When we talk to major retail players in the snowboard industry and ask about board brands, they consistently rave about Never Summer.
Retailers and customers like that the boards are all made in Colorado and have a three-year warranty. And retailers tell us they especially love that Never Summer has put core retailers first and has not sold directly online.
However, because of a rising minimum wage in Denver where Never Summer is based and other increased costs, the company made the decision to begin selling direct, but only a small percentage of boards each year.
It was not a decision the company, which is privately held and primarily owned by founders Tim and Tracey Canaday, made lightly.
At the Outdoor + Snow Show, we talked to Marketing Director Chris Harris about the decision, including how many boards will be sold online, the company’s impressive and consistent double-digit annual revenue growth, its new in-home board demo program, and much more.
Let’s start with the basics. Tell me about why you guys do a three-year warranty, because most people are one year, right?
Chris Harris: Yes. We’re actually thinking of extending that warranty to more than three years. For a long time we were the only manufacturer that did a three-year warranty, and now other brands have latched onto that.
We did it because we control our own production, so we have complete faith in our product. We’re built in the U.S. at our own factory. The other brands are built by other people in other countries, and don’t have a lot of control over the product that comes out of those factories, so maybe they weren’t as game to go that deep with a warranty.
If you guarantee it say for five years, does that mean you’re going to sell fewer snowboards because they last so long?
Chris Harris: That’s an interesting question. I don’t think we’re very worried about selling fewer snowboards. I think we have an extremely passionate consumer base, they like our product, and our consumers are on the more affluent side in our industry, so they can afford to have more than one snowboard.
Does Never Summer have a certain niche of the snowboard market that is your sweet spot?
Chris Harris: We make boards for every rider, it’s just that our demographic skews a little more mature. We obviously have young freestyle riders; we have some of the best team riders in the world, which is actually a new concept for us. We still are a product-driven brand, but prior, we could never afford or didn’t have the longevity to bring people up through our own program.
Now after 30 years in business, all the riders we have, which are all recognizable names – we’ve had time to bring those kids up through our own program. We had Chris Corning since he was 8 years old, and he’s still loyal to us.
Once people start to interact with us, they become basically loyal to us because of our business practices, family vibe, and who we are.
You guys are 100% privately owned?
Chris Harris: We are. Tim and Tracey Canaday are the primary owners – two brothers. They still work the factory, and they’re there every day.
Never Summer Founders and Owners Tim Canaday and Tracey Canaday. Retailers tell us they love how Never Summer supports core stores.
Why to this point, have you guys not gone direct? I’m guessing that was a conscious decision.
Chris Harris: Totally. Everything we do as far as distribution is well thought out. The fact that we don’t open every door in every town, the fact that we haven’t sold direct because we wanted to be in support of brick-and-mortar retailers. They are the lifeblood of the industry, snowboarding exists within these stores, and for a long time, we were really the only ones who didn’t sell direct and who went out of our way to support those outlets.
We stayed out of box stores. We opened one door in a town. In a large city like Denver, obviously, we have more than one door, but they’re not close to each other. They’re not competing with each other.
We stayed away from selling direct because we didn’t want to compete with our own retailers. In fact, our website sales exist on platforms that actually farm sales out to our retailers.
I heard that. Retailers love that.
Chris Harris: We weren’t touching any of it. Those programs have gone the way of the dodo because all of the big brands have pulled out of these platforms, and there are only these little, stray brands left on them because everybody else is actually selling direct.
So, we actually created our own direct sales program. We’ve been running it for two seasons now, so we can decrease the cost to the retailers to participate in the program. So, the old platform would take about nine percent of the sale. We started our own, built our own, which was expensive, and then cut the amount of points that the retailer gave up to five, so it saved them a significant amount of money. And those five points that we took allowed us to contribute to the cost of building that platform, and also to help manage that platform.
It’s been successful, and it’s been good for everybody. But we didn’t necessarily anticipate all of the pitfalls of starting our own platform and things that we were going to have to deal with. It takes a lot of management to run that program.
So what is changing now?
Chris Harris: As we move into the rising labor costs from a big increase coming in the Denver minimum wage, rising costs of materials, the cost for us to run the direct-to-retail program – all of these things are contributing factors in us deciding to take a very tiny portion of our own sales direct.
In total, we sell 30,000 boards a year. What we’re talking about selling direct through our website is less than one percent of that.
So, what we’re talking about peeling off is sales through our own website, which we obviously pay for, manage, and do all of that. It allows us to give a little better service to the people that shop on our own website, and the fraction that we’re peeling off is insignificant to our retailers across the country, but it’s very significant to us.
This isn’t a question of our board of directors sat down and said, “How can we make more money?” It’s literally a question of the two brothers that own our company and our directors sitting down and saying, “We’re facing extensive cost increases. We’re worried about how we meet those increases and still keep our boards priced where they’re priced.” So, it was a move of necessity and survival, and not a move motivated out of greed.
It’s a big announcement to our shops when we have to tell them that we’re going do this. It hits like a ton of bricks initially because they’re so used to being screwed by companies that go direct, and then go direct huge, and it’s all motivated by board of directors and money. We’re not talking about that here. We’re talking about paying our employees, and paying for materials, and keeping our products built in the United States, and not just built in the United States, but built in Denver, which is becoming one of the most expensive places to acquire labor across the country.
We knew it was going be a big shock, so Tim and Tracey crafted an email prior to this show and said, “Look, out of necessity, we have to do this. For 30 years, we’ve been the most loyal manufacturer to your business, and that’s not changing. The piece that we’re talking about peeling off – you’re not even going to notice, really. You’re not going to see your sell-through go down. You’ve brought our product in for 30 years, and every year, you sell through with our product. Nothing goes on sale the next year.”
How will you do that, though? When you say it will just be a small piece, you’ll say, “Okay, we’re only going to offer this many boards every year online, and when they’re sold out, they’re sold out?”
Chris Harris: Yes, for sure. We’ll project our own build-to-sell on our own website. Fortunately, we’ve never had to project a build before because we’ve manufactured here. So, where other companies are building their stuff in China, Dubai, or whatever, they have to project ahead of time the build that they’re going offer the following year before they have orders.
We don’t have to do that. We come to this show, we get orders in March, and then we build based on that. We are literally a made-to-order brand.
Now that has to change a little bit, and we have to project a small amount of boards that we’re going to sell on the website. When those boards are gone, we stop selling those boards.
It would probably be interesting for you to see our headquarters, because you’d see we don’t sit on a stock of 1,000 boards. We literally build them, they go to the shipping room, they get shipped out. So, even if we wanted to go above what we projected, we don’t have it.
My projection for next year on the amount of boards that we can sell direct – I think we’re at about 300 boards.
Three hundred boards? That’s it?
Chris Harris: Yes.
And that will make a difference to your business?
Chris Harris: Absolutely.
That’s so few. I guess you get the whole vertical margin, right?
Chris Harris: Correct. It goes from wholesale to retail price.
Watch out, it’s like crack. You see that, and you’re like, “Ohhh!”
Chris Harris: We’re not really fans of crack, and we’ve proven that over the years. Throughout the course of our company’s history, we could have done so many things that would have brought in more money for us, like moving offshore like everybody else. But we didn’t. Even though everyone else did and now nobody’s built here.
Mervin is.
Chris Harris: Okay, I’ll give you Mervin. So, us and Mervin are it out of all the companies. So, that could have been an easy cash grab, and there are several examples of that through the years where we could have done these things, but it would have hurt retailers, we would have lost the hands-on production. Every step of that process is important to us.
From hours of talking about how boards are built and what segment of the snowboarding public we need to reach, and what new product we need to bring to them – that’s important, and the design piece is important.
Those parts happen, but then they all get brought to a table, and the marketing team sits there, and the sales team sits there, and the owners sit there, and the production manager sits there, and we all talk about that product that we’re going to bring. Then we build the first one, and then we all ride the first one, and then we go back to the drawing board, and then we make changes, and we do all of that stuff.
Every single part of that process is super important to us, and we always want to be hands-on with everything we do. We don’t outsource any part of our business. We have an in-house marketing team. We don’t rely on an agency. Every part of our business is hands-on, and that shows our interaction with our consumers. Our business was built on organic practices of doing business the right way, and it’s still that way, and what we’re going to peel off is completely insignificant to everybody except us.
So how was business last year?
Chris Harris: Great. I’ve been at Never Summer for 10 years. When I got here, we were selling about 12,000 boards a year. Now, we sell about 30,000 boards a year.
We’ve had double-digit growth every year for the last 10 years.
That’s amazing. Even during bad winters?
Chris Harris: Yup. That has to do with our main consumer demographic. We’re not in the game of price point, so weather fluctuations hurt us less because we’re not trying to sell the cheapest board to a guy with the least money.
We have tried that in the past. We’ve come with a price-point snowboard three times in our history, and each time, it didn’t sell enough to sustain keeping it in the line. It’s a pretty fortunate problem to have when your least expensive product is your worst seller.
And, you guys are profitable, obviously?
Chris Harris: Oh, yeah. Not insanely profitable.
That’s the story of hardgoods.
Chris Harris: If you saw Tim and Tracey’s house, they both live in unassuming homes, they drive unassuming vehicles. There’s no extravagant living happening from the top to the middle to the bottom.
We make enough to support ourselves, and some of us live more comfortable lives than others, but nobody has this extravagant wealth coming out of this operation. It’s done for passion, not done for the money.
No private planes ferrying you guys around?
Chris Harris: No. Private planes? Shit, we have to save to take a flight.
What’s the price range of Never Summer boards, and what price is the sweet spot?
Chris Harris: Most of our product is between $500-$600. We have competitors that are in between $400-$500. We also have competitors that have higher-priced boards than us. Our offering is somewhat unique in that we’re mostly in a narrow $100 range.
So, the sweet spot is $600 for us.
And, how would you describe the state of the snowboard industry right now? What’s your assessment of things?
Chris Harris: I’m sure you’ve heard it before. We’re heroes when it snows, and we’re zeroes when it doesn’t. My assessment is it’s a flat industry; it always has been. The way you sell more boards is by taking market share from other companies.
If you’re growing double digits every year, you obviously are taking market share.
Chris Harris: We’re taking market share from these companies. I think watching other companies’ behaviors, actions, and maybe marketing plans… If you’re close to it, you can see it reflect the success of Never Summer in what other companies are doing.
I get what you’re saying.
Chris Harris: I’m trying to say it without saying it.
I think we can all read between the lines. But, that’s good, right?
Chris Harris: Yeah, it’s great for us. Authenticity is big in this industry. It’s important to our consumers. We have no problem displaying our authenticity. We’re the real deal. We’re authentic. Our consumers see that, and most of the others – all of the industry sees it, and I think that our authenticity is obvious.
Tell me about what you guys look like globally. Do you own the business in different parts of the world?
Chris Harris: Our business is worldwide. How we handle international business is we have an International Sales Manager, and our International Sales Manager sells to distributors in other countries, and then the distributors get it into the shops.
So you don’t have your own operation in Europe or Japan.
Chris Harris: We don’t have an office in Switzerland, as much as we’d love to.
I’m guessing this is your biggest market, of course – the U.S.
Chris Harris: Yes. International is growing substantially, but the U.S. market is about two-thirds of our business.
In the U.S., what does it look like regionally? Is that just based on population? Is California your biggest territory because there’s more people there, or is it the Rockies because it’s your home base?
Chris Harris: It’s the Rockies because it’s our home base. I think that’s probably the same with every company. I think Lib probably sells the most in the Pacific Northwest. I think Burton probably sells best in the East. I don’t think that’s unique to us.
What’s your association with Academy Snowboards?
Chris Harris: We build their snowboards.
Throughout the history of our company, one of the things we decided to do to make our business more sustainable is build product for other companies. So, we started an OEM branch of our business. Academy is an awesome example of what we do. We build Icelantic Skis as well. I’m not on the ski side – all I know is they make more and more skis every year. We’re not in the ski business ourselves. We just produce for them, and we produce for a couple other ski companies.
We produce for a couple other snowboard companies, and then, we get your other OEM projects, like Monster Energy drink.
For next year, do you have some big, new product you’re launching at the show?
Chris Harris: The Proto line of snowboards has been our best seller, which is short for “Prototype.” It’s the nature of that board that it changes pretty significantly every couple of years.
We’ve changed it again into a new profile, called the Shockwave profile, which is an even more camber-dominant profile. It’s still rocker camber, because we hold the patent on that profile, and that’s where we’re at home. We also expanded the Proto line, so this year, we’ve added a freestyle version of the Proto, called the Proto Slinger.
One of the trends in snowboarding these days is your volume boards, your directional wide yet shorter snowboards. We started the Shaper series – I think we started the Shaper series five years ago, and that’s a series of directional short, fat boards, basically.
We’ve now taken two of those boards – the Maverix and the Insta/Gator – and combined them into one board called the Harpoon.
How much do you know about snowboards?
Not that much to be honest.
Chris Harris: Your readers – they’ll get the name.
(Editor’s note: The Harpoon name takes aim at Lib Tech’s popular Orca board line).
Do you offer any other unique programs?
Chris Harris: We have the most extensive demo program throughout the industry. We do more demo days at resorts where people can try our boards than any other company.
We have four specific employees across the country that all they do is set up demos at resorts around the country.
For instance, our Eastern demo rep has 59 demos on his schedule this season, our Colorado rep has a comparable amount, our West Coast rep has a comparable amount. What I’m trying to say is we end up doing about 200 demos across the United States every season.
We’ve also started an in-home demo program that comes direct from our factory, so not only are we doing those on-slope demos, but now we’ll ship the demo directly to your house with a deposit so we get the board back.
You mean as a customer, I can say I want that?
Chris Harris: Hit us up on Neversummer.com tomorrow. You can say, “I’d like to try the new women’s Proto,” and we will send you a form to fill out. Send it back to us, we take a deposit, we ship you the women’s Proto, you can try it at your home mountain for 30 days, and then you ship it back to us.
Then, if you like it, you go buy that board from one of our retailers.
Have you done that for a long time?
Chris Harris: We just started it. We started at the end of the season last year, and it started in conjunction with our spring break demos, which happen in March.
All of our regions are having a concentrated month of demos so people can try next year’s product this year in March, and then be ready to purchase when our boards hit the shops in September.
So, the people demoing are the end users, not the retailers.
Chris Harris: Correct, these are all consumer demos. They are designed to drive sales next season.
Very interesting, especially where you’ll send consumers a board to try. That’s very innovative.
Chris Harris: Sometimes we have a good idea.
