Sports Insight

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Signs of recovery

By: Jeff James

Listed Under: Top Story

Published: Monday, January 23, 2012

With so many stories, interviews, articles and statistics surrounding the economic environment in Great Britain and the wider eurozone, it seems like we are being bombarded with bad news every day.

Unemployment figures, inflation rates and consumer confidence ratings are just a few of the many numbers that are thrown at us on a weekly basis. Being able to relate these figures to our businesses and understand if our industry is suffering or growing is another challenge altogether.

Using NPD’s Consumer Panel, which covers the sports apparel and footwear markets across Great Britain, we hope to shed some light on how Britain is performing.

Disposable income
The unemployment rate across Britain hovers above the eight per cent mark, while a five per cent inflation rate means disposable income is being squeezed more than in recent memory. The eurozone debt crisis has already resulted in government bailouts in three countries, and we may yet see further casualties. With our own economy so closely linked to these countries, there are signs of a continued slowing of growth, according to the Bank of England.

Consumers themselves are not exactly enthusiastic about the stalled British economy and a survey by Nationwide Building Society in June 2011 shows a consumer confidence level of 51 points, 12 points lower than the previous year. With petrol prices at a record high and falling property values, families are clearly uncertain of the economic conditions facing the country.

So how does this translate to our industry? Looking at the 12-month period ending June 2011, the sports market as a whole has grown 2.4 per cent to slightly more than £4.2 billion when compared with the same period a year ago. This is certainly encouraging, but how does this compare with before the recession hit in late 2008?

If we look at the 12-month period ending June 2008, the sports market was valued at just over £4.4 billion, so over the last three years we have experienced a contraction of about four per cent. The good news is that since June 2008 the current 12 months is the only time period that growth has been achieved, possibly indicating that we are on the path to recovery.

Resurgence
So where is this growth coming from? It may come as a surprise to learn it is primarily females who are driving the resurgence in the market, with an increase in spending of over four per cent when compared with a year ago.

When we look at the apparel market, we can see that females are increasing their spend across several categories, including running, fitness/gym and outdoor (all more than 10 per cent revenue growth). In footwear, again we see the running and outdoor categories showing very strong growth among females.

Looking at the retail sector as a whole, there is further evidence of increased consumer spending, with overall revenues across independents increasing by nine per cent and multiple door retailers seeing a four per cent increase. The great news for independents is that they have seen an increase of more than 10 per cent in revenues from items being sold at full retail price, compared to a year ago. Conversely, multiple door retailers are seeing growth from items sold on promotion, with a 10 per cent increase compared to a year ago.

It would seem that consumers are still happy to pay full retail price for customer service and technical knowledge, and go to the multiple door retailers when they know what they need and can purchase at a discount.

Critical element
Delving a little deeper into the retail landscape, we can see that Sports Direct is the critical element within the multiple doors sector. The retailer saw revenues continue to grow, posting a 12-month increase of nine per cent. The second largest UK sports retailer, JD Sports, also had a good 12-month trading period, but with a more modest three per cent increase in revenues over the same 12-month period. Looking to the future, it will be fascinating to see what effect the expansion of the French retailer Decathlon has on the British market, as it plans to open 50 stores across the country by 2016.

Let’s hope that the sports apparel and footwear industry can continue the trend set by the 12-month period ending June 2011 and that this is indeed a positive sign of gradual economic recovery.


The NPD Group monitors the sales of sports footwear and apparel in many countries around the world. For more information contact the NPD Group sports team on 01932 355580.

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