A sales increase of more than 5 percent at the retail level was achieved in 2009 by the sporting goods retailers affiliated with the Intersport group in the main European countries, confirming the fact that the sporting goods sector is less dependent on the economic situation than on the weather and other factors. The strong growth, which was only minimally influenced by new store openings, pushed the retail turnover of the Intersport network around the world beyond the €9 billion threshold for the first time, reaching a level of around €9.3 billion. Detailed figures will be published in April 2010.
Increases in retail sales were recorded in every major European country except in Russia, Italy and Spain, where the economic situation did have an impact. In Spain, for example, which is one of the countries that have suffered the most from the recent financial squeeze, sales per store fell by an estimated 3 percent to around €720,000. With the number of affiliated stores declining to 328 from 343, Intersport España said that total retail sales declined by an estimated 4 percent and its own central settlements by 11 percent.
The highest sales increases were recorded in the Nordic countries. Germany and Austria (see separate article on Intersport Austria in this issue) also fared well. Good figures were also reported in Turkey, Greece, Romania, the Czech Republic, Slovakia, Slovenia and other countries covered by Intersport’s licensee for the Balkans, Mercator, which is now entering the Albanian market.
The weather was probably the major positive factor across Europe for part of the year. Excellent snow conditions in January and February led to sales increases of between 15 and 30 percent in several countries. While the month of November was not so good, cold temperatures in October and abundant snow in the first half of December and the first few days of January boosted sales of winter sports products, leading to shortages of several kinds of items such as winter apparel, gloves and other accessories, ice skates, after-ski boots, snowshoes, children’s skis and sleds.
Margins have been under pressure, however, leading to widespread discounting. The liquidity issue was a key due to the financial crisis, so retailers have been buying conservatively, and according to Franz Julen, chief executive of Intersport International Corporation, they will continue to do so. Noting that some important brands have been reducing their own inventories, Julen is calling for a more balanced supply-demand situation where suppliers should take up more of the inventory risk.
He acknowledges that ski manufacturers have been reducing their production capacities, but he thinks that there is still more room for improvement in this sector and that they should be more market-oriented than product-driven.
Besides winter sports, the outdoor sector also enjoyed strong growth rates in the warmer months last year, with increases in the double digits in many countries. The main reason is the fact that many customers preferred to engage in relatively inexpensive outdoor activities rather than traveling to exotic locations.
Running, football and fitness were also good performers in the past year, although the more expensive fitness equipment items had trouble getting out of the stores. In fact, the customers’ wish to save money and the availability of relatively good Intersport collections with an interesting price/quality ratio resulted in markedly higher sales of private-label items in many sports categories, posting double-digit increases since last September.
The overall annual growth rate at Intersport stores rose to a level of about 6 percent in the fourth quarter of 2009, partly because of the weather situation and partly under the influence of the 2010 Fifa World Cup, as many customers bought many match balls and replica jerseys for their national teams in advance of the tournament, often using them as Christmas gifts.
While pointing out that the Intersport banner had a very strong presence toward the end of the year as a sponsor in important international ski and handball competitions, among other sports events, Julen says another decisive factor was the personal motivation of the affiliated retailers in running their own businesses in a highly competitive environment and in the current difficult times.
The outlook for 2010 is relatively positive, although the weather will again play a decisive role. The economic situation seems to be improving step by step, and the World Cup of football will definitely provide a lift. Another positive element will be Intersport’s expansion in new markets such as Saudi Arabia and South Korea.
LG Fashion is now set to open the first four Intersport stores in South Korea – one with a surface of 1,000 square meters and three others between 2,000 and 3,000 square meters – before the end of April. They will be the first major multi-sport retailers in the country, where mono-brand stores are still the norm, but they will focus more deeply on important sports categories in this fast-growing market such as running, football and outdoor (more about this market in our Outdoor Industry Compass).
As indicated before, the Korean market will be an important stepping stone for Intersport’s penetration into China. In the Middle East, Intersport’s Dubai-based licensee, Al Futtaim, will shortly open the first stores in Abu Dhabi and Saudi Arabia.