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Olympic gains?

By: Jeff James

Listed Under: Feature

Published: Monday, June 08, 2009

Will the 2012 Olympic Games provide a boost to UK sports retailers? John Bensalhia investigates


Only three more years to go, and the impact of the 2012 Olympics will be hurtling towards Britain like a train.

The event has been the centre of massive media hype, right from its announcement that Britain would play host way back in July 2005. Since then, the media has reported about its involvement and its implications - both positive and negative - including many references during the 2008 Beijing Olympics coverage, but also in recent reports about how the country can afford to hold such a spectacular event during a financial crisis.

One thing should be guaranteed though - and that is the profits gained by sports shops and companies throughout Britain. Already, adidas has been confirmed as a tier one sponsor for the 2012 Games, and stands to benefit greatly from the exposure and ensuing revenue that it will receive.

SALES SPIKE
Many of the big guns are also predicting fantastic sales, both in the run-up to and during the event itself. Chris Ronnie, the former chief executive of JJB, has said that he predicts a big rise in sales during this period. When the Beijing Olympics were being held, Nike was also showing a prodigious increase in retail growth. It was opening the equivalent of three shops every two days as a result of the excitement of the Games, and by 2012 it aims to have at least three standalone stores in and around London.

Sales of sports apparel, equipment and accessories in the UK soared last year as a result of Britain’s success in the Games. For example, Halfords recorded strong sales of bikes because of Chris Hoy’s participation. Halfords said that a million bikes were sold in 2008, and made pre-tax profits of £92.5million. Evans Cycles also saw a 20 per cent rise in bike sales. Similarly, sports bra sales rose dramatically in this timeframe, with John Lewis reporting a 27 per cent rise for products such as Nike’s Determination sports bra. This was attributed to the growing amount of women wanting more sports bras after seeing female gold medallists such as Rebecca Romero wearing them as they scooped victory.

Other outlets recorded excellent results. Tesco reported a 155 per cent increase in smaller items such as energy bars and drinks, while eBay reported strong sales of swimming goggles and caps, which were up by 36 per cent and 91 per cent respectively.

These positive results tally with the equally positive findings into British interest in the Olympics as a whole. A survey conducted five years ago found that 10 per cent surveyed by Sport England were already more deeply involved in sport after being inspired by the British team’s involvement in the 2004 Athens Games. A further 15 per cent said that they were interested in doing more sporting activities. 71 per cent felt that the feelgood factor was a key element of the Games, with even sports like badminton becoming more popular.

That means there is great promise for the sports trade in 2012, with retailers facing a golden opportunity to push profits to the maximum. A combination of heavy media presence, enjoyment and aspirations to be the next Chris Hoy or Rebecca Romero will allow the best chances of making good money in the retail trade.

However, what of the country’s prospects? Experts from the Canterbury Christ Church University of Kent drew up a list of findings with regards to the potential impact of the 2012 Olympic Games on physical activity, sports participation and health. The findings were uniformly positive, with the results showing that the Games would have a demonstrative effect - since some people regard athletes as role models, this would boost the participation in sports activities. The results also showed that the fun factor and the good-time atmosphere would play their part, as well as the fact that the 2012 Games present a once-in-a-lifetime opportunity.

In addition to this, there is also the prospect of more jobs to cope with demand and also the revenue that could come in from international interest, especially tourism. However, a study by the European Tour Operators Association in 2006 refutes this assertion. Similar claims had been made for previous Olympiads in Athens and Sydney, but these were not actually backed up by actual tourism levels. Because of mass TV coverage, the need for tourists to visit the parent country wasn’t so great, since they could arguably get a better view of events from the comfort of their own armchair or in a local bar or town square. Furthermore, this argument was cemented even more by the costs involved, such as travel and accommodation. As a result, claims of boosted tourism levels are arguably based on supposition and hope rather than cold hard facts. And while it’s been argued by 2012 advocates that London will receive a huge industry boost, in reality the many sponsors of the games will be the ones that benefit the most.

TAKING PART
Another argument has been put forward that the Games will encourage more youngsters to take part in sport, a noble sentiment that could be regarded as no more than spin. The Department for Culture, Media and Sport has said that £340million will be channelled from existing sports lottery distributors. In other words, it’s debatable that priority is being given to an elite group of promising youngsters in order to make sure that Britain is seen to be leading the pack in sport.

And then, of course, there’s the issue of finance, a contentious issue considering the current dire state of affairs in the economy. Many reports have said that the £9.3billion budget is being stretched to the limit. Allegedly, the cost of the Olympics has soared by £100million, with the Olympic Delivery Authority being forced to raid its contingency funds to pay for the Olympic Village and the Media Centre. Together with the rise in venue finances, this has allegedly meant a price hike of £318million.

You can only wonder what sort of money will go towards funding the Opening and Closing ceremonies. While other countries can get it right with grand but dignified spectacles, it’s debatable whether Britain will successfully achieve this balance. Think of the folly of the Millennium Dome opening ceremony. Think of Leona Lewis making a meal of the Led Zeppelin classic ‘Whole Lotta Love’. Think of Boris Johnson trundling in on a gaudy Double Decker bus. You get the picture. Let’s hope that the authorities can come up with something that creates a lasting impression for the right reason, rather than a ramshackle, eccentric laughing stock.

And there’s the rub. There are two sides to the argument, which at the moment are based purely on speculation and hope. The 2012 Olympic Games has the potential to be a big success and a vitally needed shot in the arm for the economy - as long as costs are maintained reasonably and that spin doesn’t warp reality. One plus point does stand out though - the Games looks very likely to be a considerable boost for sports retailers across the country, and it’s an opportunity that should be grabbed with both hands.


Pictures: London 2012.

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