July 2, 1998

       Surviving the Inline Shakeout
Saturated market, dwindling sales shrink industry

By Paul McHugh
Chronicle Outdoors Writer

The in-line skating craze that crested two years ago left many people - from small shops to big manufacturers - scratching for traction as the boom faded.

Now, soberly picking itself off cold asphalt, the industry prepares for a leaner and more purposeful future, one where market share must be nurtured by innovation and service.

SFChronOutdoors7-2-98.jpg (117671 bytes)

 photo by Liz Hafalia/the Chronicle
Anna Stubbs, an inline professional specializes in teaching all-women skating classes

Every boom has a heyday. It's like that' kid's game of musical chairs: You've gotta have a seat when the music stops," said Lee Cole, 46. His Skates-on-Haight shops in San Francisco benefited from the boom, but his business was buffeted after skating's meteoric rise began to slow.

"In-line skates once were the province of specialty shops like mine," Cole said. "But when big, publicly-traded corporations noticed the sport's rapid growth and jumped in, they turned it into a mass market. Suddenly, there was a huge glut of inventory. Chains like Big Five and Sports.Mart sold skates to the public for less than your average retail shops could obtain them for wholesale.The that great cadre of casual buyers - the ones shopping for skates just because it seemed a cool, happening thing to do - fell back. And our whole industry had a heart attack," Cole said.

SFChronOutdoors7-2-98-1.jpg (56257 bytes) It's not hard to see why big sports equipment companies felt the allure of skating. In the past decade, overall skating participation soared by 850 percent. Recent polls indicate million Americans have tried it and go out at least once a year. However, the once spectacular growth curve now sketches a milder slope. Although the mid-l990s saw 100 to 200 percent growth, the last two years showed only a 20 to 30 percent rate.

Great slugs of equipment pumped into the market by Rollerblade, Bauer, K-2, Roces and other makers backed up in the retail pipeline. The crisis peaked last year. The Sporting Goods Manufacturers Association (a national trade group) said sales of in-line skates and accessories

were $520 million in 1997, an 18 percent decrease from 1996. Severe discounting to dump inventory was largely to blame. Consumers scored fantastic deals. But retailers began to sweat. San Francisco lost two skate stores. Others had to shift ownership, location and personnel.

After Cole watched $3 million dollars in gross sales tumble by half, he sought Chapter 11 reorganization. He shut down his large Oyster Point warehouse/sales shop and opened a smaller retail outlet on Polk at Sutter. Here he sits in the window, assembling custom skates for discriminating buyers.

Other Bay Area locals who make their living from skating found ways to ride out the storm. Their success - amid the larger debacle - illustrate that skating does have "legs." Those who make savvy choices will be able to take advantage of a sport shifting to a steadier, more "mature" growth rate in the next two years. Skating as a sport remains vibrant; a sharply reduced rate of growth only felt, like a contraction of the market.

Anna Stubbs, a nationally ranked, long-distance skate racer from Alameda gave up her effort to coax manufacturers to sponsor her career. Instead, she launched her own business teaching womenonly skating classes for beginners. Graduates can move straight on to using skates as a fitness tool in Stubbs-coached 90 minute workouts.

"I found terrific response," said Stubbs, 33. "There's big demand for something like this. Women like to learn in a supportive environment. They begin very self-conscious. But then, once they have key skills, they don't feel bothered anymore. It's like, OK, bring on the men!"

Art Howard, owner of the Skate Pro Sports shop on Irving, credits the female segment for helping to keep his business going. "We were written up as a good place for women to buy hockey gear, and they really responded." Howard, 32, also said his location attracted skaters who throng Golden Gate Park on weekends. But his ace-in-the-hole is sales via an Internet Web site. These now form a third of his business. Half of the buyers are from overseas. Once they know about his shop, they treat it like a tourist destination when visiting San Francisco.

The Bay Area's sultan of skate is David Miles, 42, who helped organize the Golden Gate Skate Patrol, started the Friday Night Skates (on the San Francisco waterfront) and formed the event-promoting group CORA (California Outdoor Rollerskating Association). Miles said skating's future lies in stimulating the sport at a grassroots level. More than just gaining legal permissions for skaters to operate on city streets, this means getting civic and industry support for skate-friendly events and facilities.

In this respect, a crucial issue for San Francisco is the fate of the Bladium - an indoor skate hockey rink on Third Street that slurped up most of the street hockey scene after opening in 1995. The place is wildly popular with kids: It operates above 95 percent capacity. Co-owner Dave Walsh said he regularly exceeded his business plan by 25 percent. But the leased site itself may get swallowed by the sprawling Mission Bay project. If Walsh and his partners can't convince developers a skating venue would be an attractive item, he must scour the city for a fresh and friendly site.

The backdrop for everything is an industry unkinking itself after its crash off the growth curve. Big outfits such as Nike and Fila, which attempted to force their way in during the crunch, failed to make much penetration in the Bay Area.

The only new player making headway is Salomon. Meanwhile, established figures such as Rollerblade and K-2, continue to try to assess trends and assure a future' -by issuing precisely targeted innovations.

Rollerblade, still the industry gorilla,with market share near 40 percent - has lust introduced an off-pavement, all-terrain skate called the Coyote. K-2, whose popular 2O-model line using SoftBoot technology has spawned many imitations, will introduce an. expandable kid's skate called the Merlin in fall and a split frame skate (with technology based on the new Klap ice racing skates) in l999.

According to Cole, shops that can hang on past the shakeout should eventually find themselves in excellent shape. They will be needed. All the new product in the world won't make a difference if there are no local specialty shops around to provide parts, advice, lessons and service.


CORA (California OutdoorRollerskating Association):

On-a-RolI: Classes for women, (510) 864-8644, or /Iessons.html.

Skate Pro: