Extremely cold winter weather boosted sales of protective clothing, skis and many other sports products in many parts of Europe over the past few weeks, depleting retailers’ inventories. Combined with the prospect of higher sales induced by the Winter Olympics in Turin and by the FIFA World Cup in Germany, the resulting supply-demand situation is making market operators bullish about the business climate at the ISPO show opening in Munich tomorrow.
With 1,806 exhibitors, up from about 1,600 one year ago, including 58 participants in the Ispovision section, ISPO is breaking new records in terms of the breadth of the offerings, which will include many novelties, particularly in the ski sector, in textile materials, in protection equipment and in the growing women’s segment. It will be full of events for the whole industry and for specific sectors. ISPO is also growing in terms of international scope. Only 336 of the exhibitors at this ISPO in Munich are German companies. The others are coming from 48 other countries. Many will also be showing at ISPO Russia later this month and at ISPO China in April.
A high double-digit increase in pre-registrations is promising to lead ISPO to a record in attendance as well, compared with the already high score of February 2005, breaking through the barrier of 60,000 passages through the turnstiles. Interestingly, ISPO is consolidating its role as the international platform of the section just a few days after the famed Super Show celebrated its funeral on the other side of the Atlantic Ocean.
The past calendar year has already been better than 2004 for sporting goods retailers in Germany and in the rest of Europe. According to Werner Haizmann, president of the German and European sports retailers’ federations, VDS and FEDAS, the market increased in 2005 by 0.5 percent in Germany and by 1 percent in a large part of Europe. According to Haizmann, it had been flat in Europe in 2004, but as we cover more countries, we think it grew by 2.8 percent to almost €40 billion.
VDS, the German retailers’ association, estimates that the national sporting goods market grew to €7,004 million in 2005. Thanks in part to the weather, there were increases of 8 percent for winter hardware and ski boots, 1 percent for winter sports clothing, 4 percent for hiking/trekking garments and 8 percent for textile accessories. Sales of sports shoes and all-year sports apparel went up by only 1 percent (more in terms of volume), while tennis hardware and swimwear went down by 1 and 3 percent, respectively.
On the other hand, German retailers are fairly certain that the current winter season will be better than the already positive Fall/Winter 2004/05 season, because of the weather and the Olympics in Turin. They are even more bullish about the impact of the World Cup, which has already begun to be felt in their stores in many ways. Industry officials and the economists have predicted that the German sporting goods market will grow by about 5 percent this year, with the football-related segment alone rising by 30-35 percent to about €1 billion. The World Cup should create between 40,000 and 100,000 new jobs throughout the German economy, where some 5 million people are still unemployed, and boost the whole retail sector by 0.6 percentage points or €2.2 billion.
The pundits have predicted a general recovery of the German economy, driven by higher export sales of capital goods. German consumers have already started to spend more money, mostly in durable goods like cars and furniture, but fast-moving items should follow soon. They also seem to be more willing to pay more for high-quality merchandise. Any improvement in the German economy will necessarily have a certain positive effect on the rest of Europe.
The positive outlook was reflected in a recent survey by BSI, the German sporting goods vendors’ association, which shows that only 10 percent of the members were unsatisfied with the present market situation at the turn of the year, as compared to 35 percent one year ago. Sales increased for 46 percent of the companies in 2005, and only 3 percent of them were pessimistic about the future outlook, down from 10 percent a year ago.
For German retailers, the election of a new coalition under Angela Merkel last fall was a positive factor because it is boosting the economy, rekindling consumer confidence. The only problem is Merkel’s decision to raise the German value-added tax by 2 percentage points to 19 percent on Jan. 1, 2007 to replenish the government’s finances. Consumers will not necessarily want to spend 2 percent more of their money, including their large savings, they argue, so instead of raising prices retailers want to get better mark-ups from their suppliers. BSI indicates that its members are more or less willing to share the sacrifice with the retailers.
