Our exclusive annual study of the European sporting goods retail market shows that it increased by 2.3 percent in the 14 major Western European markets in 2006, reaching a level of €43.6 billion after VAT for the year. The growth rate was broadly in line with the hesitating forward trend of the past few years, but it would have been higher if we had included the emerging markets of Eastern Europe, where sales of sporting goods are enjoying strong double-digit gains.
The market in Central Europe was generally flat in spite of the general excitement around the World Cup of football, which offset the damage created by the highly uncertain and unseasonable weather conditions, particularly around the Alps. It actually declined by around 3 percent in the two alpine countries of Austria and Switzerland. It virtually stagnated in big markets such as France, Germany and the UK. On the other hand, it increased by more than 4 percent in all the other Northern European countries including Ireland, which we have added to our chart for the first time. At 10.4 percent, the highest growth was recorded in Norway.
It is too early to predict the evolution of the European market in 2007. While sales of sporting goods have continued to grow very much in Sweden and other Northern European countries, the poor snowfall early this year and the absence of any major international sports tournament may dampen the effect of a strong economic recovery in Germany, where consumers have stopped saving their money and looking for bargains. January, February, May and June have been bad months because of the weather, but segments such as swimwear, cycling, golf and tennis have fared well, and sports fashion is booming. The advent of the 2008 European Football Championships in Austria and Switzerland may give a further boost to the market before the end of this year.
As reported by BSI, the German sporting goods industry association, GfK has given positive indexes of 5.7 percent for May, 7.3 percent for June and 8.4 percent for July to the level of consumer confidence in Europe’s largest economy, in spite of an increased VAT rate. Out of BSI’s members, 60 percent are reporting better business conditions, compared with 31 percent one year ago. Two-thirds of the companies say their sales have risen and more than half mention increased orders.
The data collected by us for 2006, which include the sales and the market shares of the major retail players in each country, are not quite comparable with those that we published one year ago for 2005. We have spent a lot of time on this new chart, trying to make a better distinction between retail sales before VAT and retail sales after VAT (or consumption), which had not been so obvious before. We have also changed our estimates for the size of the market, particularly in the countries of Northern Europe, which we have studied intensively over the last few months for the first 1,000-page market research report on this frequently forgotten region.
We have discovered that many national trade associations were using a more restrictive definition of the market than others, taking out items such as golf products, fishing gear and sports bicycles because they are not sold by the major chain retailers in the country. Many have been ignoring sales of sports apparel and sports shoes in the fashion circuit, or the mass market. We are now using a more homogeneous definition everywhere, particularly in Northern Europe (the details are in our market research report).
There is still some work to be done in this respect, particularly in Germany or in Switzerland, if we get support from the customers of our market research. Sports bicycles and golf products are not included in the more or less «official» figures published for these two countries by the local industry associations, for example, in contrast with the figures provided by the associations in Austria or France.
According to NPD Group, annual sporting goods sales in Germany approach €8.7 million after VAT, instead of the €7.1 billion reported by VDS, the German sporting goods retailers’ federation. NPD’s first report for the World Federation of the Sporting Goods Industry, which came out last December, figures that the total European market was close to €70 billion including small and emerging markets, or 30 percent of a global market of $235 billion, equal to €180 billion in euros.
We hope to set the record straight for the rest of Europe by next year, thanks to our ongoing research into the sporting goods market, country-by-country. We should be in a position to add at least two more important markets – Greece and Portugal – to our charts next year.
We wish to stress the fact that the figures that we provide in these charts for individual retailers and buying groups only refer to their sales in the country. Retailers like Décathlon, Hervis, Go Sport, Lifyestyle Sports, Stadium or Sports World have higher sales at the international level. Some of the figures are only estimates based on the information that we could obtain. For example, we heard that Décathlon had a sales decline in France, but it actually had an increase of more than 4 percent if we stand by their declaration that the domestic market represented 58 percent of their sales last year.
In general, the biggest retailers continue to grab more market share, growing faster than the overall market. Décathlon continues to grow strongly in Belgium, Italy and Spain. Sports World and Lifestyle Sports are making major strides in the UK and in Ireland, respectively, and Sports World is growing fast also in Belgium, where it was previously called Disport. Major growth rates are being recorded by national challengers to the majors such as the STAG voluntary group in Britain, XXL and Stadion in Norway, Team Sportia in Sweden, Sport 2000 in France, Sport Alliance in Italy and specialists like Globetrotter in Germany
The biggest retail concentration is now in Norway, where Gresvig had a market share of 38 percent last year through G-Sport and Intersport-Norge, and it became higher this year following its recently reported takeover of Sportshuset. Kesko controls 34 percent of the Finnish market through Intersport, Kesport and Citymarket.
