North Face Bets on Explorers to Recover Lost Trail Cred

For 10 years, Kirk Reynolds has toted his laptop to work at Discover Outdoors Inc. in New York in a North Face backpack. When he’s out leading expeditions, he favors gear from Mountain Hardwear or Marmot Mountain LLC.

“For serious outdoor enthusiasts, North Face is not the first go-to,” said Reynolds, 38, a six-time New York City marathoner whose firm organizes trips in Africa and Iceland.

Plenty of other hikers, climbers and skiiers feel the same way, and that hasn’t been lost on North Face’s owners. They say they are spending more than ever developing everything from better zippers to rapidly drying insulation to regain the brand’s trail cred. At stake is 45-year-old North Face’s dominant position in the U.S. outdoor apparel market.

North Face was founded as a ski and camping-gear retailer in San Francisco in 1966 before it was bought by Kenneth “Hap” Klopp and started manufacturing products two years later. It was acquired by Greensboro, North Carolina-based VF Corp. for about $26 million in 2000, days after North Face said it doubted its ability to stay in business.

VF boosted the brand’s marketing and opened stores dedicated entirely to the line that helped North Face clothing become as common on subways and in suburbs as it was in the wilderness. North Face last year had about $1.9 billion in sales, accounting for 17 percent of VF’s revenue. VF projects North Face’s sales will grow 12 percent annually to $3.3 billion by 2017, said Steven Rendle, a vice president for the brand. VF rose 0.3 percent to $191.42 at the close in New York.

Mainstream Cost

Going mainstream has come at a cost, giving competitors with a technical bent an opportunity to win over enthusiasts who don’t want to be associated with North Face’s ubiquitous backpacks and puffy insulated coats.

Marmot, Arc’teryx Equipment Co., and Columbia Sportswear Co.’s Mountain Hardwear have increased their combined share of the U.S. sport apparel and footwear market by 0.37 percentage point to 4.11 percent in the year that started Feb. 3, according to SportsOneSource, a Charlotte, North Carolina-based research firm. North Face has added 0.23 percentage point to a 5.33 percent share.

Alex Bruni last bought North Face gear 13 years ago when he was into backcountry skiing and rock climbing. Now Bruni, 36, and wife Molly favor clothing from Patagonia Inc. Aside from liking the duds, Bruni admires founder Yvon Chouinard for not selling his company. That independence gives the brand an authenticity that Bruni says has faded at North Face.

For Newbies

“North Face, under VF’s ownership, has certainly become more mainstream,” said Bruni, vice president of corporate development for pharmaceutical maker Patheon Inc. in Durham, North Carolina. “When you see someone wearing North Face, you think they’re probably a newbie to the outdoorsy world.”

North Face isn’t surprised by the criticism, even if it doesn’t agree. Seventy athletes, including mountaineer Conrad Anker, who scaled a previously unclimbed section of the Himalayas in 2011, take 15 to 20 expeditions a year to test North Face garments and gear before they go on sale.

“When you are the largest brand in the outdoor industry, you’re a target for a lot of conversations that you’re no longer as special, as technical and able to really service those technical needs,” Rendle, who runs VF’s outdoor division for the Americas, said in a telephone interview.

Still, it’s spending the most ever on research and development, according to Rendle, who wouldn’t disclose the amount other than to say it’s a “low single-digit” percentage of the brand’s sales.

Development Center

The spending includes a new development center near its year-old headquarters in Alameda, California, that allows designers to work directly with athletes and the production crew on prototypes. Tucked inside a warehouse behind a Home Depot store, the 2,000-square-foot room contains rolls of fabric, sewing machines and a laser cutter for making uniforms for the Winter Olympics in Sochi, Russia, in February, where the brand is supporting the U.S. free-skiing team, its first Olympic sponsorship.

Technology used in the team’s uniforms will go into other clothing lines, said Liz Braund, director of outdoor apparel.

The brand also is introducing a new collection of outdoor training clothing and shoes for hard-core enthusiasts. The line will debut in spring 2014 and includes jackets containing ThermoBall, a synthetic down that can dry in 40 minutes even if soaked, said Braund, who helped develop the patented technology.

North Face delayed ThermoBall’s rollout by a year to fall 2013 after athletes who tested the coats found that static was causing the synthetic filler to clump, she said.

Wonky Zippers

The brand’s explorer-testers have spurred other improvements. French snowboarder Xavier De Le Rue called a product designer on Christmas Eve, while he was on an expedition to Antarctica, to say the zipper of his coat was acting “wonky” in the extreme cold. That led to the development of a zipper with a thicker, stronger pull tab.

North Face also has been testing a line of outdoor training clothing called Mountain Athletics, meant to appeal to trail runners, hikers and those who engage in unconventional workouts, that will go on sale in January. Shirts in the new line are designed with more durable shoulder seams and come in more muted colors than traditional gym wear from Nike Inc. and other makers.

“When something has been around for a while, it gets boring,” said Simon Graj, chief executive officer of Graj & Gustavsen, a New York-based brand consulting company that has worked for Brooks Brothers Inc. and Harley-Davidson Inc. “The bigger the company, the bigger the brand, the more challenging it is.”

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