The outlook is more positive than before for the sporting goods sector, based on the results of the July edition of the Covid-18 Impact Survey carried out by the World Federation of the Sporting Goods Industry (WFSGI), a monthly report conducted among manufacturers as well as retailers and brands across the sporting goods sector to explore the effects of the pandemic on their businesses. In July, for the first time since the start of the survey, none of the respondents (0 percent) said that they did not expect any rebound in its business. Furthermore, 20 percent of repondents said that they expect a recovery of more than 100 percent for their business, nearly triple the rate measured through the June survey.
With regard to the time frame necessary for the recovery, however, respondents are slightly more pessimistic as close to 50% think that their business will need more than one year. In the previous month, only 30 percent opted for this answer. One-third of the respondents again opted for a timeframe of between 91 and 180 days.
Other positive signs came from the manufacturing side, with only 25 percent of the suppliers reporting a drop in orders and with the number of respondents facing supply chain disruption down by 10 percent. Only in North America, Africa and the Middle East the number of respondents who face disruption increased as compared to June. Labor shortages have also become a less pressing issue. More than half of the respondents said they do not face labor shortages, an improvement of over 15 percent as compared to June, and only 50 percent are coping with shortages of materials. The proportion of companies faced with cash flow problems has declined to 52 percent. Consolidating production is seen as a solution less than before.
Good news also in the area of coronavirus-related regulations. July was the first month since the start of the survey in which more respondents said they were not impacted by regulatory requirements specifically put in force due to the pandemic.
When trying to forecast the future, however, Covid-19 is expected to impact 86 percent of the manufacturers’ business, slightly more than during the previous month. However, only little more than 4 percent of respondents are now expecting a drop of more than 60 percent in their business, as compared to 15 percent in the previous month. While 42 percent of the respondents expect the business to drop by around 20 percent, 30 percent are looking at a decline of about 50 percent. The most affected regions remain Europe and Northern America, where more than 70 percent of respondents expect less business. This is an increase of around 10 percentage points as compared to June.
For sporting goods brands and retailers, the July survey showed that the key solution to mitigate the impact of the pandemic remains an increase in online sales, as indicated by 76 percent of the respondents, the same as in June. All other alternative strategies – cleaning out all inventories, cancelling orders or keeping minimum inventories - actually lost popularity among respondents in the July survey, the only exception being a focus on fast-recovering Asian markets, which remained as important as in June. Among the different priorities, the company’s cash position is losing importance while the employees’ health was slightly more important than in June.
Supply chain efficiency, market share gains and product marketing were all prioritized by around 10 percent more respondents than in the previous month. The consolidation of the supply chain continued to gain importance, and close to 90 percent called for flexibility in relations with suppliers. The same goes for deferred payments to suppliers, a measure that was ticked by more than 30 percent of the respondents. For the first time, there was a loss of 10 percent in the number of respondents that wanted to move closer to the market, but 20 percent said they were in favor of local-to-local sourcing of products.
The market trends put forward by brands and retailers showed once again the development of environmentally friendly products at the top of the list. The development of functionally driven products, which had come out as the least important trend in the past months, rose to the second place in the July survey. Attention to price points, which reached a high point in May, is now at the bottom of the list.
Among the different sports, outdoor activities remain the most prevalent sport, and cycling is on the rise. Basketball and baseball were not selected by any of the respondents for the third time in a row.
The questionnaire for the August edition of the WFSGI Pulse Survey is already online at https://www.surveymonkey.com/r/MSWP3MW. The WFSGI invites all interested sporting goods companies to participate, regardless of whether or not they are WFSGI members. The survey is completely anonymous as no individual or company data are requested.