The latest State of Trade report by the European Outdoor Group (EOG) indicates that the outdoor market declined by 1 percent in value and by 0.5 percent in volume in 2018 in terms of the sell-in to the trade in the 23 European countries covered by its annual study, resulting in wholesale revenues of €5.81 billion. The study also covers Russia, which is estimated to represent about 5 percent of the European outdoor market.
As previously reported, the European outdoor market grew by 2 percent last year according to the consumer panel of the NPD Group. The EOG’s study is based on the sales invoiced by 115 brands in Europe. It doesn’t cover recreational segments like cycling, which has been growing lately, and boardsports. Nor does it account for cheap tents sold in supermarkets, said Pauline Shepherd, who is in charge of statistics at the EOG.
In general, it seems that high inventories prompted retailers to order less in 2019. A year ago, the EOG had reported an exceptionally high increase of 7.2 percent in the sell-in for 2017, after flattish sales in 2015 and a 3 percent increase in 2016.
According to Shepherd, the weather had a major impact on the market last year, when a relatively hot summer was followed by a prolonged mild winter in major parts of Europe. The EOG also mentioned increasing competition from “non-core outdoor entrants, and turbulent social and political times.”
In the main product categories, the sharpest variations were recorded by the EOG survey in climbing equipment and sleeping bags. In line with the growing participation trends, particularly in bouldering, sales of climbing products rose by 5.7 percent in value to €142 million at the wholesale level, with an even higher increase of 6.1 percent in volume. Sales of sleeping bags to the trade fell by 4.7 percent in value and by 4.9 percent in volume, down to €113 million.
The climbing category has been growing rapidly since 2014, particularly in the U.K. According to the EOG, it now represents 20.0 percent of the outdoor market in Germany, 19.1 percent in France, 11.6 percent in Italy, 10.2 percent in the U.K., 7.9 percent in Austria and Switzerland, and 6.2 percent in Spain. Elsewhere in Europe, its market share averages 17.1 percent.
Sales of backpacks and luggage declined as well, falling by 2.6 percent to €398 million, with a lower drop of 1.2 percent in volume because of the ongoing popularity of daypacks. Tents did not perform much better, remaining flat at €152 million and declining by 0.5 percent in volume, with some suppliers and retailers clearing their stocks.
Across all the categories, sales of both shoes and apparel were in line with the sector’s general trend. While sales of footwear declined by 0.7 percent to €1.69 billion, sales of clothing went down by 0.8 percent to €2.91 billion.
In terms of volume, footwear was off by 0.9 percent and apparel was slightly positive with growth of 0.3 percent, indicating opposite trends in terms of average selling prices. It seems that retailers had over-ordered in the previous year, when the sell-in went up by 13.4 percent for this type of product, according to the State of Trade report issued by the EOG one year ago.
On the other hand, the exceptional heatwave of last year led to higher sales of sandals and low-cut breathable shoes, as well as light apparel items and insulated water bottles. Conversely, it negatively affected rainwear and warm clothing as well as insulated jackets and the whole mountain and backpacking category.
Later in the year, the cooler weather pattern in November helped in the sell-out of the more casual-inspired functional winter boots. Due to the long winter season that followed, most of the winter shoes have been sold, said the EOG, but with lower margins for the retailers.
The various countries and regions generally performed in line with the general trends, within a range of plus or minus one percent. The market was particularly difficult in Germany and Austria. Looking at the three major countries, which represent about half of the European market, the EOG reported declines of 0.7 percent in Germany and 0.5 percent in the U.K. and Ireland, while the French market increased by 0.5 percent.
As Decathlon represents about half of the French outdoor market, where the big retail chain suffered an overall sales decline of 5 percent, the EOG study has taken it into account. The final figures were compiled with expert opinion across the industry and peer review taken into account.
At the OutDoor by Ispo show, the EOG sent out a strong message to outdoor retailers, inviting them to participate in a study of retail sales all over Europe, even if they are not members of the organization. Only 25 retailers are currently members of the EOG. For the past 18 months, the EOG has been running a pilot project with the collection of point-of-sale data.
Participants in the new project will receive a quarterly report and a monthly score card on key performance indicators with the key metrics for the sector, plus information on consumer trends and market insights. Data security and privacy are guaranteed.
The key metrics would include important elements such as the retailers’ ratio of online turnover, mark-downs, conversion rates and – for online orders – return rates.
The EOG has also embarked on a pilot study of sell-in data in the snowboard sector. The first data should become available toward the end of this year.
Looking at the evolution of the market so far this year, the EOG is slightly optimistic. The sell-in has risen by up to 5 percent for 37 percent of the respondents to a separate survey, and by more than 5 percent for 32 percent of them. Only 21 percent said it had declined. On the other hand, only 21.7 percent of the sample said that the first half of 2019 was better than expected, while 43.5 percent said that the market situation was about the same as at the same time a year ago. In general, market sentiment is more cautious that a year ago, indicating that the market may return to the same position as in 2015 and 2016.
We can infer that it will then be a battle for market shares. The better ones will win.
Asked to list the main challenges for the outdoor sector, they mentioned among other things overstocking at the distributor’s level, the disappearance of many retailers, the internet price war throughout Europe (including pricing online vs. offline), a general lack of innovation, a plethora of products in the market, the general economic situation, Brexit and the increasing pressure to address the issue of sustainability.
We think that these challenges are also the opportunities to win the battle for market share.