The European Market
The 27 countries of Europe form a common market with a combined population of over 500 million people.
In reality, there are 27 different cultures, national purchasing idiosyncrasies and differing living styles that make it difficult to develop an integrated strategy across Europe as a whole. However, despite these issues, there are sporting goods retailers who are embracing these challenges with relish and expanding accordingly.
Decathlon have established a strong European foothold, Sports Direct are attacking the market aggressively and, forced to come together, independent retailers under the buying group umbrellas of Intersport and Sport 2000 are gaining traction.
The overall picture is not, however, as simple as first appears due to the “split” between old Europe and new Europe. The Old Europe, predominantly in the East of the region, has seen growth in alternative channels most notably sports brands driving an own brand /mono-store strategy as, historically, this approach carried less risk and was more easily managed.
The Buying Groups
Two large organizations spearhead the field of multiple brand name suppliers in Europe, whose turnover in sports goods and sports fashion hovers between 35 and 40 billion Euros – Intersport International based in Switzerland and Sport 2000 International based in Germany.
In the UK and Ireland Sports Direct are “under the Sport2000 umbrella” (although what that actually means is difficult to establish) and Intersport have a strong presence with over 300 doors.
Intersport is, in fact, the world’s largest corporate group in the specialist sports goods trade, and accommodates
5230 retail locations in 40 countries inside and outside Europe under its trade. With revenues of over 13.7 billion dollars the group’s market share amounts to 37 per cent in Germany, and to 20 per cent in Europe.
Sport 2000 International is the number two among Europe’s corporate groups. It is home to 3800 independent sports retailers in 25 countries recording sales of more than 6.5 billion US
Finally we have the French based Decathlon chain who, in 2011, recorded a turnover or more than six billion
Euros (7.8 billion US dollars) making it the largest specialist sports goods retailer in France, Italy, Spain and Portugal, but also one of the largest sports goods
manufacturers with a market share of 60 per cent of French sports goods production due to its own label strategy.
In the UK Sports Direct reported sales of £2.186billion in 2013 and with an aggressive 20%+ growth rate, future acquisitions and organic growth we are likely to see the retailer featuring more and more on the league table.
So, having established the background, what are the trends that are likely to affect the growth of these businesses into 2015 and beyond? Peter Thurl of Sportpress, Germany believes that there are currently seven key trends:
Exercise and fitness in the open air has a widening appeal and its popularity looks set to continue.
Whether it be trail running, outdoor gyms, indoor and outdoor climbing, nordic walking, skiing or just generally enjoying the great outdoors this trend will undoubtedly feature in the future growth of the sport industry.
Enjoying a similar boost to the outdoor sector, running looks set to continue on a steady growth curve. Once again the open air appeal looks set to drive growth albeit in, perhaps, more niche areas such as trail and off-road running as well as more extreme events.
The close links between the running and “health sports” market is also likely to ensure that the running boom seen across Europe will continue for some years to come.
Also on the back of the outdoor boom and, particularly in the UK on the back of high profile professional successes, Cycling will remain an interesting sector. The rising demand for electric cycles will help fuel this growth as will the relevant clothing – whether it be specific or more lifestyle driven.
4. Multifunctional clothing
A noticeable trend developing is the multie-use clothing. In particular generic walking/running/outdoor/cycling apparel will see significant growth in the coming years across Europe. This may well bring more sports fashion brands into the mainstream sports trade as, in future, the sports/fashion lines become more and more blurred.
The specialist brands will continue however with full-range suppliers playing a major role for leisure and mass sports products. The more individual and technical a sport is, the more frequently the ideal product will be supplied by a specialised business.
5. The Women’s Market
It is a criticism that has been frequently put forward in the time that I have been in the trade that there is a lack of good product for women.
This, however, does seem to be changing where women’s product is driving an ever increasing boost to sales.
Since this evolution is relatively immature this trend looks set to grow accordingly.
6. Team sports
Team sports still benefit from the positive development of soccer, above all the rising popularity of women’s football will drive increased revenue opportunities and further drive the women’s market.
7. Innovation & Smart technology
Across many industries technological advances are driving consumer demand – the sports industry is no different.
The innovatory boost coming from outdoor textiles, footwear and hardware will continue unabated in the future. New high-tech materials and technical improvements will involve a further optimization of the equipment’s functionality for the ambitious outdoor sports enthusiasts. Hence, it is certain to remain the most essential criterion for outdoor clothing,footwear and hardware to 2020 and beyond.
In summary we can certainly predict: In future, the sports market in Europe will not decline, since older people remain active and sports-minded for a far longer time today than in previous generations.
Many European nations will experience an ageing population which will, in turn, directly effect the growth drivers within the trade. In the forthcoming years, sports may well be determined by the 40-
In the longer term the generation of over 60-year olds are likely to drive change in the sports industry as sport becomes seen as a health provision. Employees may well encourage this activity to keep employees healthy and maintain the number of staff on sick leave
on a low level, thus driving the infrastructure of European companies to become increasingly geared towards
What is in no doubt too is that at retailer level there will be further consolidation and that eCommerce will become increasingly important.
The successful brands and retailers of 2020 and beyond will be those that are already considering this longer term picture and creating the most effective business model to react to this market evolution.