John Bensalhia speaks to some industry names to get their take on the matter
Happy new year. At least that’s what everyone says at the dawn of a brand-new 12 months. However, after 2009, which saw rising unemployment, falling house prices and a generally unstable economy, can 2010 be the year in which businesses look forward to some stability?
Having spoken to a number of businesses, it’s clear that sports companies are cautiously optimistic about the new year.
BETTER TIMES AHEAD
Bob Fidler of Reusch UK says that 2010 will be a challenging year for the sports trade, but acknowledges there are possibly better times around the corner. “There did appear to be a more positive attitude towards the end of 2009,” says Fidler. “And possibly one of the key factors to give English retailers a major lift would be a successful England campaign at the World Cup.”
Fidler says that past campaigns have bolstered people’s spirits. “We saw it in Euro ‘96 and during the successful Ashes series and recent Olympics how success in sport can lift people’s spirits. However, it is not just an event - it is success that can boost sales. No pressure then!”
One point that Fidler does make is that the recession will have a lasting effect on both retailers and consumers alike. However, he says that it is up to the government to sort the mess out. “Hopefully, whichever government is in power by the end of 2010 will have resolved the issue of MP’s expenses and banker’s bonuses and get the whole country pulling in the same direction.”
But it’s up to the trade to pull their weight too. Says Fidler: “Sports shops and businesses need to focus on products related to major sports tournaments such as the World Cup, look at stocking specialist/niche products and brands that produce strong technical products, offer a point of difference from the multiple retailers and look at developing a website as internet sales grow in all business sectors.”
Richard Gray of Grays International is hopeful about next year’s prospects, although he doesn’t expect to see a rapid upturn. However, Gray says that the sports industry is a survivor: “Recent experience would suggest that people will continue to play their sport in a recession and will need the right kit. I think this is particularly true for children, as I suspect that parents will tend to look after their kids’ needs first.”
Gray adds, though, that consumers may be more cautious than in recent years. “They will probably tend to stick with established and trusted brands, rather than risking trying something new, which may not deliver what they want,” he explains.
In addition, Gray says that sales of high ticket products that are not required to play sport and might be seen as non-essential expenditure, such as replica shirts, may slip back in the short-term: “So I would guess that those shops which continue to specialise in selling equipment, clothing and footwear for sport will be best placed to benefit from the recovery.”
Paul Sherratt at Uhlsport believes that the businesses focusing on core lines and core suppliers, and who concentrate on stock levels will enjoy a solid year. He also says specialists will continue to grab market share, but must be: “Focused on working their local database effectively and exploiting the online opportunities, but only if they have expertise in this area.”
Sherratt, however, is less optimistic about the state of the economy: “I think that we are somewhere near the bottom and will probably bump along for a year or so before things really start to stabilise.” But he does acknowledge that a good World Cup for England will help the mood of the nation. “There will be positive knock-on effects at retail level,” he says. “However, whether this boost will be sustainable post the event is questionable - it may just be that buying patterns simply shift.”
The World Cup, while an important event in the sporting calendar, could adversely affect the coverage of other sports and sales of associated product. As Ben Thompson of specialist sports PR agency, Macesport, says: “Sporting events like the football World Cup always provide a major spike in sales for the associated sports, but that can have a negative effect on other sports. We may see a big increase in sales as football fever sweeps the country, but that is likely to have an effect on tennis, cricket and other traditional summer sports.”
Saying that, in 2010 we’ll see the “light at the end of the tunnel” with regards to the recession, according to Thompson, who adds that while it will be another difficult trading year, sports retailers must take full advantage of events like the World Cup and maximise sales in both the build-up and during the tournament. He says: “Precision Training, a brand owned by Reydon Sports, has former England manager Graham Taylor as a brand ambassador and he will play an important role throughout the year in the build up to the World Cup.”
Speaking generally about prospects in 2010, Thompson says: “The industry is part of an ever-changing landscape and we need to embrace that and keep ahead of the game. I can see the internet and mail order companies growing and growing, but independent retailers can still play a major role, especially in the niche markets.”
Richard Heritage of Rucanor Sports thinks that the businesses that will hold their own will be independent sports shops that concentrate on offering sports specific products and high service levels. “The multiples will always struggle to offer the technical expertise that independents can offer, and their large stores in prime retail positions necessitate a concentration on fashion-related product with a higher turnover rate,” he says.
Heritage agrees that the recession will still cast a shadow over 2010. He explains: “Unfortunately, I think the worst is still to come as the knock-on from 2009 will see levels of unemployment rise and the tax burden increase on all of us, which is bound to have an effect on retail sales generally.
“Years in which a World Cup is held have not necessarily benefited independent sports retailers since the 1990s, as increased licensing and the dominance of the multiples has meant that World Cup related merchandise is available far more widely than in the past. In fact, the concentration on football often distracts consumers from Wimbledon and other sporting events, even to the extent that people who would normally be out playing sport actually play less because they’re sitting at home watching World Cup matches on the telly.”
Heritage offers this piece of advice to independent retailers in terms of merchandising and shop layout: “I think that many independent retailers could benefit from spending a little more time on merchandising and shop layout to make it easier for their customers to find what they want when personal service isn’t necessary - for instance, when buying accessories or general apparel items.
“The general retail experience that people have now become used to is very much ‘do it yourself’, and there are many consumers who would be quite happy to find what they want - if it was easy to do so. Rucanor’s ‘NOS’ concept is an ideal way to achieve this with colour-coded packaging and signage that clearly separates product categories.
“I think that retail generally is struggling at the moment, with far too much concentration on price and discounting. Independent retailers will always struggle to compete at this level, and probably shouldn’t even try to, but rather continue to offer an overall package of product knowledge, depth of product ranges and personal service that sets them apart from the corporate blandness of our high streets and the multiples.”
Saucony’s Jonathan Quint says that 2010 will see increased competition as markets recover. He explains: “Even if, according to official statistics, the UK is still in recession, it appears that the worst has passed. That said, it will be some time before confidence returns, even to the running speciality sector, which is historically Saucony’s stronghold and which hasn’t really been badly affected by the downturn of recent years.
“A major event such as the football World Cup or the World Athletics Championships draws attention to sport and increases participation. Just as the tennis courts of Britain are full in the month either side of Wimbledon, come June and July 2010 the playing fields of the country with be full of wannabe Rooneys, Gerrards and Coles wearing replica kits and boots or trainers. If England are successful in South Africa, the country will go crazy.”
‘Efficiency’ and ‘bravery’ are key to maximising sales in the current economic climate, according to Quint, who says that by committing to forward orders and taking additional margin, profits can be increased, and on top of that, retailers can plan in-store promotions and stimulate stock churn by keeping on top of new and expiring products. “Dealing with manufacturers and wholesalers you can trust to provide product and service is the right move,” says Quint.
Quint believes that the sports trade is in a healthy state: “Despite the tough times, it’s clear that service will always triumph. When consumers are less inclined to spend, they are more likely to make conservative purchases with retailers they trust. It’s not true that in recession cheaper products proliferate; rather, better value outlets succeed. High value does not mean low price, but means a good product, well sold with confidence that if something goes wrong, the problem will be rectified.”