North Face will be more grounded
Retailer doesn’t want focus on thin air to put it on thin ice
Todd Spaletto’s eyes lit up when I mentioned Jon Krakauer.
During a recent visit to the new North Face headquarters in Alameda, a building of blond wood, steel and glass, I casually mentioned to Spaletto, the company’s president, that I was reading “Into Thin Air.” Krakauer’s acclaimed book recounts an ill-fated expedition to Mount Everest in 1996 in which a rogue storm killed six climbers.
A week later, I received a handwritten note from Spaletto with a copy of “Meru,” a documentary about North Face-sponsored climbers who scaled Mount Meru in India.
Yet North Face is looking at a future where it depends less on adventurers scaling majestic mountains, and more on the kind of people who frequent Planet Granite or Mission Cliffs. If they bother to climb out of a sofa, that is.
I suppose I should have known the book would strike a chord with Spaletto. North Face is one of the country’s top apparel brands for outdoor sports, especially mountain climbing. It controls about a third of the outdoor-sports apparel sector. The company, founded in 1966 in San Francisco and now owned by VF Corp., owes its name to the side of a mountain in the Northern Hemisphere that’s typically the coldest and hardest to climb.
But sometimes a company’s greatest asset can also be a liability. North Face is so associated with cold weather activity that the apparel maker took a significant hit late last year because of usually high temperatures from October to December, typically the peak season for buying cold weather gear. As a result, North Face’s sales grew just 1 percent, to $2.3 billion.
In an interview, Spaletto acknowledged the impact of the warm weather, but said that North Face has already been trying to recast itself as a 12-months-a-year brand for everyone, even urbanites who have no intention of scaling Mount Everest or K2.
“We have a physical, emotional attachment with our consumers when they get outside,” Spaletto said. “For us, that’s not a fourth-quarter thing. I think we just naturally drove most of that growth through the fourth quarter. But our brand has that relevance year-round.”
$4 billion industry
Outdoor apparel is a $4 billion industry, according to the IBIS-World research firm, but the athletic apparel market is far larger. It grew 7 percent to $33.7 billion in 2014, and is expanding faster than spandex in a yoga class as we swap jogging outfits and compression tights for khakis and dresses.
To that end, Spaletto says, he wants North Face to focus on selling gear not just to people who can already run marathons, but those who are just starting to think about those 26.2 miles. (The dirty secret, of course, is that many people who buy athletic clothing just wear them to the couch and skip the 5K.)
“You need countless hours to get your body ready for doing those things,” Spaletto said. “If you want to run a marathon, you have to do more than run. You have to get your body in shape. That translates to different activities in different product categories that addresses 12 months a year. We should be the No. 1 brand in technical outdoor footwear. That’s a year-round business.”
“Consumers are doing more with less,” said Matt Powell, vice president and sports industry analyst for research firm NPD Group. “Rather than purchasing specific products for every season or activity, they are buying adaptable and multipurpose items.”
Retail consultant Doug Stephens said that coldweather brands like North Face and Canada Goose have been trying to expand into apparel for warmer seasons. But they will run into a crowded marketplace, he said.
Activewear has been a rare bright spot for the sluggish apparel industry, where sales grew 1 percent, to $206 billion, in 2014, according to NPD. Excluding activewear, apparel sales would have declined 1 percent.
Lots of attention
Activewear’s growth has attracted everyone from Under Armour and Lululemon to privatelabel brands from traditional chains such as Target and Sears. For North Face, the challenge will be to expand its customer base without losing what makes it special in the first place, Stephens said.
“Markets that were separate and rigidly defined 10 years ago are blurring more,” Spaletto said. “That’s been driven by consumers wanting fewer brands to play a bigger role in their lives. It used to be that ‘These are athletic brands’ and ‘These are outdoor brands.’ We would even separate the color tones. But consumers look at these worlds colliding very fast, with the athletic market.”
North Face’s bread and butter has always been its higher-end technical innovations, things like ThermoBall, a synthetic alternative to down, and FlashDry technology, designed to push moisture to the surface of the fabric and eliminate it as fast as possible, keeping the user dry and cool during aerobic activity.
Yet an NPD analysis suggests that consumers are generally unaware of such innovations. Less than half the people surveyed knew about smart fabrics, including those that have been available in the marketplace for several years, the report said.
Spaletto sees particular promise in cities, where people are in constant motion, whether jogging, climbing an indoor rock wall or just commuting to work.
“Ten years ago, someone would say: ‘Wait a second. You’re talking about playing a role in the city? That’s not what outdoor brands do,’ ” Spaletto said. “That’s just not true. Consumers are looking for brands that are not one-dimensional. They love the energy and lifestyle in these urban environments.”
“We should be the No. 1 brand in technical outdoor footwear. That’s a year-round business.” Todd Spaletto, North Face president