1	Ruminations on the Skateboard Industry And Some Related Action Sports Retailer Issues Presented to the Board Retailer Association Conference May 14^th, 2004
2	Today’s Topics Setting the Stage What’s Happening With Skate? Some Retailer Financial Statistics Hard Goods by the Numbers The Enthusiast Cycle Retailer Opportunities
3	The Transition to Industry Maturity Slowing Growth Means More Competition for Market Share Firms Increasingly Selling to Experienced, Repeat Buyers Competition Shifts to Greater Emphasis on Cost and Service Problem With Overcapacity
4	The Transition to Industry Maturity (continued) New Products and Applications Harder to Come By International Competition Increases Industry Profits Fall During Transition Dealer Margins Fall, But Their Power Increases
5	What Successful Core Action Sports Retailers Do Well Quality Information and Accounting Systems Extensive Owner Involvement Successful Management Development Community Involvement Customer Connection The Internet
6	What’s Happening With Skate? Coming off a bottom- but don’t expect a return to recent historical growth rates Influence of hard goods brands greater than their size would suggest. How will that evolve? Skatepark growth and mainstreaming setting a bottom Possible growth of skate coincident with shrinking of “core” of skating
7	What’s Happening With Skate? Influence of shoe and clothing companies due to their size and market reach Pressure on margins and margin dollars Foreign product shouldn’t have surprised anybody Survival issues for some companies (brands and wood shops)
8	Retailer Numbers National Sporting Goods Association 2004-2005 Cost of Doing Business Survey 314 Firms Responded 226 Specialty Stores Revenues from less than $500,000 to over $2,000,000.
9	Specialty Stores by Revenue Gross Margins
10	Specialty Stores by Revenue Before Tax Return on Net Worth (%)
11	Retailer Numbers
12	Hard Goods By the Numbers Current Market Condition No meaningful product differentiation Lower cost foreign production/blanks and shop decks Consumer unwilling to accept a technically different product? Brands losing ability to differentiate by marketing at previous levels
13	Hard Goods By the Numbers
14	Hard Goods By the Numbers
15	Hard Goods By the Numbers
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19	BUT………….
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21	Retailer Opportunities Few new irrational competitors The reach of the internet- even if it isn’t a revenue source Broader customer base Customer service (I think, whatever that means) Size matters
22	Who Are The Customers?