Golf Equipment Industry Paradox, Part III
- September 19, 2017
- Insight, Latest News, Market Analysis
The Paradox of the Golf Equipment Industry PART III: Columbia Sportswear's Solution
Portland, Oregon is the Silicon Valley of the global sports footwear and apparel industry. Portland’s flagship brands stimulated the development of a powerful infrastructure of lawyers, venture capitalists, supply chain managers, designers, ad agencies and other experts able to create and protect intellectual property.
Why is Oregon the home of Nike, Columbia Sportswear, Adidas America, and, with the recent addition of its design and development center, Nike’s upstart rival, UnderArmour, which has made great strides in the sale of its golf apparel and shoes over the last several years through an endorsement deal with Jordan Spieth? Oregon has splendid natural resources, it’s true—rain, rich soils and forested mountains. It’s America’s leading lumber producer, the world’s leading supplier of grass seed for golf courses, and enjoys a wine industry celebrated for its award-winning pinot noirs.
But none of that explains Portland’s rise to world prominence in sports shoes and apparel. There’s a simpler explanation: it’s the home town of Nike’s founder, Phil Knight.
Adidas relocated its North American operations to Portland in 1993, hoping to keep an eye on Nike. Columbia Sportswear was still a private company in 1996, when it took its first tentative steps into the golf market. In 1998, Columbia went public, and its backstory was a strong element in the success of its initial public offering.
Columbia is the oldest of Portland’s sports apparel brands. It’s worth a brief detour to look at its origins and the importance of its founding family to Portland.
Columbia CEO Tim Boyle’s mother arrived in Oregon in 1937 with her parents as a refugee from Nazi Germany. Her parents started the Columbia Hat Company the next year; in 1948, Gert Lamfrom married a WW II veteran named Neal Boyle. Tim is the oldest of Gert and Neal Boyle’s’s three children.
In the early 1960s, Gert Boyle designed a fishing and hunting vest to expand Columbia’s product line. The vests were sown in Portland and sold mostly in the Northwest. In 1970, when Tim was a senior in college, Neal Boyle died of a heart attack at age 47. When Tim left school to help out, the prospects for Columbia Hat were bleak. The company’s assets were Gert and Tim and lots of grit. Tim remembers going to a trade show with two sample fishing vests, sitting at a card table hoping someone would at least stop to say hello. Two guys from New Jersey, feeling a little sorry for him, placed small orders. I know that story because those guys from New Jersey told it to me nearly fifty years later, when Tim invited them to play at Gearhart, the course the Boyles own on the Oregon coast, and paired me with them. Tim may be great at selling apparel, but he’s a genius at making friends.
At its nadir, Gert and Tim rejected an offer to sell the company for $1,400! Rather than liquidate, as their bankers advised, the Boyles chose to expand their product lines, and by 1978 sales exceeded $1M for the first time. Nike’s success helped point Columbia toward the future.
Nike designed its shoes in Portland, but made them overseas. The global supply chain is a commonplace now, but it was a revolutionary concept fifty years ago. China was not open to the west yet, so Columbia’s first foreign suppliers were Korean. By the early 1980s, Columbia had shifted from manufacturing to brand building, focusing on creating attractive designs and durable outdoor wear to build a loyal consumer base. Its breakthrough product was a layered jacket, a clothing “system,” which consumers—especially skiers--loved.
A series of amusing ads demonstrating the durability of Columbia’s products debuted in the 1980s. Tim endured “Mother Boyle” putting him through increasingly more ludicrous product tests. He wore Columbia outerwear while strapped to the top of a car as it drove through a carwash. He was tumbled in Columbia gear inside a concrete mixer. Mother Boyle shot Tim in the neck with a tranquilizer dart and left him on a mountaintop, confident that his warm, reliable Columbia gear would keep him alive. Produced by a Portland agency, these ads were a huge hit, and Gert Boyle gained world-wide fame as “one tough Mother.” By 1992, the company had sold a million Bugaboo ski parkas, and Tim was predicting that Columbia would reach a billion dollars in sales by 2000.
Columbia started making boots and hiking shoes, too. Tim, whose candor distinguishes him among prominent CEOs nearly as much as his generosity, noted that footwear was an attractive product to sell because “they wear out, while our parkas and jackets last forever!”
By the time Columbia went public, its long-term strategy was in place: build the brand with innovative products, market them with imagination and flair, and expand through acquisitions as well as through the development of new product lines featuring high-tech fabrics: clothes to keep you warm in winter, cool in summer and dry year-round. In 2000, Columbia acquired the bankrupt Canadian boot brand Sorel for eight million dollars. Sorel’s uninspiring Caribou boots were in every Canadian’s closet, but Columbia put its flair for design to work and by 2016 annual sales of fashionable Sorel footwear reached $220M.
The fourth generation of Boyles is now assuming a leadership role. Tim and Mary Boyle’s son Joe and their daughter, Molly, both excellent golfers, are Columbia executives, and Joe was named President of the Columbia brand last summer. He earned it by, among other achievements, signing a deal naming Columbia as the “Official Outdoor Apparel Partner of Manchester United.” Joe and Molly’s ambitions are tempered by the reminder that Chairman Gert still goes to work every day, making Tim, in a way, the Prince Charles of global apparel.
Joe’s bio on the Columbia website notes that he worked at Robert Trent Jones II from 2003 to 2005. It’s fair to argue that Joe discovered the best opportunity RTJ II ever had when he uncovered a request from a public agency in a small city south of Seattle for proposals to design a new golf course. I was then the CEO of RTJ II. Joe and I flew up to Tacoma on a very rainy day in the fall of 2003, and saw the site of a lifetime—acres of deep sand on the shore of Puget Sound with views of the Olympic Peninsula’s snow-capped peaks to the west. RTJ II pursued the assignment with every resource it could muster, and was rewarded with the opportunity to design Chambers Bay, host of the 2015 US Open.
Golf apparel is now sold in Columbia’s retail stores, in sporting goods and variety stores and directly to consumers via on-line sales. But even when Columbia was not selling golf gear as such, the comfort of its shirts, especially the PGF line designed for fisherman and hunters, attracted golfers. Columbia had taken a stutter step toward selling in the green grass golf market in 1996, signing US Open champion Steve Jones. But golf was not an integral part of Columbia’s strategic focus, so, as Joe says, “we took a twenty-year breather.”
By the time Columbia got back into the golf market two years ago, it was a different company: financially robust, cash-rich, managing multiple brands—Columbia, Sorel, PrAna, Mountain Hardwear—through its enterprise platform, and growing steadily. It struck a deal with a company called Outdoor Custom Sportswear (OCS), which can add logos to Columbia’s shirts and jackets for private clubs, resorts, daily fee courses, or other groups. It can provide five shirts or five thousand from its own inventory. “It’s tough for small players to win market in soft goods,” Joe points out, so this is a smart alliance for both companies. Columbia is known for high-value, differentiated products —that is, the proprietary fabrics which make Columbia’s shirts perform better—which OCS can leverage. OCS can serve small clients, building on Columbia’s brand loyalty, but it also has licensing deals with major universities, as does Columbia.
Ten US PGA Tour players now wear Columbia apparel, but none are household names. Still, when Boo Weekly or Ryan Palmer or Brian Harman play on Sunday, the Columbia logo will enjoy a moment on TV with them. And there will be plenty of fans in the galleries sporting Columbia gear.
The Boyles, meanwhile, continue to contribute to Portland, the city which welcomed Gert as a refugee eighty years ago. Three years ago Gert contributed $100 million to the Knight Cancer Center at Oregon Health and Science University, a project initiated by Nike’s founder. Portland’s global apparel brands are vital elements driving the region’s growth, and the Boyle family saga is an inspiration to immigrant families everywhere.