Outdoor Research, Incorporated

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Outdoor Research, Incorporated

2203 First Avenue South
Seattle, Washington 98134
U.S.A.
Telephone: (206) 467-8197
Fax: (206) 467-0374
Web site: http://www.orgear.com

Private Company
Incorporated: 1981
Employees: 200
Sales: $30.4 million (2003)
NAIC: 339920 Sporting and Athletic Goods Manufacturing

Outdoor Research, Incorporated designs and manufactures gear for use in the outdoors, marketing products such as gloves and mitts, gaiters, technical apparel, stuff sacks, and other accessories used in mountaineering. Outdoor Research, whose products bear the "OR" label, is regarded as a technical outfitter, renowned for producing high-performance equipment. The company designs gear for both men and women. Outdoor Research operates one retail outlet in Seattle and distributes to retailers throughout the world.

Origins

"Seattle," an industry analyst observed in the August 21, 1995 issue of the Seattle Post-Intelligencer, "is the Silicon Valley of the outdoor industry." More than a decade before Silicon Valley became the epicenter of development and manufacture for the computer industry, Seattle represented the heart of design and production of equipment for outdoor enthusiasts. The region was littered with companies devoted to making equipment and clothing for use in the back-country, a list that included: JanSport, a backpack maker; Cascade Designs, a sleeping bag maker; K2, a ski boot and apparel maker; Recreational Equipment Inc. (REI), a mountaineering co-op retailer; and REI's subsidiary, Mountain Safety Research, which made equipment and accessories. The pack of outdoor gear companies in western Washington included sundry other wilderness outfitters, all descendants of the gold-rush suppliers that equipped fortune seekers headed to Alaska in the late 19th century. Among the numerous companies devoted to the outdoors was Outdoor Research, a small company that reflected the personality of its founder, Ron Gregg.

Mountaineering and backpacking began to attract widespread attention during the 1970s, enjoying a substantial boost in popularity that enticed thousands to take to the mountains, including a young physicist in Seattle, Ron Gregg. Gregg was working on his doctorate in applied physics during the 1970s, when he first began to develop a passion for mountain climbing and kayaking.

At the end of the decade, one of Gregg's sojourns in the wilderness led him to start a career as an inventor and entrepreneur. Gregg and a friend had decided to climb the highest mountain in North America, picking a little-traveled route up the Taylor Spur to reach the 20,320-foot summit of Mount McKinley. The mountain, also known by its native name, Denali, rose above all other peaks in the Alaska Range, flanked by five giant glaciers and myriad icefalls that offered a supreme test of the effectiveness of mountaineering gear. Gregg, on his trip up the mountain, experienced what poorly designed gear could do to a climber. Snow was crammed under his gaiters, the fabric climbers used to cover their boots from their instep to below the knee. His cold feet became wet, but his discomfort paled against the problem affecting his friend. Gregg's climbing partner's feet became frostbitten, a condition caused by the poorly designed overboots he wore. Gregg's friend was airlifted off Mt. Denali and Gregg never made it to the summit.

Gregg reacted to the calamity in Alaska when he returned to Seattle. He began designing a new type of gaiter in 1980. At the time, he was employed as a physicist at Terra Technology, a manufacturer of seismic instruments. It was a job for which he had little passion, certainly not when compared with his enthusiasm for mountaineering. He worked on his gaiter design in his basement, eventually producing one with cords that crisscrossed the instep to keep the fabric snug across the boot and pant leg. His satisfaction at the result led to the formation of a company to manufacture and distribute the innovation. Outdoor Research became that company, established in 1981.

Gregg's entry into the outdoor equipment industry occurred after the mountaineering and backpacking boom period had been going on for a decade. The spike in popularity gave Gregg an ever increasing base of potential customers, but it also meant he was subject to intense competition, as the ranks of companies focused on the outdoor industry swelled. Gregg was aided in this regard by the narrow scope of his business. Outdoor Research did not make tents, or backpacks, or sleeping bags, or other gear that occupied the interests of most outdoor companies. The company focused on "the little things," as Gregg remarked in a March 20, 1997 interview with the Seattle Times, designing and making "items most people don't give a second thought to until they wish they had," as the Seattle newspaper noted.

The company's second product typified the niche it chose for itself. Shortly after finishing work on his gaiters, Gregg, disillusioned with his job at Terra Technology, began making first-aid kits for backpackers. Gregg's version of a first-aid kit was made with cloth, featuring numerous pockets to help keep items organized. The design was practical, a hallmark of Outdoor Research's products, and it won the business of enthusiasts who appreciated the thinking behind the product. In 1982, REI, whose mailed catalogs were dog-eared by back-country enthusiasts in search of equipment, agreed to include Gregg's first-aid kit in its catalog, but the retail co-op gave the Outdoor Research product only a modicum of visibility. REI put the kit on the back cover of its catalog. Within days, the first order of Outdoor Research's 1,000 first-aid kits sold out.

A year after the introduction of the first-aid kit, Outdoor Research was still a homespun business. Gregg, 34 years old at the time, was in his basement, handling invoices and stuffing Band-Aids into his kits. Joining him was Randy King, a future vice-president and minority owner in Outdoor Research who came to Gregg's aid in 1983. As the company developed, Gregg served as its designer while King focused on the business aspects of running Outdoor Research. Together, the pair guided the company in their respective roles as it moved out of Gregg's basement and into a more expansive setting, occupying a building south of downtown Seattle. The relocation reflected the growing regard for Outdoor Research, whose products, bearing the "OR" label, came to symbolize innovative quality to mountaineers. Outdoor Research was built on the reputation of its products, and that quality of the company was drawn directly from Gregg.

Gregg preached function over style. "My design goal is 'no-frills,' " Gregg explained in a March 20, 1997 interview with the Seattle Times. "Our basic success is not because we made products people wanted. OR makes products that perform in ways people didn't think they could," he said. "I've never been motivated to design gear that was particularly stylish or sexy looking," he remarked a year later in a July 3, 1998 interview with Puget Sound Business Journal. Outdoor Research, as an expression of Gregg's personality, was devoted to making superior products no matter the look of the product or how small the market for the product.

After the success of OR gaiters and the OR first-aid kit, the company continued to focus on "the little things" that were nonetheless vitally important to people who used them. The company made waterproof overmitts, gloves, casings to keep water bottles from freezing, crampon pouches, and a number of other accessories, all designed with practicality in the forefront and with style as less than an afterthought. The company developed a small but loyal base of customers who gave the OR brand a "utilitarian chic," as the Seattle Times called it in a March 20, 1997 article.

Growth Fueled by the Introduction of the Seattle Sombrero in the 1980s

Outdoor Research, with Gregg as its lead designer, made a variety of highly functional accessories and gear during its formative decade. The company also introduced its first widely popular product during the decade, an item that became its signal financial success. The Seattle Sombrero, a Gore-Tex hat with a Velcro-stripped crown, possessed the functional qualities of a Gregg-designed product, but its popularity outside the mountaineering community almost ran counter to Gregg's ethos. The hat, which looked more like a fedora than a sombrero, was fashionable, the first and only product with an OR label that drew admiring eyes in the streets of downtown Seattle rather than in the mountain ranges that flanked the city.

Sales of the Seattle Sombrero hat drove Outdoor Research's financial growth. In 1986, the company was ranked by Inc. as number 270 on the magazine's annual list of the 500 fastest-growing, privately held companies in the country. Annual sales in the year preceding Inc. 's recognition stood at $1.1 million, a total that would grow to nearly $5 million by the beginning of the 1990s. Hat sales fueled much of the company's growth, but Outdoor Research also possessed strength in other categories, deriving substantial revenue from its coveted gaiters and mittens.

Outdoor Research added to its product line as its sales increased, but only after rigorous testing. The company never tried to exploit the strength of its brand name by introducing a stream of new products whose sole purpose was to increase sales. The company moved methodically, rarely straying from the type of technical gear that defined it. In 1993, for example, Gregg climbed Mount Aconcagua in Argentina to test the company's Flex-Tex line, which was made with Spandura, a combination of DuPont's Condura nylon, Lycra spandex, and Supplex nylon. Growth for growth's sake was never the objective at Outdoor Research, but the company did demonstrate a desire to expand, particularly in the late 1990s.

Company Perspectives:

Our goal at Outdoor Research is to design and manufacture innovative products for outdoor recreation and travel that are of the highest quality, reasonably priced, truly functional, and as versatile as possible.

Exploring New Business Opportunities in the Late 1990s

New markets and new business opportunities were embraced as the company neared its 20th anniversary. In 1998, Outdoor Research announced that it was opening its first retail store, a 2,200-square-foot shop built on the street level of the company's corporate headquarters. "It's not our intention to compete with REI or other retailers," the company's sales and marketing manager explained in a July 3, 1998 interview with Puget Sound Business Journal. "We want to increase our awareness in the Puget Sound region and offer consumers an opportunity to buy anything we make." The foray into the retail sector represented a new business frontier for Outdoor Research, a move made while the company prepared to enter another new business. In May 1998, the company signed a licensing agreement with Wild Roses, a Swiss, technical-apparel company founded by female alpinist Dode Kunz. Through its partnership with Wild Roses, Outdoor Research planned to enter the women's clothing market with the introduction of OR jackets and pants designed specifically for women. The women's line debuted at the Outdoor Retail Summer Market trade show in August 1998, with distribution in North America, Australia, and New Zealand slated for the fall of 1999.

Gregg, "whose porcupine mustache, high cheeks, and denim-colored eyes make him seem like a mountaineer straight out of central casting," as the March 20, 1997 issue of the Seattle Times noted, was the personification of Outdoor Research. The company took its ideals from its founder. Consequently, his death in 2003 represented not only a personal tragedy but it also threatened to strip Outdoor Research of its spirit, of its singular focus on making high-performance gear. On March 17, 2003, Gregg died in an avalanche in the Kokanee Glacier Provincial Park near Nelson, British Columbia, Canada. The skiing party he was with was buried by several feet of snow. Three of the six people in the group were swept away by the avalanche, and one managed to dig himself free, but Gregg and Washington state's assistant attorney general, James Schmid, were dead when their companions reached them.

Gregg's brother, Bob Gregg, served as interim president as employees at Outdoor Research mourned the loss of their founder. The company's future was uncertain for several weeks before someone stepped in to take permanent control of the company. In June 2003, the company was purchased for an undisclosed sum by Dan Nordstrom, a member of Seattle's wealthy retail family who managed the $6.5 billion department store chain Nordstrom, Inc. Nordstrom bought the company because he believed there was an opportunity "to build the company while at the same time retaining its reputation as an innovative maker of mountaineering equipment," as the June 4, 2003 issue of the Seattle Post-Intelligencer reported. The effect of Nordstrom's influence on Outdoor Research remained to be determined in the years ahead, but the legacy of innovation and craftsmanship left by Gregg gave the company's new president and chief executive officer a worthy blueprint to follow.

Principal Subsidiaries

Outdoor Research-Retail Store.

Principal Competitors

Patagonia; The North Face, Inc.; K2 Inc.

Key Dates:

1981:: Outdoor Research is founded.
1986:: Outdoor Research is ranked as one of the eight fastest-growing private companies in Washington state.
1998:: The first Outdoor Research retail store is opened, concurrent with the debut of a line of women's apparel.
2003:: Dan Nordstrom purchases Outdoor Research, be-coming its president and chief executive officer.