Arena celebrates its 50th birthday in 2023. CEO Peter Graschi sees the swimwear specialist as well positioned for the future. In our interview, he explains how Arena plans to expand its growth even further, why it has no difficulty with the shortage of skilled workers, and how the process of becoming a B Corp supports its goals.
SGI Europe: First of all, congratulations on Arena’s 50th anniversary. How will you celebrate?
Peter Graschi: We’re celebrating with a special capsule collection called the “Fifties Anniversary Collection.” As a company, we have also been celebrating. Last year, we had our 50th-anniversary sales meeting in Sardinia, where we invited guests such as Matt Biondi and Steve Furniss, who were with us in the early days, along with our current athletes, such as Sarah Sjöström and Cate Campbell.
Arena with double-digit growth
Are Arena’s numbers also worth celebrating?
Yes, we had our strongest year in 2022. In swimming, we had a strong recovery after the Tokyo Olympic Games in the second half of 2021. We closed 2022 with sales of €142 million, an increase of 46 percent compared to the previous year.
For next year, we are planning further double-digit turnover growth. We already have a very healthy spring/summer order in the books, which still needs to be delivered.
The biggest challenge currently is margins due to increased energy and transportation costs and supply chain delays. The situation is still tense for Q1, but we are already seeing a normalization in transportation costs and individual raw materials. For Q2, we expect a normal delivery situation again.
Does this mean that delays in the supply chain are over?
Like our competitors, we had delays last year. So we invested heavily in inventories this year, increasing them along with lead time in order to be well positioned for replenishment.
We are confident that the situation will return to normal in the second half of the year and that we will be able to bring inventories to a normal level.
Would increasing stocks also be a valid strategy?
This is capital-intensive and especially difficult in a growth phase. Compared to the industry, there are still opportunities for us to improve in this area.
We have introduced a new SAP system, which will be our enterprise resource planning [ERP] system, to become more efficient in warehouse logistics and supply chain management.
Online sales and e-commerce are around 25%
Have you considered increasing the amount of production in Europe?
We are currently conducting initial tests by doing part of our eyewear production in Italy. Actually, most of our racing sector is already manufactured in Europe. We have manufacturing plants in Slovakia and a prototype workshop in Italy.
Looking at Arena’s sales strategy…
E-commerce is a big topic for us and one that is developing positively. Our 2022 e-shop sales, for example, were double those of 2021. Online currently accounts for 25 percent of sales.
Our online channels include our website, pure players and marketplaces. Crucially, we address different types of customers with different channels.
Wholesale also remains important to us. We are working on concepts for POS – for example, in beachwear – to make our offers even more attractive.
Growth potential for Arena in the retail sector
What does that look like in concrete terms?
We predict the topics of health, wellness and swimming as a holistic sport will become increasingly important, as will open-water swimming. This will lead to increased footfall on the sales floor. So we still see growth potential in the retail sector.
Do you have model customers in mind?
We distinguish between several “personas”: athletes who practice sports and competition; regular swimmers who swim once or twice a week and buy training products; and customers who go to the beach, have a connection to water and maintain an active lifestyle.
Is it possible to address new target groups, such as outdoor customers or people interested in fitness?
Yes. All those who have a special connection to water. You don’t even necessarily have to swim. For example, we appeal to customers on the beach, looking for a brand that offers the perfect fit and Italian design.
Will Arena ever leave its roots as a swimwear brand and establish itself as a lifestyle brand?
We will always stay in the swim race area because those are our roots. But we also want to open up as a brand and address a larger customer group by focusing on lifestyle. We are convinced that we can do both: performance and lifestyle. These areas are becoming more and more mixed anyway.
We will relaunch our men’s beachwear in 2023. It’s inspired by racing, with attention paid to fit, design fabrics and taping.
In addition, we will launch a new marketing platform in March 2023, which will appeal to more people than ever. Our shop concept will also be expanded to include a beach focus.
We will observe and evaluate, but our goal is to further open up and establish ourselves as a lifestyle brand. At the same time, we still see a lot of potential in racing. Here we have good growth in the U.S.A. This year we are planning growth of 20 percent. Last year we grew by almost 30 percent in pure performance.
How big is Arena’s performance market share in the U.S.?
We have grown significantly in the U.S. and made clear gains in market share over the past two years, so we’re optimistic about challenging market leadership soon.
Arena is the market leader in Europe
In Europe, you are the market leader. Can you give figures and say how difficult it has been to maintain your position as number one?
We had two major competitions last year: the World Championships in Budapest, where 40 percent of the medal winners wore Arena, and the European Championships in Rome, where it was 70 percent.
It’s important to invest in innovation and teams and to maintain the network with federations, coaches and athletes. It’s no easier to stay at number one than it is to get there.
This also means that you need good staff. Are you worried about the shortage of skilled workers?
At Arena, we have low staff turnover. I think anyone who comes to Arena likes the work environment. We carefully make sure that applicants fit the corporate culture and identify with the sport. Normally, we have no problem filling vacancies. Arena is a love brand.
You’ve been with Arena for almost two years now. Coming from the fashion sector, how long did it take you to put down roots?
Not long. I was wonderfully welcomed here. I have always been very enthusiastic about sports and was, for instance, invited to an event by the local triathlon club on the first weekend. Open-water swimming is particularly fascinating to me, because it reminds me of trail running in the mountains.
Time-to-market has to improve in the sporting goods industry
What did you bring from your fashion past into the sports industry?
You can take a lot from the processes of both – for example, the speed and time to market. I come from fast fashion, where there were 14 collections a year. And then you see the cycles in the sports industry, some of which are even tied to the Olympic four-year rhythm.
To what extent is sustainability a big topic for Arena?
It’s a big topic for us and our employees. We did an assessment with Nativa last year, from which we made a roadmap. This process took four months. Now we have decided to aim for B Corp certification and have an action plan in place to attain this status in 2024.
Without the topic of sustainability, you will not get the best employees and partners. I see this, for example, in job applications and partner interviews.
Get an overview of B Corp initiatives in the sporting goods industry
Investor Capvis backs Arena’s plans
What have you done to become more sustainable?
At the product level, we launched our first FINA-approved swimsuit with recycled materials last year. This was very well received by the athletes. Performance and sustainability can go very well together.
We keep an eye on the topic of packaging too, especially for our eyewear. We are working on replacing the old soft PPE-shell packaging, and this has been well-received by retailers and consumers.
We have improved our energy concept – for example, by introducing LED lamps and reducing energy consumption. This year we will introduce solar panels.
What do you expect from your supply chain partners when it comes to sustainability?
We carry out intensive audits and have been working with our suppliers for a very long time, on average at least ten years. A large part of the production is done internally, especially concerning racing.
How do you see the topic of communicating sustainability?
On the product side, we already share what we do, such as our use of recycled fabrics.
In terms of our community, we want to continue to be more involved. An example of this is our campaign last year with SeaShepherd and Strava. It was about swimming a distance of 4 km in ten days. In return, SeaShepherd then removed six tons of discarded nets, longlines and illegal FADs [Fish Aggregating Devices] from the Adriatic Sea. We find these actions very exciting, and we want to intensify that.
To what extent is the commitment to sustainability also important for your largest shareholder, Capvis?
Capvis’ commitment to sustainability is very important. They support us a lot on the subject of B Corp, as this is a real change that affects all areas, from statutes to the goals of individual employees. Capvis, as the majority shareholder, is an important partner in this transformation process and has a strong commitment that goes beyond pure profit orientation. It is committed to sustainable business practices.
Capvis supports us through their network, on strategic topics and in critical discussions to find better solutions.
Mr. Graschi, thank you very much for the interview.
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