“We don’t depend on pádel,” Head Spain’s racquet-sports business manager has told CMDsport, because, like its global parent, his company has other “legs” to stand on, such as tennis, winter sports and water sports. Still, Ricardo Brigolle believes it could take as long as a year to empty the warehouses of unsold pádel stock and return to normal levels of business.
The overstock, Brigolle continues, has occurred at brands and retailers alike – retailers having ordered more product than they’ve been able to sell. Brigolle says the slow ebb should have little effect on Head, where pádel accounts for a small portion of sales, but it could leave pádel-centric brands all washed up.
“Overstock brings with it liquidity shortages and, in a few cases, difficulties with payments.” This, in combination with slowed growth in the market, will make it tough for specialty shops to remain solvent.
Moreover, says Brigolle, countries where pádel has gained a foothold, like Sweden and Italy, now have such specialty shops in operation, and these are cutting into the foreign sales of Spain’s online vendors.
Meanwhile, Head Spain is looking this year to increase revenues in tennis, if only to counteract pádel’s shortfalls. With its established distribution networks, tennis has, in fact, remained stable during the younger game’s recent fluctuations. The company’s racquet and ball sales for pádel have dipped 25 and 5 percent, respectively, so far this year. Sales of tennis balls are up 5 percent. Brigolle nonetheless expects pádel to continue to outsell tennis in 2023, although it will be a loser match than last year when pádel outsold tennis three to one.
Consolidation coming
As we reported at the time, Brigolle has been predicting a culling of the pádel herd since at least March. The post-lockdown boom, he said, had given rise to many small brands that customers no longer preferred to established brands. The market wouldn’t become as unvaried as it is in tennis, where three brands account for 80 percent of sales, but he thought it is “foreseeable that only some 20 brands will endure.”
The chief executive of Royal Padel, Rafael Tarradas, is thinking along similar lines. “Of the more than 200 brands in existence,” he has told CMDsport, “about five will survive.”
Royal Padel, which has been producing racquets since 1991, has seen a year-on-year decline in racquet sales of 12 percent so far this year. New players are “hunting for deals because there are racquets on the market right now selling at a discount of up to 85 percent off their list price.” The discounts are bad policy, he says, because they make a return to list prices impossible. “Royal Padel is not going to lower prices or make those immoderate offers because they mean bread today and hunger tomorrow.”
Like Brigolle, Tarradas attributes the sales declines to overstock and the discounts to liquidity shortages. Retailers, he says, “are furious with brands that sell direct to the consumer while undercutting retail prices,” and some suppliers are preventing retailers from canceling or renegotiating their orders. And, like Brigolle, he believes certain stores risk going out of business.
“Until the overstock on the market is absorbed,” he says, “we’re all going to have a bad time of it. Some brands are probably going to have to disappear because there are too many of us.” The big companies with business in other sports – such as Head – “will be able to withstand a loss in pádel until someone grows tired and decides to drop it.” And the pure players will be reduced to about five.
The present decline, if it holds steady, should have a negligible effect on Royal Padel itself, Torradas believes. The current year will simply be less interesting than the previous two. By his estimate, though, other companies could see drops of 25 to 30 percent for the full year.
“We’re going to survive, but then we don’t have serious problems. Our objective is to hold out. We’re preparing the 2024 collection and will keep moving forward with great caution.”
Photo: Tomasz Krawczyk, Unsplash
