According to preliminary data, the 5,000-plus stores affiliated with Intersport around the world suffered a decline in their retail sales of 2 percent in 2011 to €9.9 billion, including sales taxes, as compared to the record level of €10.1 billion achieved in 2010. On a same-store basis, the decline was approximately 3.5 percent, SGI Europe has learned.
Pointing out that the decline did not prevent it from scoring compound annual growth of 4 percent in the last four years, Franz Julen, chief executive of Intersport International Corporation, expressed cautious optimism that the group will pass the €10 billion threshold again in 2012.
In an exclusive interview with us, Julen said that IIC and many national Intersport licensees are determined to invest more in football, running, fitness and other categories that are not weather-dependent, without neglecting winter sports. He also predicted that the world's largest retail organization would sign one or two new master franchise agreements this year in the Asia-Pacific region. Greater China and Southeast Asia are its main priorities for international expansion, after its recent successful entry into South Korea. The Intersport banner will also continue to expand strongly in high-growth markets such as Russia and Turkey as well as in the Middle East. Julen also sees some further growth opportunities in Western Europe and Canada.
Geographically, Intersport scored positively last year in Korea, Turkey and most of the other emerging countries in Eastern Europe and the Middle East where it has a presence. The recent merger of Kesko with Intersport's former licensee in Russia had an immediate effect on its sales in that country. There were also sales increases in more mature markets such as France, Austria and the U.K. – the latter due largely to the affiliation of DW Sports. On the other hand, declines were registered in Germany, Switzerland, Italy, Spain, the Netherlands and some Scandinavian countries.
Julen regards the 2 percent drop of last year as moderate, considering the impact of a poor winter business, the absence of major international sports events and the uncertain economic climate. The challenging economic situation will continue to affect the sporting goods market this year, but as in previous difficult periods, not as seriously as other sectors, Julen said, as consumers are willing to participate in sports and to remain fit and healthy even in times of economic turmoil.
The winter sports segment, which is very important at Intersport, suffered the most in 2011 because of warm weather and lack of snow across Europe, especially in January, February, November and December, leading to double-digit declines in overall sales in many countries in those critical months. However, initial reports from key national Intersport organizations indicate that retail sales have been rising again this month by a mid- to high-single-digit figure thanks to a belated cold spell. Still, inventories of skis and other cold-weather products are generally high in the stores, indicating that many retailers will order conservatively for the fall/winter 2012-13 season.
Poor weather conditions persisted during the last spring/summer period, leading to overall stability in the outdoor sports segment after many years of intense, continued growth. Instead, Intersport retailers performed well in all other major categories, particularly in running, fitness and team sports.
With the exception of expensive fitness equipment and the winter categories, they realized good sales results in footwear and hardware. They also reached good levels of sales in apparel, except for warm jackets, fleecewear and other items related to winter and outdoor sports.
Intersport retailers even registered sales increases in football, although 2011 was a non-event year internationally. Julen attributes Intersport's relative success in this other important category to its product exclusivities with the main brands, international marketing campaigns and various investments in sponsorships such as its involvement in all major UEFA events, which will continue in 2012. Exclusive Intersport products have been worn by top players such as Xavi Hernandez of FC Barcelona.
A new example of Intersport's investment in football is the new deal that Intersport France announced a few days ago with the Olympique de Marseille football team, described as the first of a series of future contracts with major football clubs (see the story in the marketing section of the News Briefs).
These kinds of initiatives, which are also planned for running, outdoor and fitness, are examples of the efforts being conducted within Intersport to reduce dependence on winter sports, while focusing on specific categories in terms of marketing as well as merchandising.
However, Julen stressed that winter sports and other hardware categories remain an absolute priority at Intersport, as they are part of its DNA. He said that Intersport wants to gain further market shares in winter sports by continuing to invest heavily in product exclusivities, staff training, service and sponsorships. He said Intersport never invested so much as in the last couple of months on winter sports events. This coming weekend, Intersport will be the main sponsor in the women's alpine World Cup in Maribor and the jumping World Cup in Zakopane.
Intersport will attempt to use additional product exclusivities with key strategic brands as a point of differentiation from other retailers, and this will not involve just colors, but also specific technologies. It will also include exclusive marketing tools linked to the execution at the point of sale. Intersport stores will implement such exclusive packages with Adidas, Asics, Nike, Reebok, Salomon and Puma in the next months.
Julen is also calling for enhanced verticalization in Intersport operations across the areas of purchasing, marketing, information technology, retail etc., but he insisted that the affiliated retailers will have to remain close to the market and the consumer.
