We have already given you some information about the coronavirus situation on the websites of SGI Europe and the Compass in the past weeks, but of course there are new developments every day and hour. The explosion of the coronavirus pandemic, which now has Europe completely under control, has prompted us to compile further relevant information for the industry. In our box on the homepage (called ”Corona Ticker”), you will see the latest news and articles related to the topic at a glance. On our sister site SGI Europe, you will find more comprehensive information concerning the entire sports market.
The following article, which was published on March 16 on the SGI Europe website, includes many new findings and developments as well as some information already included in our own OIC Corona Ticker.
After Patagonia, which announced on Friday the shutdown of all its stores, offices and other operations around the world – including even its online store – Nike has announced the closure of all its stores in the U.S., Canada, Western Europe, Australia and New Zealand from March 16 through March 27 to help limit the spread of the Covid-19 disease. It will keep open those it has in Japan, South Korea and most of China, where the situation has improved.
VF Corp. announced the closure of all its stores in North America through April 5, after implementing a similar measure in the EMEA region. According to today’s press release, VF’s offices in Greater China and approximately 90 percent of its retail store locations are currently re-opened for business. The North Face said it’s listening to local government recommendations for select retail closures in Europe, Asia, Australia and South America. The American stores will be closed for sure until April 5. TheNorthFace.com will remain open.
Lululemon said it would close all its stores in North America and Europe through March 27.
Under Armour announced the shutdown of its North American stores through March 28.
Columbia Sportswear announced closure of its brick-and-mortar stores in North America through Friday, March 27. Some store closures have also taken place in selected markets outside the continent. The company has enhanced cleaning protocols at all its locations around the world, implementing work from home plans and facilitating sick leave. The company said its administrative facilities would remain open to provide customer support with the least disruption possible.
Canada Goose announced today that it will close all retail stores in North America and Europe as of March 17 until at least March 31. The webshop will remain open. In Greater China, all retail stores remain open, so will the partner-operated store in Tokyo, Japan, but with a reduced schedule. In Canada, the company will begin closing its in-house production facilities as of March 17 for at least two weeks. All retail and manufacturing closures will be reassessed regularly.
The American Apparel & Footwear Association (AAFA), Footwear Retailers of America (FDRA) and 22 other U.S. trade associations have asked the U.S. government to immediately eliminate the punitive import tariffs that it has imposed in the last months on shoes, clothing and other items imported from China to mitigate the impact of the virus outbreak on their businesses. They have also asked for the retroactive refund of the duties already charged.
The Covid-19 epidemic is spreading quickly in North America, after invading the European continent. European sports brands and retailers may want to follow what is happening in Italy, the first country to have taken stern measures because it has been the most affected. According to the Italian sporting goods industry association, Assosport, many Italian producers of outdoor clothing, footwear and equipment closed down their offices and facilities for a few days even before the lockdown of the country ordered by the government one week ago, and some others added an extra shift to be able to deliver some orders before closing down.
CAMP, the Italian producer of climbing equipment, said it would shut down its operations until March 25, resorting to “smart working” (remote working) wherever possible. The company had just received a big order from a Chinese client, indicating that the situation there was gradually returning to normal.
La Sportiva, the Italian producer of climbing and hiking shoes and clothing, announced on March 12 the closure until at least April 3 of its head office, store and manufacturing plant at Ziano di Fiemme in Northern Italy because of the coronavirus epidemic. The facilities employ a total of 364 people. Only some customer service, shipment and administrative functions are being maintained on a part-time basis, but the company reports that some orders have been cancelled in Italy and that others are being delayed due to travel restrictions in Austria and France. Lorenzo Delladio, chief executive and president of the company, admitted that this will cause personal sacrifices and losses in terms of sales, profits and market presence, but “will allow us to start up again with more motivation once the emergency is over.” He expressed hope that other entrepreneurs and the Italian government would proceed similarly to ensure that his determination is effective.
OTHER EUROPEAN COUNTRIES
Germany is the latest country where the federal government ordered today a ban on most commercial activities, a few hours after the state of Bavaria took action in line with the emergency measures enacted in other European countries.
In Switzerland, public life is also being cut back to a minimum. From midnight this Tuesday, almost all shops as well as all restaurants, markets, museums and leisure facilities will remain closed, as president Simonetta Sommaruga announced on Monday in Bern.
In Spain, where the situation has been described as being like “World War III,” many sporting goods stores and gyms closed their doors just before the head of the Spanish government, Pedro Sánchez, making similar recommendations and imposing similar measures as those taken in Italy, ordered the lockdown of the country for 15 days on the evening of Friday, March 13. Many companies in our sector announced that they were shutting down hours before he made his speech, according to CMDsport.
Measures have started to be taken in countries where the epidemic is not so acute. In Sweden, for example, the leading Scandinavian operator of fitness clubs, SATS, implemented a generalized shutdown. The largest player in Sweden, Friskis & Svettis, is keeping its gyms open for individual training, but suspended all classes and group activities.
DISRUPTION AND ECONOMIC WORRIES
While the production apparatus has fortunately been set again in motion in China, we are now receiving reports of disruption of the manufacturing process in countries like Cambodia and Myanmar due to the lack of fabrics and other inputs from China. We also hear about a certain concern building up in China that foreign residents coming over to supervise the supply chain may be infected in turn, possibly leading to reverse travel restrictions.
Experts feel that more flexibility and resilience should be introduced in the supply chain now and in the longer run to cope with this sort of emergencies as well as unilateral government measures like Brexit or the U.S. tariffs on Chinese goods. Brands, distributors and retailers should accept temporary delays in deliveries without penalties.
Some studies indicate that, with warmer weather conditions setting in, at least the Northern Hemisphere should get over the current pandemic by the summer, if not sooner, depending on the containment and mitigation measures taken by governments, companies and individuals.
Anyhow, there is no doubt that the global economy will slow down, raising the specter of a possible recession, although the sporting goods sector showed a certain resilience as compared to other sectors during the previous 2008 economic crisis. According to the United Nations Trade and Development Agency (Unctad), the recent shortfall in Chinese production alone is likely to cause a 2 percent drop in global exports this year.
Reacting to the gloomy economic outlook, the Federal Reserve in the U.S. has slashed again the benchmark interest rate down to almost zero. In the first such move since the 2008 financial crisis, it had already lowered it on March 3 to range of 1 to 1.25 percent.
DONATIONS, SHOWS AND SKI RESORTS
Some companies have announced donations. Save the Duck, an Italian “animal-free” outerwear company that exhibited for the first time at Ispo Munich 2020, said it would give 20 percent of the proceeds from its online sales since March 2 to the health system in Milan, which has been overwhelmed by the epidemic. Similarly, Macron, the Italian supplier of replica jerseys, is making a donation of €100,000 to a local hospital in its hometown of Bologna.
In the USA, the brand Toad&Co launched an unprecedented ecommerce revenue sharing program to help brick-and-mortar retailers who run into financial difficulties as a result of the crisis. The brand from Santa Barbara, California, dedicated to sustainable, organic and eco-friendly clothing, will share 10 percent of the e-commerce revenue of first-time customers with its physical retail partners. Gordon Seabury, Toad&Co’s CEO, explains how the program, effective March 15, works: “If a retailer is shut down due to coronavirus, we’ll provide them a special code. When customers come to our website, they’ll put in the code to identify as customer of retailer X. After a sale, that store will get part of the revenue and that customer will be tagged as a customer of that retailer for all sales going forward. Any subsequent online sale will be flagged, and part of the revenue will go back to that retailer, even after the coronavirus outbreak calms down.” Seabury also said that his company wants to expand the program further, which could happen as soon as this week.
According to a report in Handelsjournal, the German online trading platform Sportmarken24 offers affiliated retailers immediate pragmatic liquidity help in times of the coronavirus: For two months, the company promises an interest-free loan equivalent to the amount paid out in the previous month. In addition, Sportmarken24 offers all retailers not yet affiliated the opportunity to join in a fast track procedure. Sportmarken24 is an e-commerce start-up based in Wiesbaden, which has been active since spring 2018. The start-up enables local sports retailers to participate in the online business. The products are offered on a variety of channels including Amazon, Ebay or Real as well as in the company’s own Sportmarken24 webshop. Currently, more than 150 stores in Germany are already affiliated with the platform.
Meanwhile, more and more trade shows and sports events are being cancelled or postponed. Sport 2000 Germany has canceled its in-house Order Show 3 for the winter hardware sector planned for March 22-24 due to the current spread of Covid-19.
In France, after the recent cancellation of the Sport Achat show in Lyon, an international exhibition on mountain infrastructure that was due to take place in Grenoble on April 22-24 has been cancelled. The next edition is now planned for April 26-28, 2022.
We have already reported about the postponement of the IWA Outdoor Classics show in Germany.
It would take a long time to list all the sports events that have been canceled. However, since in many states assemblies of more than 50 people are already prohibited, it affects the entire sports world. In addition to major associations such as the FIS, the World Surf League and the Freeride World Tour have now also canceled their events.
The ski resorts in the Alps and the Pyrenees have shut down, so have all resorts run by the U.S companies Alterra and Vail Resorts as well as a number of other resorts in the U.S. and Canada. This is expected to have a negative impact on retailers’ orders of new equipment for the next season.
Please check back on our website and that of SGI Europe regularly for the latest news on the situation!