Gabel, the Italian producer of skiing, trekking and Nordic walking poles, reports an increase of about 20 percent in its order intake as of last month, compared with the same time a year ago. In the first two months of the year, its sales were up by 22 percent from a year earlier.
For the full year of 2008, Gabel booked sales of €8.5 million, of which 34 percent came from ski poles, 48 percent from trekking poles and 18 percent from Nordic walking poles.
The company’s president, Gianpietro Beltramello, said that the boost was underpinned by the group’s exclusive ‘Click System’, which enables the rapid release of the pole’s strap.
The technology was first introduced by the company in 2007. Retail clients are also apparently attracted by the Italians’ ability to deliver on short notice from its two factories in Italy and the Czech Republic.
The business environment continues to be difficult in North America and Europe, with about half of stock at distributors remaining unsold. The situation has further prompted retailers to reduce forward orders and push for reorders during the season.
Thus, reorders from specialised stores now total 25-30 percent of Gabel’s overall sales, compared with 10-15 percent five to six years ago, and the percentage is likely to continue increasing, according to Beltramello.
Retailers are also imposing shorter delivery periods. A leading European sports group is even asking for deliveries 10-15 days after order placement. The change in delivery policies is shifting the risk of unsold goods from retailers to manufacturers. The latter also have to implement more sophisticated production management systems as forecasting production levels has become more difficult and production runs are shorter and more frequent.
On the upside, shorter delivery times are creating difficulties for Asian groups without a production base in Europe. This has generated a golden market opportunity for European manufacturers such as Gabel, according to Beltramello. However, he does not expect European pole manufacturers to have to expand capacity to respond to a potential shift from Asia to Europe because the sharp drop in manufacturing levels experienced in the mid-2000s has left some slack among producers.
The global economic crisis has slowed down Gabel’s expansion in China. The group is studying the possibility of re-entering the Chinese market jointly with two other Italian companies producing complementary ski equipment. The three firms will meet at the end of May or in June to examine the opportunity of entering the market as a consortium though an Italian corporate vehicle called Associazione temporanea d’impresa (Temporary Corporate Association).
Gabel entered the Chinese market in the mid-2000s with a local partner. But due to a change of strategy by its partner, Gabel had to pull out of the country in 2007 despite a presence in 80 retail outlets and a sponsorship deal with the Chinese ski team.
The objective is to be present in most of the country’s specialized stores for the 2010 winter season. Noting that retail prices for ski equipment in China are already aligned with those in Europe, Beltramello believes that the market could represent between 7 and 15 percent of its sales in the 2011-2012 season if the project goes ahead. Due to the uncertain economic outlook, he admits that achieving this goal is not guaranteed.
He feels that it should be easy for Gabel to supply the Chinese market from its European sites. But, if sales were to reach 50,000-70,000 pairs of poles in the Asian country, it would be economically viable to set up a local production facility.
Gabel also plans to reinforce its presence in extreme outdoor sports such as sky running (races of about 25-50 kilometres long organized at an altitude of about 2,000-4,000 metres) and long-distance races (over 50 kilometres). The firm currently offers one model of poles for those sports and intends to add another two to three models in the near term.
The poles need to be very light and robust, and they sell at premium retail prices from about €50 to €120 a pair.
Gabel produces nearly 1 million poles (not pairs of poles, to be precise) a year and has an estimated market share of 8.2 percent in skiing, trekking and Nordic walking poles in specialized retailers.
Over the past few years, the company has been steadily repositioning itself as a premium brand. In the 1980s, 90 percent of its production was carried out for third parties. Currently, 70 percent of the group’s ski poles are sold under its brand name.
In 2004, under the pressure of increasing competition from cheap Asian offerings, Gabel began to upgrade the quality of its product range and gradually increased its average wholesale prices from €6.50 to €21.20 per pair.
The company spends about 7 percent of its turnover on research and development and has extensively renewed its collection - only two of its 70 models date back to 2005.