An unspoken question looms about the future of the hockey equipment industry. Are the manufacturers or the retailers profitable? The situation is not good for either, as both the manufacturers and the big retailers are currently hemorrhaging money!
The biggest manufacturer, Bauer, has a 62% share of the market. They make great product and they are publicly traded. Even though they own the market, their profit is miniscule.
They are trying to add other categories to make their business model work, but at this moment they probably have a break-even business even with their monster share.
Easton, Reebok/CCM, Warrior and Sherwood have very little market share. They have no chance of long-term success unless they come up with a way to take market share from Bauer.
I believe Sherwood/TPS will be the first to go under. They have almost no share of the US market and their wood stick business is failing.
Reebok/CCM would be next. Poorly managed, they have failed miserably every single year since the Reebok takeover of CCM. Adidas, which owns Reebok, will decide if enough is enough this year. $20M to $40M of losses (my estimate) year in and year out is not healthy, and there is no end in sight. Their management team is horrendous and almost every decision they make is puzzling. I believe it will become a house brand for some big national retail store in Canada in the future.
Easton, as well is doing poorly. Their parent company, Bell Sports, is trying to sell the hockey brand, though most interested parties want Easton's healthy baseball division as part of the package.
Warrior, owned by New Balance, is not big and will probably look at buying someone to increase share.
So, after Bauer, which brands will fill out the top five? In this economy, most hockey consumers stopped paying retail prices for goods. On their present margins, the big manufacturers are not currently profitable, so how will they reduce their prices?
Retailers have been using manufacturer's credit in the $10s of millions of dollars, but have been unable to pay them back for years. Do healthy US businesses allow this in any other industry? The big retailers are suffering a slow death. They are selling product at their cost in order to raise cash so they can meet payroll, rent, etc. but usually have very little left to pay the manufacturers. On the other hand, the manufacturers are addicted to the 4 or 5 big retailers in the US as far as loading them up with product, even though they pay them back very slowly. These retailers are losing millions of dollars every year and their only way out so far has been to not pay the manufacturers.
Let's go back to my initial question. What are the brands of the future? Once the manufacturers or their parent companies decide that they do not wish to keep losing millions of dollars each year, they will start calling the debts of the big retailers. Since those retailers do not have the money, the manufacturers will probably take drastic action (closing them down). I have asked my accounting buddies on my hockey team if it is possible for a retailer to do $40M in sales and have an inventory of $40M and still be profitable. Their answer was unanimous: NO WAY! But the manufacturers, with their actions, have alienated all the smaller to mid-sized stores and have caused many of them to shut down over the last few years. What will they do about the consumer's trends (caused by the big retailers) to only buy heavily discounted product?
These are questions that will be answered in 2013.
The Tron business has grown ten-fold since last year. We plan on continuing to grow by manufacturing great product (in the same factories the big guys make it in) and selling it at closeout prices. Our hockey visors, hockey jerseys, socks, gloves, inline equipment all rank in the top five in sales. We will be able to maintain our prices because we do not have the overhead the other retailers or manufacturers have. We have pro players playing with our hockey sticks and love them. Last year, we sold more visors than anyone other than Bauer. We are currently selling more jerseys (also customized) and socks than anyone due to the great quality and price. We are developing new products to continue this trend of excellence. Keep your eyes on our website to see what else we have to come!