What it’s going to do for me? How is this going to make the adventure better and more enjoyable?’ So our staff do need to be well-trained. We try to hire people who have an outdoor/adventure inclination and that certainly helps on the floor when talking to these core consumers.
The other tier of consumers are the adventure types – they’re your much more off-the-beaten track traveller, they might be trekking in the Himalayas or backpacking in South America. They have a strong travel approach and often need a nice sleeping bag or decent backpack.
You have the traditional travellers, they’re often the mature customers going to Europe, US or Asia and they need a good jacket that will keep them dry.
Then of course, you get the aspirational consumers. Occasionally, I’ll work in the store and I have a habit of opening the conversation with, ‘What’s your next adventure?’ And they’ll go, ‘Nothing, I’m not going anywhere!’ Whether or not you’re in the outdoor industry, you’ll encounter aspirational consumers. They like what your brand stands for and they aspire to your core principles, but they might not end up going anywhere exciting.”
IRW: What are some of the big plans for North Face in 2017?
PK: “I think the biggest objective for 2017 is to amplify our customer loyalty program, so we need to know more about our end customers and we need to know how to put on all sorts of events and experiences that are relevant and engaging to them.
At the moment, the program is fairly rudimentary, we’re obviously trying to capture the data about our customers so we can maintain a continued dialogue with them. The long-term objective is to really know them a whole lot better and if we know they’re keen skiiers, then we’ll be able to launch new connections to them, get them along to the store, talk about seeing a movie or meeting some of our athletes.
We’ve got a while to go, but we now have systems in place that will allow us to do that and that feels like a strong step forward.”
IRW: What are some interesting retail trends on your radar at the moment?
PK: “I saw it at unprecedented levels over Christmas last year and that’s the strong discounting mentality. We’ve always taken an approach at North Face to put our best value offer forward so we go out with a compelling product at a reasonable price and we do our best to sell it during the season, if it hasn’t worked, that’s the product that goes in the end-of-season sale and goes cleared. Then we usher in new product.
It feels like it’s been an honest way to conduct our business. Our end consumers have a good understanding of our sales cycle and they appreciate that we’re not on Boxing Day sales three weeks beforehand.
But we’re very consistent with that and I think that at the end of the day, we have to deliver compelling product to the market all year, if we’re going to see it.
The actual Boxing Day sales were fine. The Boxing Day period did tail off quite quickly though [perhaps due to the strong discounting mentality]. I know specific to our stores that we had less inventory available for Boxing Day sales at the same time last year. Our stock was cleaner, margins were stronger but revenue was slightly down.”
IRW: How do you see the business competing with other retailers?
PK: “Within the industry, you’ve got everyone from the big box retailers like Anaconda and Rays, who are very promotional-driven through to the specialists, like Paddy Pallin, where they offer the world’s best brands, high quality service and are great operators. So it’s a broad spectrum – you’ve got low service level, high pricing model, through to the premium end of global brands with high service levels.
IRW: What are some of the challenges that the business is facing at the moment?
PK: “It’s an interesting landscape. Firstly, it’s definitely a fun and rewarding industry to work in, whether we’re engaging with wholesale or end consumers. Generally we’re like-minded outdoor types, so you’re always off to a good start in that industry.
Then within that, for us, it’s a fine balance between the direct consumer and wholesale businesses. Sometimes we will have to compete with our wholesalers which is not ideal and that’s why any direct-to-consumer expansion is always carefully considered and again, I will usually try to put myself in the consumer’s shoes. What would they expect to see if they turned up in Hobart? Would they expect to see North Face? If we have a wholesale customer with a good assortment of North Face products, we’ll look at that before we expand our distribution or store base.
Another challenge is that we have four clear channels we operate in – our concept stores, our wholesale stores, online and outlet. One customer may shop in all channels, so how do we interact and engage with the in a smooth, seamless way across those channels?
They’ll go to one of our stockists like Paddy Pallin or they might buy something online and return it full price but really, I just want the systems in place to allow that customer to operate in a seamless and easy way across those channels. There’s been a lot of work in the background in relation to our supply chain logistics and systems, but it’s coming together.”
IRW: Will there be any new North Face stores opening in 2017?
PK: “There are new stores coming, but it really comes down to signing the lease. It’s the usual adage – you can end up with a store with no inventory or inventory and no store. It’s hard to align your store rollout with the buying cycle. We have plans for a couple of new stores and we’re looking for sites and to my earlier point, those locations will be thoroughly reviewed in relation to our wholesale account base.”
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