The Outlook for Outdoor in 2021

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Heike Pirochta

The year that’s gone, and preparing for the year ahead

Physical pursuits have been a force for good throughout the past year; a year that’s been like no other. Prior to 2020, activities once considered leisure or sport have taken on a far more critical role in people’s lives. As a society, our mental health has been challenged by the pandemic, and the importance of exercise, outdoor activity and work-life balance cannot be overstated.

I spoke with senior executives at leading outdoor companies: Simplon, SIGMA-ELEKTRO, 3T Cycling and Merida & Centurion, to understand the impact of Covid on them, their businesses, production, and how they are getting ready for, hopefully, a return to doing what we love, with the ones we love, very soon!

Four important themes emerged:

Leading organisations always put their people first

The sporting goods industry, in general, reacted admirably to the pandemic addressing safety and well-being of employees first and foremost.

“The measures we established are very thorough. Amongst other activities, we provide FFP 2 masks as well as clinical masks and free tests if needed, which has been very much appreciated; we are a family business and think of employees like family members.” Thomas Seifert, Managing Director, SIGMA-ELEKTRO

From shifting to working from home where possible, new hygiene measures, providing clinical-quality protective equipment, air purifiers and reconfiguring departments, the leaders I spoke to had acted extremely proactively with extensive measures to keep people safe while maintaining as much business continuity as possible. The employees, in general, felt supported and safe without significant negative impact to business.

“For employees who cross the border a negative test is required before they are allowed to work in the office.  Manufacturing work is being done in two separate groups. We are extremely proud that we have had no cases of illness considering our large number of employees.” Stefan Vollbach, CEO, Simplon

Going more local is a common theme for production and the supply chain – a trend set to increase.

The leaders I spoke to all work for organisations that are well aware of the benefits of local production and Simplon, SIGMA-ELEKTRO, Merida & Centurion all have production based in Europe. Some other organisations, such as 3T Cycling, are bringing parts of production back to Europe from Asia.

We are celebrating our 60th anniversary this year. We have continuously brought more production to Bergamo to have more control with regards to quality, reducing lead time, IP (Intellectual Property), save on import duties and get closer to the market.” René Wiertz, President & CEO, 3T Cycling

The broad ranging benefits of localized production are increasingly outweighing the previously anticipated cost benefit of producing and importing from elsewhere.

“Having production based in Hard, Austria has multiple benefits. For example, our customers feel great affinity with the region and the origin of the bike. It is important to them that we are building here. It is also convenient for marketing and testing: in the Alps we have a testing ground on our doorstep. Another benefit, particularly in the early days, is that people who were deeply passionate about bikes and Simplon came here to work!” Stefan Vollbach, CEO, Simplon

“If the decision of location was to be made again today, we would always be in Hildburghausen, Germany.  We are in the process of expanding our production even further.” Gerd Klose, General Manager, Merida & Centurion

A move from strategic to flexible purchasing

Lead times for some key components have increased by tenfold. Shipping container prices have also increased significantly, in some cases also by as much as tenfold. These dramatic shifts are forcing outdoor businesses to aggressively adapt procurement strategies.

“You have to be flexible depending on which components are available. Customer, dealer and manufacturer will need to work with more flexible specs for at least the next two years to deliver satisfactory product to customers.”  Stefan Vollbach, CEO, Simplon

Merida & Centurion is forced to take a similar approach, says General Manager Gerd Klose, “Due to long lead times for some components, we will need to work with flexible specifications and in some cases alternative parts.”

Planning cycles are getting longer: “To ensure no interruptions longer forecast and planning times are now needed.” Thomas Seifert, Managing Director, SIGMA-ELEKTRO

Outdoor companies are also working hard to strengthen relationships with suppliers and increase trust: “Being close to the key vendor, building a relationship with trust and personal connection is important.” René Wiertz, President & CEO, 3T Cycling

These factors are shaping the leadership competencies that outdoor and other businesses will need to seek and prioritize in 2021…

 Purpose, agility and humility will be fundamental in 2021

One of the reasons I enjoy working with the outdoor sector is that organizations in this sector are invariably driven by a strong sense of purpose, to bring health, joy and community. I have the pleasure of working with leaders who are immensely passionate about their work. It is not just ‘a job,’ it is a way of life.

In speaking to leaders from 3T Cycling, Simplon, SIGMA-ELEKTRO, Merida & Centurion and in SRI’s broader work with clients, it is clear that adaptability is critical to success, and that to remain competitive, flexibility and agility is key.  Humility and the ability to inspire will also be important for leaders in building momentum and accelerating their progress in the next 12 months.

I look forward to working with leaders who embody these characteristics.