The Columbia Sportswear group's European business could benefit from a sizeable increase in marketing spend in the next years, after a sharp uptick in its European sales and profit margin in 2017.
The group decided last year to reorganize its business, which should make more resources available for marketing, and make that spending more efficient. The marketing budget amounted to about 5 percent of Columbia Sportswear's turnover last year, and it has budgeted a similar level for this year. But the group's chief executive, Tim Boyle, said in Munich last month that it should increase by at least two to three percentage points in Europe in the next years, and this extra investment should materialize most strongly from 2019.
As reported above, the group achieved a sales hike of 16 percent to $293.7 million in Europe, the Middle East and Africa (EMEA) in 2017. This was a rise of 14 percent in constant currencies, with more demand from distributors and in countries covered directly by Columbia Sportswear. The group's European reorder rates reached an unprecedented level last year. Columbia Sportswear reached breakeven in Europe in 2016 and it returned to a meaningful level of profitability last year.
The strongest European focus in recent years has been on four priority markets where the group has its own operations. The Columbia brand already has sizeable market share in two of them, in France and Spain, but its business remains small in the two others, Germany and the U.K. – all the more so as a percentage of the market size.
Matthieu Schegg, Columbia's general manager for EMEA since June, said that sales continued to rise last year in France, which is its largest European market. After two years of buoyant sales increases, the brand again raised its turnover in Spain as well. It was supported by intensified partnerships with retailers such as El Corte Inglès, where Columbia opened branded concessions.
The same applies in Germany, where the Columbia brand's sales have been pushed up by investments in branded sales areas with retailers such as Intersport. But at the same time, it has gained traction in the German market with online accounts led by Amazon and Zalando.
The smallest of the four priority markets for the Columbia brand is the U.K., despite the fact that it has been taken up by the two leading outdoor retail groups, the outdoor arm of JD Sports Fashion and the British banners under the A.S. Adventure group.
The focus is on driving more sales in these stores through more efficient marketing, led by the partnership sealed last May with the U.K.'s National Parks. Among other items, this means that the rangers and other staff in 15 parks wear Columbia apparel and footwear. The partnership includes co-branded merchandise and Columbia is sold in some visitor centers. It has helped Columbia to gain exposure with relevant British customers, which it wants use as leverage with third-party retailer clients.
The Columbia brand has seen robust increases in its own European online sales, which it decided to start handling directly last year. However, the company says that they make up less than 5 percent of its turnover in Europe, and the bulk of its regional sales hike has come from the wholesale market – more so than in other markets.
Boyle said in Munich that the Project Connect launched by the group in 2017 would entail few structural changes in Europe – due to the fact that the European business has already been run with resources appropriate for its size. However, he acknowledged that retailers have been clamoring for more spending on marketing to make the brand's voice heard. Columbia has started implementing an “always on” marketing strategy in Europe, shifting from seasonal campaigns to more permanent engagement with consumers.
Columbia Sportswear is currently designing its new platform and targeting regional implementation from the first half of 2019. It will be integrated with its global enterprise resource planning system, which has been implemented in most of its operations. It was launched in the group's Chinese joint venture last year and its European-direct business should migrate to the system around the middle of this year.
Separately, Michael Levi has been appointed as European sales director for Columbia Sportswear, which was Schegg's previous function, from the start of this year. Levi previously spent several years at Nike, and he was most recently general manager for apparel at the Oberalp Group, covering the Salewa, Dynafit and Wild Country brands.