By Kate McEnroe, President of Kate McEnroe Consulting
The Outdoor Recreation industry isn’t often cited as a top target industry for economic developers, but it can occupy a very interesting place in the economy of a state, a region, or a locality. The most recent figures from the Outdoor Recreation Industry Association report that businesses in this sector, which encompasses a wide variety of NAICS codes, account for 6.1 million jobs in the United States with consumers spending more every year on apparel, gear, and experiences, than on pharmaceuticals and cars combined. So why don’t we see this industry cited more often as a target of opportunity for states and regions interested in recruiting high growth, green job and investment opportunities? Perhaps it’s because to appreciate the full impact of this sector at the state and local level requires tracking jobs and investments that fall under the separate missions of departments of tourism, economic development, and natural resources.
Most states have tourism efforts dedicated to bringing in visitors and their dollars, and programs to protect their natural assets within their departments of natural resources, but some have decided to link these missions to the more traditional goal of attracting companies that manufacture products and offer services to the users of those recreational assets.
In some cases, these efforts have evolved in response to an existing concentration of companies and investments while in others the effort is more proactive and dedicated to growing the sector in places where the natural environment is the draw.
Utah claims to be the first state to establish a dedicated Office of Outdoor Recreation in 2013 within the Governor’s Office of Economic Development. The office’s charter explicitly recognizes both the natural assets that are typically marketed by tourism offices and the businesses that enable people to enjoy those assets.
The other two states that have followed a similar path are Colorado, where Governor Hickenlooper appointed the first director of the Outdoor Recreation Industry Office in June 2015 and Washington State, which appointed its first Outdoor Recreation Policy Advisor in late 2015.
These three states have been recognized with a special publication of the Outdoor Industry Association called “A Promising Trend.”
At the local level the Salt Lake City metro area, with dedicated recruitment efforts of its own, has been the host city for the Outdoor Recreation Industry Association’s trade shows since 1996, which means that decision makers and influencers in the industry are consistently exposed in person to the region’s natural environment and its business advantages.
Other areas, like Roanoke, Virginia and Bend, Oregon are working hard to build a cluster around strong outdoor assets and some of the smaller businesses that are often started by entrepreneurs who are inspired by their own recreational pursuit to design products and services for themselves and their fellows. The goal of these marketing efforts is to pursue large companies who are looking for expansion sites close to their users, or small companies who have outgrown their original locations and are looking for a location that will allow for growth at moderate costs in a place that values the environment.
Apparel and Gear
Apparel and Gear manufacturers that appeal to outdoor enthusiasts are an important sector of the Outdoor Recreation industry. They represent yet another example of how the total impact can be diluted. One major component is the purchases made by tourists who visit outdoor recreation attractions, which are categorized as bricks and mortar retail activity, and the other is products and services that are housed in the state or region for “export,” which are measured by their contribution to the manufacturing, business service, and online retail and distribution industries.
Larger companies, such as Nike and Patagonia, serve the general consumer population today, but were originally founded to serve a niche specific to a sport or activity. Many smaller companies today have followed the same pattern, specializing in products that are highly technical in design and often have been developed by or with expert practitioners or in new ways to delivery those products to customers. These companies often start up wherever the founder is located, which may or may not be near the environment associated with the activity they support.
Ask many economic developers how they feel about the opportunities for employment and investment in the apparel industry and they will tell you that this is an industry that was once a mainstay of the local economy and now is in decline or has disappeared altogether. Technical apparel, though can be the exception. Though it is far from immune from the non-U.S. production model followed by much of the general apparel industry, it appears that there are niches in the sports and technical apparel arena that at least start their life cycle as U.S. based operations.
A key concern faced by companies in this niche is satisfying the performance expectations of the customer base, which means rigorous field testing and constant innovation in materials and design.
Along with technical performance, however, consumers also appreciate a customer service experience delivered by people that have personal experience with the product, and can act as more as advisors than order takers. In a small labor market, looking for individuals who have both the required business skills and the right personal passion can become a real challenge as companies grow. In larger areas, the ability to work in a company and with co-workers who share that passion can be the recruiting edge an employer needs to attract scarce talent.
Customers of these companies often also have a heightened sensitivity to the sourcing, content, and sustainability of materials, along with the conditions under which the products are produced. A look at the list of “Issues Affecting Business” from the Outdoor Recreation Association highlights these concerns shared by the companies and their customers:
- Access
- Chemicals Management
- Climate
- Fair Labor
- Made in America
- Materials Traceability
- Risk Management
- Supply Chain Transparency
- Tariff Relief
The Association formed a “Made In America” working group of 200 companies in 2009 to focus on how to keep producing goods and services in the United States that are destined for use in the Great American Outdoors.
Experiences
The outdoor “experience” economy does generally require some cooperation from Mother Nature in order to turn what would otherwise be a nice local hiking trail or ski slope into an attraction that brings in visitors and investment from the outside. (Then again, maybe anybody can play that game – there are those indoor ski slopes being built in Dubai).
There are many examples of places that have consciously developed and promoted what were once local attractions and now enjoy the stimulus to the economy that comes with becoming a destination experience.
One strategy is to pursue hosting opportunities for competitions, or even create competitions, that will draw aficionados of a given sport to the area, the smaller version of competing for the Olympic Games. Marathon races are just one example: the first Boston Marathon was run in 1897, but in 2014 Running USA estimated that there were more than 1,100 races run in the United States. These events have also gotten larger, with the number of races having over 1,000 finishers increasing by 360 percent in the past 25 years. According to the Bank of America, the 2013 Chicago Marathon generated over $250 million in economic impact for the city. The impact can be even more significant for smaller communities. In 2014, Sturgis South Dakota hosted the 75th anniversary of its annual motorcycle rally. The City’s Rally Department (that’s right, Rally Department) estimated that the 2010 rally events brought over $800 million in economic impact to the state. Orange, Texas pursued a Bassmaster fishing tournament to serve as part of its annual Orange County River Festival, and estimated that in 2013, the first year of what has become an annual event, the tournament adding $2,000,000 in additional revenue in a county with a population of about 90,000 that had suffered substantial hurricane damage in 2008.
Add it Up
Better data can lead to better decisions, but one of the lessons this industry can teach both site selectors and economic developers is that the way we categorize information can hide as much as it reveals.
About the Author
Kate McEnroe is President of Kate McEnroe Consulting and has been advising corporations on location strategy and economic development organizations on marketing strategies for over 20 years. She can be reached at kate@katemcenroe.com.
