The European outdoor market rose by 3.35 percent to €5.676 billion after VAT at the retail level in 2007, judging from an annual survey conducted by the European Outdoor Group (EOG), but the growth is expected to slow down this year, with a projected rise of just 2.48 percent for 2008.

The expansion in 2007 was driven by lifestyle-oriented products, whose sales grew by 6.7 percent to €1.442 billion, in contrast with a sales rise of only 2.2 percent to €4.234 billion for the more technical outdoor market. The same trend is being observed this year, as the specialist market is expected to grow by 1.7 percent, against a projected sales increase of 4.7 percent for the technical segment.

Furthermore, last year’s growth was again dominated by apparel, which enjoyed a sales increase of 4.1 percent to €2.851 billion. Outdoor footwear continued to grow as well, its sales climbing by 3.7 percent to €1.246 billion. Growth was slower in the equipment category, where sales rose by 1.8 percent to €1.579 billion.

The market growth reported by the EOG is roughly in line with the findings of NPD, the market research company, which we reported in issue #1 of THE COMPASS. NPD placed the European outdoor market’s expansion at 3.4 percent for 2007. However, the definition of the outdoor market studied by the EOG is much narrower than that used by NPD, for which the market was worth €11.4 billion after VAT at retail. This is chiefly due to the fact that the EOG concentrates on premium outdoor brands, excluding private labels and the mass market.

Underlining the industry’s healthy shape, a survey of EOG members found that more than 75 percent of them increased the number of their employees last year, while over 50 percent raised their marketing spend. Furthermore, in spite of many uncertainties in the global economy, over 85 percent of the EOG’s members said that they felt either as confident or even more confident than at the same time last year.

While disclosing these findings, officials of the EOG expressed concern about inflationary trends in the market during a press conference on the first day of the OutDoor show in Friedrichshafen. They indicated that vendors of outdoor products are raising their prices by up to 5 percent in Europe for next summer, to partly make up for increases in the cost of raw materials, oil and labor. The price hikes should be higher in the American market, where the problem of heavier production costs is worsened by the weakness of the dollar.

Rolf Schmid, president of the EOG, boldly addressed the issue, indicating that the average price of landed products had increased by 7 to 10 percent over the last months – including the heightened cost of raw materials, the rise in salaries of manufacturing employees, and more expensive transport. Some manufacturers of outdoor products demanded price increases of up to 20 percent, particularly in the Far East for products made with fibers issued from the petro-chemical industry.

However, these higher costs and the ensuing inflation are reaching out further, for example leading to demands for higher salaries by European employees. The protection of the environment, which is becoming a key issue in the outdoor industry, is another new cost factor. While some of these cost increases will have to be passed on to consumers, Schmid called for the industry to absorb part of them through further improvements in efficiency.