Hudy Sport, the leading outdoor retailer in the Czech Republic and Slovakia, is preparing to move into the Polish market with several store openings early next year. The first two stores should open in Poznan and Warsaw in March and April, based on the same concept and with the same stock as Hudy Sport in the Czech Republic.
This comes as the Czech outdoor market itself has become stagnant, affected by consumer thrift and price pressure. The entry of Décathlon last year is heating up competition among sports stores, and the specialist outdoor market has become crowded, with three sizeable chains and scores of independents.
Hudy itself remains the largest player in the Czech market, with estimated retail sales of about €35 million last year. The retailer, which was established and is still owned by Jindrich Hudecek, has 34 stores in the Czech Republic and another eight in Slovakia. With an average size of about 150 square meters, the stores are mostly franchises, with only four stores fully owned by Hudy Sport itself. The Czech Republic makes up about 75 percent of the group's retail sales, amounting to some €26 million.
Separately, the company has a distribution activity dealing with brands such as Millet, La Sportiva and Salewa, which are among the best sellers in its stores. And Hudecek half-owns two other Czech companies: Direct Alpine, an apparel brand; and Rock Empire, an outdoor and climbing equipment brand. All of these will be displayed prominently in the Polish stores. Pointed, a much smaller brand of outdoor sandals, is fully owned by Hudy Sport.
Hudy Sport remains the retail destination for Czech climbers and other active outdoor participants in the country. This positioning enables it to sell more functional products at higher prices, and it has protected Hudy Sport from direct competition with sports retailers. However, Ond?ej Johanovský, Hudy's general manager, said that the Czech market had been almost stagnant in the last two years, and there is little space for further growth of the format in the country in the coming years.
Meanwhile, Hudy Sport could face growing competition from Rock Point, the country's second-largest outdoor retailer, which has gone through several patchy years but is starting to recover with a new format. This comes after Rock Point was fully taken over last year by Stanislav Krpejs, an entrepreneur who already owned Hannah, one of the leading Czech outdoor brands. The activities of the joint companies were subsequently restructured under the leadership of András Sárközy. He is the owner and chief executive of Mountex, the leading outdoor retailer and distributor in Hungary, which has five stores left after the closure of two stores in the country's economic collapse two years ago.
Under the new combination, the activities of Hannah and Rock Point are arranged in three units. The retail division includes 18 Rock Point stores owned by the group, and one Rock Point franchisee, as well as two Keen mono-brand stores and nine Hannah stores (after the group's only multi-brand store trading as Hannah, in Plze?, was converted to Rock Point). Another unit, called Outdoor Concept, takes care of wholesaling in the Czech Republic for a raft of outdoor brands, such as Mountain Hardwear, Garmont, Osprey, Tatonka, Julbo, SmartWool, Keen and more. The last unit consists of development and sales for the Hannah brand. The entire group reached a turnover equivalent to about €31.5 million last year, with retailing alone accounting for some €21 million.
Management for all units has been regrouped in Plze?, in the former head office of Hannah, which has significantly reduced their overheads. Furthermore, the alliance with Mountex in Hungary has yielded strong synergies on the distribution side – in terms of purchasing prices as well as the extension of distribution deals, whereby Outdoor Concept obtained Czech distribution rights for brands sold by Mountex in Hungary, and the other way around.
The restructuring measures affected the Rock Point stores last year, as the retailer struggled with supplies and new replenishment systems. However, sales increased sharply again this year and Rock Point is preparing to upgrade all of its stores. Its new format contains appealing store fittings and more independent brands than the previous concept, such as The North Face and Icebreaker.
Rock Point wants to distinguish itself as an outdoor format targeting a wider group of consumers, as opposed to the more geeky appeal of Hudy Sport. The concept is not unlike Mountex in Hungary, and was applied for the first time in a store opened in December 2009 in the Olympia shopping mall in Brno.
The third-largest player in the country is Husky, which has 20 stores in the Czech Republic, most of them owned by the company. The apparel and equipment brand reported sales of about €10.5 million last year. About half of the sales are generated by apparel, and the other half by equipment. Most of the turnover comes from the Czech Republic, even though Husky hired an export manager last year to improve its export business.
The competition is further heightened by mono-brand stores of international brands. The North Face already has three of them in the Czech Republic, and it intends to open two more next year. The stores complement a network of about 100 Czech and Slovak stores selling The North Face, adding up to a turnover of about €4 million.
Another battleground for the retailers is the internet. Hervis, the Austrian chain that has become one of the leading sports retailers in the Czech Republic, recently started its online business in the country, as did Sportisimo, a large-scale Czech sports retailer. Outdoor specialists have entered the fray, led by Hudy Sport: Its online sales are equivalent to those of one of its largest stores, and they grew by 200 percent last year. The Rock Point group, which previously subcontracted its online business, has taken it back in-house and launched three new websites, for Rock Point, Hannah and Keen.
Furthermore, a myriad of smaller online-only outdoor retailers has sprung up in the country, nearly always drawing customers with hefty discounts. Among the more robust players is Bart Sport, a smaller Czech outdoor retailer, which has teamed up with mallcz, an online mall, to focus almost entirely on online retailing. Many others last only a few seasons, but still long enough to disrupt the market's price structure.
The increasing tightness of the market is particularly affecting the smaller outdoor retailers. There are still an estimated 120 independent retailers selling outdoor products – some of them well-established, such as Namche and Alpsport, but many others barely hanging on. Unlike the situation in Hungary, where the dramatic decline of the market two years ago forced the closure of all but a dozen independents, their number has not decreased significantly in the Czech Republic in the last two years – but many appear ill-equipped to deal with the market's growing price pressure.
This news feature is a prelude to an extensive study on the outdoor markets in the Czech Republic, Slovakia, Hungary, Poland and Slovenia. Your leads and reactions are most welcome.