Increasing Sales For B.C. Freshwater Fishing And Tackle Stores Through The Development Of Complementary Goods And Services Gregory M. Lawrence Project Submitted In Partial Fulfillment Of The Requirements For The Degree Of Master Of Business Administration The University OfNorthern British Columbia April2006 © Gregory M. Lawrence, 2006 UNIVERSITY of NORTHERN BRITISH COLUMBIA LIBRARY Prince George, B.C. ABSTRACT The sport fishing market in British Columbia is declining and unlikely to grow in the short-term. In addition to the difficulty of operating in a declining market, retail fishing and tackle stores have been challenged with increased competition, changing consumer expectations and new retail technology. In order to grow their operations, these stores will need to develop new ways to increase sales and improve operational effectiveness. Increasing sales is possible through new products and services that are complementary to the existing product mix. These include fishing-related products such as rental equipment, packaged vacations or events, or products that cater to other activities engaged in by anglers, such as camping, hiking and bird-watching equipment. There are also opportunities for fishing and tackle stores to undertake service and merchandising improvements to improve their sales and margins. Options to improve profitability through economies of scale and scope also exist. II TABLE OF CONTENTS INTRODUCTION .... ......... ......... ......... ........ ........ ..... .... ......................................... .... ... 1 SECONDARY RESEARCH- CONSUMER PROFILE ........ ...... ..... .......................... 3 General Demographic Trends ... ..... ........ ............. .... .. .... ...... .... ........... ..... ......... ......... 3 Aging Population .................. ... .......................... ...... ......... ........... ........ ...... ........... 3 Geographic Distribution ..... ....... ....... .......... .......................................... .... .. ....... .... 3 Angler Demographics ................. ............................. ............. ... ........ ............ ............. 4 Age and Sex ....... ........................ ......................................... ......... .... .......... ........... 4 Location .................. ....................... ................. ..... ...... ... ........................................ 4 Participation and Spending ................... .... .................. ..... ...... ........ ........................... 5 Angler Participation .......... ................. ........... .................................. ... ........ ........... 5 Reasons for the Decline of Angling ................ ..... ............... ..... ... .................. ........ 5 Spending on Sport Fishing .......... ... ...... ........... ............... ...... ...... ............... ....... ... .. 6 Seasonality ............................ ............ ......... ......... ............................ ...... ..... .... ....... 7 Motivation for Fishing .............................................................................................. 7 Angler Motivation ................................................................................................. 7 Encouraging More Angling ............................ ... ................ ............................... .... 8 Complementary Activities ........ ... ............................. ... ...... .............. ...................... ... 8 Current Activities ............. ...................................... .... ... .............. ................ ...... .... 8 Growth Sectors ...... ...... ... ......... ...................... ..... ............. .......................... .......... 10 Priority Sectors Identified for Primary Research ............... ......... ..... ................... 11 SECONDARY RESEARCH- RETAIL SECTOR .................................................... 13 Participants ..... ....... .. ............. ..... .......... ............................. ....... ......................... ....... 13 Industry Performance ............... ..... ....................... ................... .... ..................... ....... 13 Retail Trends .... .... .... ..... ......... ......... ........... ..... .... ...... ............................ .... .... .......... 14 Mass Merchandisers, Discount Stores and Specialty Stores ....... .................. ...... 14 Retail Technology ................. ... ... ............. ........ ................ ..... ...... ... ................. .... 15 Growth of the Internet. .................. ...... ............... ............. ............ ... ................ ..... 16 lll RETAIL SURVEY RESULTS ....... ..... .... .......... ....... .......... ....... ...... ... ... ..... .. ........ ...... 18 Types of Business ... ... ... ... ............. .......................................................................... 18 Number of Locations ....... .... .............. .... .... ...... ....... ................................................ 18 Sales Profile ............................................................................................................ 18 Sales of Complementary Goods .... ........................ ............ ....... ........ ....................... 18 Rental Iterns .... ...... ................ ..... ..... ........ ......... ..... .... ........ ....... ... ............................ 19 Trip/Travel Services ... ... ......... .... ...... ....... ......... ....... .................... .... ...... ......... .... ..... 19 Events and Promotions ........................................................................................... 20 Shopping/Convenience Services ..... ...... .. ...... ....... ........ ......... ...... ........ .................... 20 Cooperative Activities ....... ..... ....... ..... ...... .......... .............. ...... ................................ 21 CONSUMER SURVEY RESULTS ..... ........ ..... ... ... ....... ........... .... ..... .............. .......... 22 Age and Sex ............ .... .... .............. ...... ....... .......... ................ ................... .... ............ 22 Location ..... ............... .............................................. ................. .... ............. .............. 24 Size/Type of Community ...... ....... .... ... ........ ...... .... ........ ......... ...... ........ ................... 25 Income ..................................................................................................................... 25 Angler Participation ... ........ ... ....... .............................................. .... ......... ................ 26 Where Anglers Shop ......................... ............. ...... .............. ............ ......................... 27 Motivation for Fishing ......... .. ........ .... ............................................. ........... ............. 28 Complementary Activities ...................................................................................... 31 Expenditures on Complementary Activities .. ..... .......................... .......................... 33 Purchase Interest in Complementary Goods and Services ..................................... 35 Rental Opportunities ...................... ... .............. ..... ..... ................................. ...... ....... 37 Interest in Trip/Travel Services .... ... .... ...... .... .. ... .... ..... ........ ... .... .. ...... .... ........... .... . 38 Interest in Events/Activities ........ ....... .... .... .... ...... ........................ .......... ................. 40 Interest in Shopping/Convenience Services ........ ..... .......... ....................... ....... ....... 42 CONCLUSIONS ... ....... ....... ...... ............ ... ...... ... ...... ..... ...... ....................... ............ ...... 43 RESEARCH METHODOLOGY ..... ...... .......... ... ......................................... .... ........... 46 Secondary Research ................................................................................................ 46 Survey Methodology ................... ..... .... ........ ..... ......... ............ ...... ........ ................... 46 Consumer Survey ................................................................................................ 46 Retail Survey ................... ....... ...... ............ ..... ..... ............................... .... ...... ........ 48 IV APPENDIX ......... .... .................... ...................... ..................... ...... ....................... .... .... 49 Appendix 1 - Consumer Survey ............ ......... ................................ ....... ....... ........ .. 49 Appendix 2 - Consumer Survey e-mail.. .......... ... ...... ... ....... ........ ..... .......... ............ 54 Appendix 3- Retailer Survey ......................... ....... ........................... ...................... 55 Appendix 4 - Retailer Survey Follow-Up Request # 1 ........................................... 59 Appendix 5 - Retailer Survey Follow-up Request #2 .................... ..... .. ................. 60 Appendix 3- Tables ... ................................. ...... ..... ....... ......... ................................ 61 Appendix 4- Figures ......................... ......... ............................................ ................ 69 Appendix 5 -Bibliography ...... ........ ... ........ ..... ....... .............................. ...... ......... ... 74 Appendix 6 - Citations .................. ................ ....... ......... ... ..................... ...... ........... 77 v LIST OF TABLES Table 1 - Fishing Participation Index ...... ............. .... ..... .............................................. 23 Table 2 - Additional Activities Engaged in While on Fishing Trips .......................... 33 Table 3 -Retail Survey: Sales by Product Category .................................................. 61 Table 4 - Retail Survey: Sales from Complementary Goods ...................................... 61 Table 5- Retail Survey: Sales from Rentals ...................... .. .......... .. .......... .. ...... ........ 61 Table 6- Retail Survey: Trip/Travel Services ............................................................ 61 Table 7- Retail Survey: Promotion of Activities ....................................................... 62 Table 8 - Retail Survey: Shopping/Convenience Services .......... .. .. ........ .......... .... ..... 62 Table 9 - Retail Survey: Cooperative Activities ......................................................... 62 Table 10 - Survey of Sportfishing, Consumer Survey and BC Stats: Age Groups .... 63 Table 11 -Consumer Survey: Respondents by Sex .................................................... 63 Table 12- Consumer Survey- Days Fished by Sex ................................................... 64 Table 13- Consumer Survey: Respondents by Province/State .................................. 64 Table 14- Consumer Survey: Respondents by Type of Community ......................... 64 Table 15 - BC Survey of Sportfishing and Consumer Survey: Income Grouping ..... 64 Table 16- Consumer Survey: Days Fished in 2005 ................................................... 65 Table 17- Consumer Survey: Where Anglers Shop ........ .... ...... .... .. .. ........................ 65 Table 18- Consumer Survey: Angler Motivation for Fishing ................................... 65 Table 19- Retail Survey: Understanding of Angler Motivation for Fishing ............. 66 Table 20 - Consumer Survey: Angler Motivation by Store Shopped ........................ 66 Table 21 - Consumer Survey: Days Fished by Store Shopped .................................. 67 Table 22 - Consumer Survey - Other Activities Engaged in While Fishing ............ 67 Table 23 - Consumer Survey: Annual Expenditures on Complementary Activities .. 67 Table 24 - Consumer Survey: Interest in Complementary Goods and Services ........ 68 Table 25- Consumer Survey: Interest in Rental Items .............................................. 68 Table 26- Consumer Survey: Interest in Complementary Services .......................... 68 Table 27- Consumer Survey: Interest in Activities/Events ....................................... 69 Table 28 - Consumer Survey: Interest in Shopping/Convenience Services ............... 69 Vl LIST OF FIGURES Figure 1- BC Population 55-64 ... ................................. ......... .... ... ........ ........................ 4 Figure 2 - Other Activities Engaged in by BC Anglers (2000) .................................... 9 Figure 3 -Product Categories for Complementary Activities .................................... 12 Figure 4- B.C. Sport Fishing GDP .......................................................... .. ................. 14 Figure 5 - Retail Survey: Sales of Complementary Goods ......................................... 19 Figure 6 - Retail Survey - Shopping/Convenience Services ....................................... 21 Figure 7 - 2006 Consumer Survey Respondents by Age with Comparison to the 2000 BC Sportfishing Survey and 2005 BC Population Statistics ............ 22 Figure 8 - Consumer Survey: Days Fished by Sex ...... .. .. .. .... .. .................................. . 23 Figure 9 - Survey Respondents by Province/State ..................................................... 24 Figure 10 - 2006 Survey Respondents by Type of Community ........................ .. ....... 25 Figure 11 -Angler Income Groupings ...................................... .. ................................ 26 Figure 12 - Days Fished in 2005 .. .............. ........ .. ....................................................... 27 Figure 13 - Where Anglers Shop ...... .... ...................................................................... 27 Figure 14 - Consumer/Retailer Comparison of "Reasons for Fishing" ...................... 29 Figure 15 - Motivation for Fishing by Store Always/Mostly Shopped ...................... 30 Figure 16 - Days Fished by Store Shopped ...... .. ...................................................... .. 30 Figure 17 - Days Fished by Internet/Mail Order Shopping .. ...... .......... .... .. .. .......... .. .. 31 Figure 18 - Complementary Activities Engaged in While on Fishing Trips .............. 32 Figure 19 - Annual Expenditures on Complementary Activities ................................ 34 Figure 20- Purchase Interest in Complementary Equipment and Supplies ............... 35 Figure 21 -Respondent Requests for Other Equipment and Supplies .......... .. ............ 36 Figure 22 - Interest in Rental Items ............................................................................ 37 Figure 23 -Interest in Trip/Travel Services ........................................................ .... .... 38 Figure 24 - Interest in Events/Activities ..................................................................... 40 Figure 25- Interest in Shopping/Convenience Services ............ .. .. ............ .. .. .... .. .. .... . 42 Figure 26 - Rating the BC Fishing Experience .. .. ....................................................... 69 Figure 27- Number of Active Anglers in BC .... .. .... .. ...... .... ...... .. ........ .... .. .. ............... 70 Figure 28 - Average Days Fished by Anglers in BC 1985-2000 .................... .. ........ . 70 Figure 29 -Average Direct Expenses per Angler in BC 1985-2000 .......... .. ............. 70 Figure 30 - Angler's Reasons for not Fishing More .................... ................................ 71 Vll Figure 31 -Top Items Researched/Purchased Online .... ............ .. ............................... 71 Figure 32 - Barriers to E-Commerce Adoption for Small Firms .......................... ...... 71 Figure 33- Angler's Motivation for Fishing ............................................ ................... 72 Figure 34 - Reasons Anglers Fish- U.S ................................................... .................. 72 Figure 35- Situations that Would Encourage an Angler to go Fishing .................... . 73 Figure 36 - Trends in Participation for Selected Outdoor Activities .......................... 73 INTRODUCTION British Columbia is home to 217,000 lakes and 430,000 rivers and streams 1 containing 80 species of fish • Respondents to the 2000 Survey of Sportfishing in British Columbia identified the fishing quality as world-class, with 70% of anglers rating their 2000 B.C. fishing experience as good to excellent. The results of the survey (Figure 26- Rating the BC Fishing Experience) would seem to demonstrate that the quality of the resource is not an issue in the decline ofthe Sport Fishing industry. However, the Survey of Sportfishing in British Columbia uses fishing licences as the source of survey respondents. Therefore it does not include those who may have fished in the past and quit, at least in part as a result of poor fishing results. A closer look reveals that the quality of the resource is declining - as measured by angler catch-per-unit-effort or CPU. The areas of decline tend to be adjacent to urban areas and the Canada-U.S. border, and include the South-Central British Columbia trout population. 2 This longer-term decline in the resource has a negative effect on angler motivation and participation. Angler participation is also declining as a result of: angler time constraints; decreasing opportunities for fishing as waterways are developed and are no longer suitable for sport-fishing; an increase in the number of recreational alternatives; and a shift in population from rural to urban centers. Declining markets for sport fishing in British Columbia are resulting in reduced revenues and profits for retail freshwater fishing and tackle stores. This paper reviews the environment in which this sector operates, and provides 2 recommendations for increasing store revenues through the development of additional products and services. The report includes: A discussion of general demographic trends affecting the sportfishing sector. An analysis of the freshwater sport fishing sector in British Columbia with discussion on the reasons for the decline of the industry. A review of global consumer and retail trends affecting the industry. Demographic and behavioural profiles of anglers. An analysis of angler activities and related product/service opportunities. The report includes recommendations for: Products and services that can be added to the fishing package to increase store revenues. Re-positioning stores to match emerging trends and consumer expectations based on the addition of these products and services. This work is important to the sport fishing sector because: It provides retailers with information and ideas in support of increased profitability. It will lead to improved product and service offerings, thereby enhancing value to customers and ultimately increasing the overall customer base. 3 SECONDARY RESEARCH - CONSUMER PROFILE General Demographic Trends Aging Population The aging of the baby-boomers is the most significant demographic force shaping the marketplace with nearly 1/3 of the population between the ages of 39 and 58 in 2005. The median age increased from 29.6 in 1981 to 37.6 in 2001 3 . Canadian adults now have more parents than children for the first time in history. The biggest concerns of the elderly are health preservation, wealth preservation and safety/security. The aging population is also leading growth in passive recreation, recreation fitness and gardening4 . Geographic Distribution There has been a long-term population migration trend away from rural communities. The majority of Canadians (64%) now live in the Country ' s 27large Census Metropolitan Areas 5. As the population becomes more "urbanized" there are fewer individuals being exposed to the sport of fishing . In addition, it is challenging for urban dwellers to obtain the experience necessary to have success with the sport. 4 Angler Demographics Age and Sex The average age of B.C. resident anglers increased from 40.8 years in 1980 to 46.9 years in 2000. Canadian anglers from other provinces increased in average age from 38.3 years to 45.4 years over the same period. Participation rates for fishing have traditionally been highest in the 55-64 year age group 6. The B.C. population cohort of 55-64 is forecasted to grow significantly over the next 17 years levelling out at approximately 700,000 individuals. This increase matches well with the primary cohort for fishing. Figure l - BC Population 55-64 Persons (Thousands) %55-64 16 ID Pop 55-64 - % 55-64 I 12 1---' 8 - ~ m 4 98 1 600 400 Forecast 111111111111 11111111111 1976 4 200 Es1imated 197 / soo 986 1991 1996 200 y~ 2006 2 1l 201 0 202 t 2026 203 1 7 Location In 2000, resident anglers made up 89% of the fishing days in British Columbia. 45% of non-resident anglers were Canadians visiting from other Provinces, primarily Alberta. 53% were Americans, primarily from Washington with 5 the remaining 2% from other parts of the world, primarily the United Kingdom and Europe 8 . Participation and Spending Angler Participation Angler participation has been declining across North America. There were almost 17% fewer anglers in B.C. in 2000 than in 1995. The greatest decreases were from B.C. Residents and other Canadian anglers at 20% and 13% less anglers respectively, with non-Canadian anglers showing a modest increase of 3% (Figure 27 - Number of Active Anglers in BC). The primary reasons for this decline are: angler time constraints; decreasing opportunities for fishing as waterways are developed and are no longer suitable for sport-fishing; declining fishing quality ; an increase in the number of recreational alternatives; and a shift in population from rural to urban centers. For those anglers who do fish, the average number of days fished remained relatively consistent for the 15-year period from 1985-2000 (Figure 28 - Average Days Fished by Anglers in BC 1985-2000). Reasons for the Decline of Angling Eighty-two percent of B.C. anglers surveyed in 2000 indicated that they did not spend as much time fishing as they would have liked. The primary reason given was not enough time. Other reasons included poor catch rate, fishing spots too crowded, restrictive regulations, and fish too small (Figure 30 - Angler's Reasons for not Fishing More). 6 Fifty-five percent of U.S. anglers identified a lack oftime as the reason they did not fish as much as they would have liked. Work obligations was the main reason cited (69%), followed by family obligations (22%), education/school commitments (13%) and other sports and hobbies (9%). The top 5 issues influencing inactive anglers not to fish more were cited as: amount of free time, lost interest, family obligations, work obligations and not having anyone to go with. 9 Potential opportunities for freshwater fishing/tackle stores include identifying and developing ways to save time for anglers, and positioning stores to support angling as a family-oriented sport. Spending on Sport Fishing Despite dropping participation, total direct expenditures for angling were just 3% lower in 2000 than in 1995. Of particular interest were the increases in package deals (62% increase), fishing services (44%) and lodging (21% increase). These increases are consistent with trends in other tourism-related sectors where trip packaging, consumer convenience and higher levels of service are growing in importance. Total expenditures decreased for fishing supplies (24%), transportation (14%) and food (10%) 10 • Trip packaging, guiding services, and lodging represent potential service enhancements for the retail sector. From 1995 to 2000, B.C. resident expenditures on Sport Fishing declined 47%. Other Canadian expenditures increased by 102% and non-Canadian expenditures increased 107%. Spending on fishing equipment declined 39%, boating equipment 38%, special vehicles almost 40%, and, other expenditures, about 45% 7 (Figure 29- Average Direct Expenses per Angler in BC 1985-2000). The 39% decline in fishing equipment expenditures is particularly relevant to fishing/tackle stores, and clear motivation for developing additional complementary products and services. Seasonality The majority of fishing activity happens between the months of June to September. Fishing and tackle stores have an opportooity to look for services and/or products to increase their sales in their "shoulder" months. Motivation for Fishing Angler Motivation An increasing number of anglers are fishing for relaxation, familial and naturalistic values. This is consistent with both the aging demographic and with the trend toward decreasing catch-per-unit-effort. An analysis of 1999 data compared to 1980 data demonstrates a clear trend of increasing motivation for these reasons (Figure 34 -Reasons Anglers Fish- U.S .) with the numbers of participants fishing for sport, fishing for large fish and fishing for food decreasing. 11 Fishing for relaxation, nature and companionship are the key fishing motivations for B.C. anglers. (Figure 33 -Angler's Motivation for Fishing). U.S. studies portray similar results with 35% of anglers fishing for relaxation, 33% fishing to be with family and friends and 13% fishing to be close to nature. 8 It is also apparent that there are two distinct markets within the fishing population. Those who fish to relax and to be with friends and family, and those who fish for sport and utilitarian values. The market is clearly shifting toward the former. Encouraging More Angling When asked what would encourage them to go fishing, U.S. anglers cited: asked by a child, invitation from a friend, offered as part of a vacation, one-stop equipment/licence purchase, fishing spot with all gear provided, borrowing fishing gear free, amateur fishing tournaments with many prizes and fishing clinics (Figure 35- Situations that Would Encourage an Angler to go Fishing). Eighty one percent of anglers and 45% of non-anglers said they would go fishing more if it were offered as part of a vacation. For avid anglers, fishing is the reason to take the trip, where for less avid anglers fishing needs to be marketed as part of the vacation- not the reason for it. 12 Complementary Activities Current Activities Anglers are consumers of other outdoor recreation products and services. These complementary activities represent opportunities for fishing/tackle stores to expand their product/service offering. In British Columbia, camping was rated as the most popular complementary activity by 72% of anglers, with hiking indicated by 52%. 9 Figure 2 - Other Activities Engaged in by BC Anglers (2000) Activity Camping Boating Canoeing Hunting Nature study Biking Off-roading Hiking Horseback Swimming Snowshoeing Skiing Other activities No other activities ,.,umber responding 13 B.C. Resident I Other Canadian NonCanadian 172,015 85,540 56,680 63,052 39,909 47,965 35,515 119,136 16,783 105,277 12,623 60,258 28,996 12,184 20,475 9,648 6,579 5,694 6,624 4,855 4,998 15,984 3,173 10,900 1,749 6,165 3,197 1,669 22,106 232,609 28,211 Total % 11 '108 7,483 6,998 8,606 3,957 1,792 19,517 3,395 10,225 1,224 7,024 4,921 5,556 214,596 106,296 70,742 75,744 55,139 56,777 42,305 154,637 23,351 126,402 15,596 73,447 37,114 19,409 71.8 35.5 23.7 25.3 18.4 19.0 14.1 51 .7 7.8 42.3 5.2 24.6 12.4 6.5 38,263 299,0831 100 Research on U.S . outdoor recreation trends identified the following groups as being very interested in freshwater fishing : hunters, target shooters, boaters, wildlife/bird watchers, campers, wilderness campers, national/state park visitors, hikers, water skiers, waterfowl hunters, small game hunters and mountain bikers. 14 Not surprisingly, wildlife/bird watching, camping and hiking are consistent with angler favourites . Research undertaken by the Sporting Goods Manufacturers Association and the USDA Forest Service identified two major market segments related to the Sport Fishing segment: the Huntin' and Fishin' Avids and the Bass Club. Huntin' and Fishin' Avids are active participants in all forms of outdoor recreation with an emphasis on hunting and fishing. Other popular activities include camping, group activities, walking and hiking. Major constraints to increased 10 participation include lack of time, lack of money, no one to do activities with, crowded activity areas, inadequate information and pollution problems. Huntin' and Fishin' Avids are also interested in other outdoor/nature activities. Huntin' and Fishin' Avids are consumers of equipment that support these activities including: outdoor footwear, foul weather gear, outdoor apparel, binoculars and cameras 15 Members of the Bass Club are primarily anglers. Bass Club members participate more in warm water fishing and motor boating. Constraints to increased participation include lack of activity companions and crowding of activity areas. Both of these groups are likely to participate in less challenging physical activities. They are not driven by the need for excitement and marketing should focus on outdoor comfort and practicality of use. Growth Sectors From 1982-83 to 1997, a number of activities experienced growth in the US market. Bird watching had the highest growth, 155% from 21 million to 54 million participants. Hiking grew 94%, backpacking 73%, downhill skiing 59%, and primitive area camping (58%). 16 US participation in viewing or studying activities including bird-watching, wildlife viewing, and studying nature increases until about age 40 where it reaches a high of over 80% and then declines. Over the age of 60, less than 60% of the population participates in viewing or studying activities. 17 Participation in hunting has declined in recent decades. Participation rates remain relatively constant at around 10% until the age of 60 when they drop to less 11 than 5%. 18 For this reason as well as the consumptive reputation of hunting which is not consistent with other identified "nature activities", hunting was not specifically included in the Consumer Survey. Participation rates in fishing decrease as people age moving from a high of over 35% through to age 40, to approximately 30% from ages 40-49, 25% for ages 50-59. over the age of 60 participation rates remain comparatively high at approximately 15%. 19 Priority Sectors Identified for Pri mary Research Bird watching, hiking, backpacking and camping were chosen for further survey work, based on the following analysis: These activities were the 1,2,3 and 51h rated growth sectors in the U.S. in 2003 (Figure 36- Trends in Participation for Selected Outdoor Activities), Camping and hiking were identified as the first and second "other activity" engaged in by B.C. anglers. The Women in the Outdoors 2005 survey identified hiking or backpacking (39%), fishing (39%), camping (37%), bird watching (37%), primitive cooking (36%) as activities undertaken in the U.S. 20 The table below lists a variety of product categories that were developed from on-line retailers of bird watching, hiking, back packing and camping gear. As can be seen in the cross reference, there are similar equipment needs to fishing across many of the categories. 12 Figure 3- Product Categories for Complementary Activities Fishing Back packing books, magazines, DVDs or videos Backpacks Binoculars or spotting scopes Bird feeders and bird food Bird watching books, magazines, DVDs or videos Birdhouse cameras Camping furniture and cots Camp stoves and cooking equipment Camping books, magazines, DVDs or videos Daypacks and hydration GPS units, altimeters, compasses Headlamps and flashlights Hiking books, magazines, DVDs or videos Hiking shoes and boots Knives and tools Maps Outerwear and rainwear Sleeping bags Sleeping pads Tents Walking sticks and poles Water purification, filters X Bird watching X X X X Hiking X X X X X X X X X X X X X X X X X X X X X X Back packing X X X Camping X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 13 SECONDARY RESEARCH - RETAIL SECTOR Participants The retail industry for freshwater sport fishing equipment is made up of: Independent owner-operators. These are typically single-store operations run by local proprietors. Independent stores are a prime source of local information on fishing locations and the "right gear" for local conditions. Sporting goods stores carrying a variety of sporting goods, a portion of which is made up of sportfishing equipment. Hardware and general stores carrying a variety of goods, a portion of which is made up of sportfishing equipment. Discount chains and superstores such as Wal-Mart and Canadian Tire. These stores are focused primarily on the lower-end mass merchandise market. Store staffs are not typically knowledgeable about the sport. On-line retailers, the largest and most established of which is Cabelas (http://www.cabelas.com/). Cabelas offers a full line of outdoor equipment including a wide selection of medium to high quality fishing gear. This focus of this report is on the independently-operated specialty freshwater fishing/tackle stores. Industry Performance Sport fishing and retail tackle stores are not segmented by a Standard Industrial Classification (SIC) code by Statistics Canada. As a result there are no 14 readily available and consistent measures of the economic impact or growth of the industry. BC Stats extrapolates data for the industry from a number of other servicesector industries. An analysis of this data shows a general decline of overall GDP for the sport fishing industry in B.C. Figure 4- B.C. Sport Fishing GOP 70 GOP, $ 1992 m i.'ion 60 50 40 30 20 10 Freshwa1er 00 QO 1Q84 1Q86 1988 1990 1Q92 1994 1996 21 Independent owner-operators have been particularly hard-hit over the past 10 years through a combination of increasing competition from discount chains and Internet retailers and a shrinking market. In the lower mainland of BC for example, seven tackle stores closed in 2004/05 22 . Retail Trends Mass Merchandisers, Discount Stores and Specialty Stores The structure of the retail industry in Canada has changed significantly over the past 10 years, primarily through the growth in mass merchandisers, discount stores and specialty stores (category killers), driven by consumer demand for both 15 low prices and convenience. Operations such as Wal-Mart are leading the way with competitive advantages based on "everyday low pricing" and advanced logistics systems. The primary impact of these changes on fishing and tackle stores has been the loss of the medium to low end market to mass merchandisers such as Canadian Tire and Wal-Mart. Retail Technology New technologies are being used increasingly to create competitive advantage in the retail sector. UPC codes and point-of-sale systems have allowed for the development of a number of marketing and logistics advantages including: Customer loyalty programs using information collected to target products and marketing messages to consumers Just-in-time supply chain management using sales data collected Quicker check-out time Improved data entry accuracy Interactive information kiosks use touch-screen technology to improve services in areas such as product information, ordering of non-stock items, selfservice ordering and gift registration. The development of RFID tags will soon result in "self-service" check-outs, further reducing selling costs for large retailers. The majority of independent tackle stores have been slow to adopt these improvements. Although these systems are rapidly becoming the standard "cost of 16 entry" for most retail operations, it is difficult to justify these expenditures for single independent stores. Growth of the Internet "Connected" consumers are increasingly using the Internet for both product research and purchasing of products and services 23 . Total Internet sales have increased from $4.2 billion in 1999 to $19.1 billion in 2003. Business to consumer sales accounted for $5 .5 billion of this amount. 68% of Canadians used the Internet in 2002 with 41 % having made online purchases24 • Canadians are most comfortable buying low-cost items on-line. The Internet is also used to research more expensive items (Figure 31 -Top Items Researched/Purchased Online). The Internet provides consumers with: instant access to product information and comparative pricing increased selection of goods and services dynamic pricing models such as airline tickets that are priced differently depending on when you buy them sharing of product and service feedback with other consumers The Internet represents a marketing and customer-relationship building medium that is not currently well-used by independent tackle shops. 17 1.1.1.1 Use of the Internet by Small Firms Eighty-two percent of all Canadian businesses were connected to the Internet in 2003. For small ftrms, this rate is reduced to 76%. Only 29% of small ftrms have their own web site and of these, only 26% have interactive capabilities. 25 An Industry Canada survey on barriers to e-commerce identified two primary barriers to cited by small ftrms, goods and services do not lend themselves to Internet transactions and prefer to maintain current business model. Security concerns, costs of development, employee skills and customer readiness were also cited (Figure 32Barriers toE-Commerce Adoption for Small Firms). It is interesting to note that the number one concern - goods and services do not lend themselves to Internet transactions has reduced to 44% from 52% only 3 years earlier, as more ftrms recognize the capabilities and advantages of the Internet. 18 RETAIL SURVEY RESULTS Types of Business For the purposes of inclusion in the Retail Survey, only those respondents with a retail presence and at least 40% of total sales from freshwater fishing equipment and supplies were included. Other business types not included in the final sample included: on-line advertising, mail-order, internet, hardware, marina, sporting goods, and general store. Number of Locations 12 of 13 respondents indicated that they operated one location. One respondent indicated two locations. This result is consistent with the assumption that the retail specialty freshwater fishing/tackle sector in British Columbia is dominated by independent owner-operated stores. Sales Profile Included respondents generate 57% of their sales from freshwater fishing equipment and supplies. 12% of sales comes from saltwater fishing equipment and supplies, 10% from hunting equipment and supplies and 21% from other goods and services (Table 3 - Retail Survey: Sales by Product Category). Sales of Complementary Goods Current sales of complementary goods and services by included respondents are limited. This is not surprising given that the survey sample was limited to respondents who generate at least 40% of their total sales from freshwater fishing equipment and supplies. The largest categories of complementary goods were 19 outdoor apparel with 10 of 13 respondents indicating sales of $1 ,000 to $10,000 and one at $10,000 to $20,000, followed by camping supplies and equipment with 8 of 13 respondents indicating sales of $1 ,000 to $10,000, and day hiking/backpacking with 5 respondents indicating sales of $1,000 to $10,000 and one at $10,000 to $20,000 (Table 4- Retail Survey: Sales from Complementary Goods). Figure 5- Retail Survey: Sales of Complementary Goods 12 . - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - . 10 8 +--- - - ---l 6 4 2 0 +--...L.-- $0-1000 $1 ,000-5,000 $5,000-10,000 $10,000-20,000 ID Camping • Day hiking/backpacking D Nature/bird watching D Outdoor ~ Rental Items There was very little sales indicated from rental items with only two respondents indicating rentals of pontoon boats and fishing gear with sales of $1,000 to $5,000 per year(Table 5- Retail Survey : Sales from Rentals). One respondent indicated that they rent DVDs and videos. Trip/Travel Services 5 of 13 respondents indicated that they organize/package guiding and charter services. Two of 13 respondents indicated that they organize/package fishing vacations (Table 6- Retail Survey: Trip/Travel Services). None ofthe respondents organize or package lodging or transportation services. 20 Events and Promotions The most popular activities organized and/or promoted by retail respondents were fishing clinics/workshops with 3 of 13 offering more than 10 workshops per year, 1 offering 5-10 and 7 offering 1-5 per year. Fishing derbies and family fishing events were next with 8 of 13 offering 1-5 events per year. Four respondents offer 15 "fishing buddy" programs per year (Table 7 - Retail Survey: Promotion of Activities). Other events and promotions cited by survey respondents included: movie nights, party fly-tying nights, familiarization trips, fly-casting competitions, information sessions for new customers, and spey claves. Shopping/Convenience Services Retail respondents have limited e-comrnerce capacity. 8 of 13 respondents have a web-site with information on their store and/or products carried, and only 3 of 13 have e-comrnerce capability. 3 of 13 indicate that they provide customer loyalty programs with 4 indicating limited service in this area. The majority of stores indicate that they provide customers with the ability to order non-stock and specialty items. Gift registration is offered by 3 of 13 stores with 5 stores indicating limited service in this area. One store indicated that they provide information kiosks with product and fishing information with 6 stores indicating limited service in this area (Table 8- Retail Survey: Shopping/Convenience Services). 21 Figure 6- Retail Survey- Shopping/Convenience Services ~ ~ 8 +--- - - - - - - -----1 ONo • Limited DYes 6 +----------t 4 2 0 Web site with store/product information Web site with product ordering Customer loyalty programs Order nonGift registration stock/specialty items Information kiosks Other shopping/convenience services cited by respondents included: a mobile tackle van and mail order catalogue. Cooperative Activities Formal cooperative activities are limited. 10 of 13 respondents indicated that they share information and approaches with other retailers occasionally or often. Three indicate that they engage in cooperative advertising with suppliers "often with 7 additional respondents indicating "occasionally". 5 of 13 respondents indicate that they occasionally engage in buying groups and cooperative advertising with other retailers (Table 9- Retail Survey: Cooperative Activities) Other cooperative activities cited by respondents included: stock swapping with other retailers and referrals on guiding. 22 CONSUMER SURVEY RESULTS Age and Sex The 2006 Consumer survey indicates the highest participation rates in the 4554 year age group at 30.9% of total respondents. The next highest group is the 55 and over age group at 25.1% of respondents. The 35-44 year age group made up 19.7% ofrespondents with the 0-34 year age group making up only 24.3% of respondents, compared to 45.8% of the BC population (Table 10- Survey of Sportfishing, Consumer Survey and BC Stats: Age Group). Figure 7 - 2006 Consumer Survey Respondents by Age with Comparison to the 2000 BC Sportfishing Survey and 2005 BC Population Statistics 50.0% . - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - . . , 45.0% 40.0% 30 .0% + - - - -- - - - - - - - - - - - --r-a-- - - 25.0% 20.0% 1 -- - -1 15.0% 10.0% 5.0% 0.0% 0-34 35-44 45-54 [ • 2000 BC Sportfishing Survey ---cJ2oo6 Consumer Survey -- ~ ~ ~ t; BC General Population ---- 55 and over J The 2000 BC Sportfishing survey is also shown for comparative purposes Males made up 87.2% of survey respondents. This is somewhat higher than the 2000 Survey of Sportfishing in British Columbia results of 78.1% male. These results are attributed to the fact that more male anglers are "angling avids" who are more likely to visit web-sites and belong to clubs associated with fishing . 23 52% of Male survey respondents fish more than 30 days per year compared to 19% of Female respondents. As stated above, it is expected that the survey methodology resulted in a higher percentage of avid anglers as compared to the general population. Figure 8- Consumer Survey: Days Fished by Sex 60% 50% 40% 30% • Female 20% 10% 0% 0 1-5 6-10 11-15 16-20 21-30 More than 30 A participation index was developed by dividing age group percentages for the BC general population by the age group percentages for the 2000 Survey of Sportfishing in British Columbia. The results of that analysis are as follows: Table 1 - Fishing Participation Index Under 20 20-24 25-34 35-44 45-54 55-64 65 and over 2000 BC- 2000 2.6% 23.7% 3.2% 6.2% 12.7% 13.6% 24 .2% 16.3% 25.9% 14.0% 18.2% 8.8% 13.2% 12.4% Index 0.11 0.52 0.93 1.48 1.86 2.07 1.06 BC- 2005 2006 3.3% 22.9% 4.2% 7.1% 16.7% 13.4% 19.7% 15.8% 30.9% 15.7% 19.5% 11.4% 5.6% 13.8% Index 0.14 0.68 1.23 1.21 2.22 2.22 0.45 24 The highest participation rates are clearly in the 45-54 and 55-64 year age group at an index value of 2.10 and 2.11 using the 2006 Consumer Survey data. It is expected that as the 55-64 year age group moves into the next age cohort, their participation rates will begin to decline, further reducing the total numbers of anglers. Location The survey methodology for the 2006 Survey resulted in a higher proportion of survey respondents from British Columbia at 85% versus 77% for the 2000 Survey of Sportfishing in British Columbia. Survey responses from Alberta were comparable at 7% versus 8% for the 2000 Survey. Other respondents totalled 5% versus 9% for the 2000 Survey. Figure 9- Survey Respondents by Province/State BC Alberta Washington [ • 2000 Survey o 2006 Survey I Other 25 Size/Type of Community 54% of survey respondents indicated that they lived in an urban or suburban community. According to Statistics Canada data 85% of the BC population lived in urban areas in 2001 . The numbers of people living in urban communities is increasing: from 80% in 1990 and 78% in 1981 26 . This trend will continue to negatively affect the overall market for sportfishing. This analysis supports previous research that indicated that angler participation is decreasing as population moves to urban centres. Figure 10 - 2006 Survey Respondents by Type of Community 40.0 % 35 .0 % 30.0 % 25 .0 % 20.0 % 15.0 % 10.0 % 5 .0 % 0 .0 % +-__j_ _...___-----.._ Urban/ City ___L_ ____._ - - , -_ Suburban _ L __ Small Town ~ _ ~ Rural Income 52% of survey respondents indicated a household income of over $60,000. These individuals represent potential markets for enhanced service offerings. When compared to the 2000 Survey of Sportfishing in BC, the 2006 Survey results show a disproportionate share of anglers indicating an income of more that $80,000 (Table 15 - BC Survey of Sportfishing and Consumer Survey). It is not clear 26 to what extent this difference is a result of: a different survey sampling methodology, changing incomes over time, and/or fewer don' t know/prefer not to answer responses to the 2006 Survey. Figure II -Angler Income G roupings 35.0% 30.0 % 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Less than $20,000 $20,000 to 40,000 $40,000 to 60,000 $60,000 to 80,000 More than $80,000 Dont know/no answer Angler Participation Almost half of the survey respondents fished over 30 days in the last year. (Table 16- Consumer Survey: Days Fished in 2005). These results should be viewed in the context of the survey limitations outlined in the Survey Methodology section, particularly in regard to the assumption that "avid" anglers were more likely to be survey participants. 27 Figure 12- Days Fished in 2005 50.0% r-- 45.0°/o - -- 40.0 % - - 35.0% --- 30.0% -- -- - - 25 .0 % 1-- 20.0 % -- 15.0 % f--- --1 1- 10.0 % 5 .0 o/o D O.Oo/o 0 1- 5 -- --n---n-- -- 6-10 --- --- 11 - 15 -- 16-20 -- 1- -- 1- r--- 11- 2 1-30 More than 30 Where Anglers Shop Survey respondents were asked where they bought their fishing gear /tackle. Results were rated on a four point scale from 0 ="never" to 3 ="always". Specialty fishing/tackle stores were rated highest at 1.87 (Table 17- Consumer Survey: Where Anglers Shop). Figure 13- Where Anglers Shop 2.00 1.80 _ 1.60 - 1.40 1.87 .....--- - 1.18 1.00 0 .80 0 .60 0.40 0 .20 1.20 L o.o_o _ _ -- -- -- -- 0 .86 0 .36 II I I ~y Discount store Sporting Goods Internet 0.38 I I r- Mail-order I 28 Motivation for Fishing The 2006 Survey asked respondents to rate the reasons why they fish against a variety of "motivations". These results (Table 18 - Consumer Survey: Angler Motivation for Fishing) were consistent with the U.S. National Survey of Fishing, Hunting, and Wildlife-Associated Recreation and with the 2000 Survey of Sportfishing in British Columbia. The strongest motivations are in the social/relaxation grouping (relaxation, companionship, family togetherness, close to nature and to get away) with the challenge/competition grouping (for the challenge, for large fish, many fish) of lower importance and "fish to eat" rated at the lowest level. -- -- 4.50 ;-- 400 - ;-- I 350 - -- -- 3.00 - -- - 2.50 - r----- - r--r--r--- 2.00 1.50 1.00 - - 0.50 - - I #'I> ~ ~ ~ ~ ~ 6' - ~ - - - - - - -- -- '<_'li - ~ - - -- _ ;--r----- - - f-- - r----- - - f- - 1-- - -- -- -- -- r-r-- - - ,., ,o -- -- - -- ~ .,._-s <:-'li -- - - ~ - r--r--- .,, rF ,<§$ ~... - - - -- - -- -- - 0.00 - - -- "0 ,._'li ~ ,o '<'<$' w