As we are all painfully aware, the performance industry has notoriously small profit margins, especially in the racing segment. Those of us in racing-related businesses are always looking for new customers, new markets and new ways to make that all important “incremental dollar.” In this competitive segment, almost any customer is a good customer.
So, imagine the prospect of finding a large group of customers with the following attributes:
- They have a very high repeat and referral customer ratio
- They usually replace your products at least one time each season
- They often have family members who need products as well [meaning one customer actually equals three or four customers]
- They almost always have “sponsorship” funding from family and friends
- They are part of a customer base that is both national and international
- They represent a segment of the market usually ignored by your competitors
- They are one of the fastest growing segments of the racing industry
- They require very little additional inventory to service
Sounds too good to be true, doesn’t it? Believe it or not, it actually does exist. It’s the children’s racing segment.
Youth Market Growth
Due in part to the popularity and extensive media coverage of NASCAR drivers, youth racing has grown tremendously in the past few years. Quarter Midgets, Jr. Dragsters, Karts, Mini Cups, Mini Sprints and Bandoleros have all experienced significant growth and growing exposure in the last five years. A variety of racing product manufacturers have responded to the demand with merchandise designed specifically for the youth racing market.
We had an opportunity speak with a variety of manufacturers and industry insiders about their perceptions of the children’s racing market, and gathered many diverse points of view. Despite their differing perceptions, each believed that the youth racing segment was-in one way or another-an important element of the racing business. Here are a few of their experiences and observations.
The most innovative contributor to youth racing safety gear has been Impact Racing Products and its’ legendary leader, Bill Simpson. We had an opportunity to speak with Simpson recently, and he described his decision to develop the very first youth helmet. “When I was with Simpson Performance Products, no one was interested in developing racing gear for children, so when I started Impact, one of my first goals was to design a helmet specifically for children.”
Specifically For Children
To determine the exact needs and parameters for the helmet, Simpson worked with physicians and specialists in the field of children’s head injuries. He then combined that information with the limited pertinent data available from racing safety organizations, including the Snell Foundation.
Simpson focused on three critical helmet features: impact response, attenuation and weight. The research results provided the framework for a revolutionary new helmet design, a helmet designed specifically for children. It was first introduced as Impact’s Lil Champ Youth Helmet. In comparison to traditional adult helmets, the Lil Champ featured a smaller, lightweight shell, softer and lighter impact absorbing foam, and removable inserts so the helmet could “grow” with the child, thus decreasing the necessity to purchase a new helmet every time the child grew. The Lil Champ later evolved into the current Mini Champ helmet, and it was quickly followed by Impact’s second youth helmet, the Mini Vapor.
Simpson invested approximately $300,000 to $400,000 for development and production of the Lil Champ. In addition to the Mini Champ and Mini Vapor, Impact currently has plans for one more youth helmet model in the near future. However, since the market is relatively small [roughly 600 units per year], and costs to set up a new helmet production run $70,000 to $80,000, there are no additional plans for more youth helmet styles.
In addition to youth helmets, Impact youth suits also address some of the unique needs of the youth racer. Current kid-friendly features include durable and fire resistant Kevlar reinforcements on both the knees and the hips. Impact will also introduce new youth suit designs in 2008 that feature repositioned seams and a larger seam allowance to accommodate growing racers.
Despite the success of the Impact youth gear, Simpson insists he didn’t create the youth helmet to be a huge segment of his business, or to act as a springboard to adult racers. “I was more interested in just keeping the kids safe,” he explained.
To illustrate his point, Simpson described a recent incident in Milwaukee, where an eight-year-old flipped a Kid Kart and the chin strap of their imported helmet broke – with disastrous consequences.
Much like Impact, Italian-based Alpinestars describes their youth gear as more than just adult gear in smaller sizes.
“Alpinestars started as a gear manufacturer for motorcycle and motocross riders, an industry that has produced youth safety gear for years,” explained Alpinestars’ key account manager Bobby Ali. “We understand the special needs of younger racers.” Small details common in motocross have been incorporated into Alpinestars’ youth products, like modified padding in their kart suits. “We want to produce our gear at a decent price, but still include the enhanced safety and security features needed by youth racers,” Ali stated.
Alpinestars believes that the recent influx of youth racers highlights a fundamental change in the American consumer’s overall perception of children’s sports.
Ali says the popularity of the current youth racing market indicates a shift away from traditional sports like baseball and soccer towards the more extreme sports, including auto/kart racing and motocross.
“Kids aren’t into traditional sports. Kids want to emulate their idols, and the increased media exposure of these newer sports has expanded the range of kids’ idols beyond the traditional NFL and NBA pros. These emerging sports weren’t available to previous generations there weren’t large groups of organized racers and easily accessible tracks to their parent’s generation.”
In addition to a shift in the perception of sports, Alpinestars believes there is also a shift in the traditional image of a racer. This is illustrated by Alpinestars’ next product line expansion. In 2008, Alpinestars will be introducing two new driving suits, both designed specifically for women. Due in part to the popularity of professional female drivers like Danica Patrick, females have been entering the racing community in record numbers. Many industry professionals believe that women’s gear is another emerging market that has been largely ignored by the racing community.
Ali sees both the female and the youth racing market as basically untapped by not only manufacturers, but also by racing product distributors. “They tend to focus in one niche or another, and they are missing out on a market with tremendous potential,” Ali explained.
The World Karting Association has also noticed the increase in female racers. “There are a lot more girls in karting now,” stated WKA’s Amanda Gaunder.
Gaunder also described another relatively new shift in overall karting demographics, “Not only are there more girls in karting, but the average age of both the boys and the girls is getting younger and younger.”
Gaunder believes the younger median age is the result of two separate factors; the younger age kids are starting to race, and the younger “move up” age of karters who advance to racing cars.
“If the parents have the means or the contacts to support racing cars, the kids are leaving karting at a much younger age,” Gaudner explained. Young racers are being recruited much earlier by professional teams. In addition, the recent development of “youth teams” has become an alternate method to gain exposure, obtain PR grooming and develop advanced racing skills for young drivers. This trend for youth racers to “go pro” at a younger age illustrates just how talented these young drivers really are.
Case in point: Chad Boat. Chad has been racing competitively for 10 years, but still isn’t old enough for a valid driver’s license. His racing career started with quarter midgets at age 5, and he quickly progressed through to karts, mini sprints and midgets. At 15 years old, Chad is now racing sprint cars…and he has been since age 13 [for more details, go to www.chadboat.com.]
But Chad isn’t the only racer in the family. His father, Billy Boat, is the 1995 USAC Champion and a former IRL racer who raced professionally as recently as the 2003 Indy 500. Chad’s uncle, grandfather and sister also raced. Many youth racers come from a racing family environment and have not only siblings, but parents, uncles and other relatives who still race, and they are still purchasing racing-related products. In Chad’s case, his career represents 10 years of potentially missed opportunities by racing product manufacturers who did not offer a youth-oriented product.
Bill Boat also illustrates that youth racing market opportunities aren’t limited just to safety gear. When Chad was racing mini sprints, Bill’s company, Billy Boat Exhaust, designed an exhaust system for mini sprints that is still in use today.
A number of other racing parts manufacturers are now joining Billy Boat and producing products appropriate for the youth racing market, including Hoosier Tires, Eibach Springs, HANS Performance Products, and even the high-end TKO ceramic bearings.
In some cases, sanctioning bodies are actually driving the demand for youth-specific products. For example, WKA now requires SFI rated chest protectors for their youth karters, and was actively encouraging both manufacturers and retailers to make them available.
Why not take a close look at your business? Are you missing an opportunity to expand into the children’s racing market? You may be able to increase your current product line by just adding a few parts in smaller sizes, or you may have to be a little creative. But whether your expansion is subtle or more comprehensive, the addition of youth racing could mean big gains by simply adding smaller customers.