Reports out of the European markets, including from buying groups at February's ispo show in Germany as well as from banks and economists, show the economy in general and the sporting goods markets specifically ending on a high note for 2005.
"We had a picture-perfect last quarter," said Klaus Jost, sales and marketing director for the buying group, Intersport, at a press conference at the ispo show in late January. "Reason No. 1, weather."
Sales in the European sporting goods market grew about 1 percent in 2005 -- from Euro 36.255 billion (USD $42 billion) a year earlier to Euro 36.617 billion (USD $43.7 billion), reported the VDS, the association of German sporting goods dealers. The VDS pointed out that the 1 percent growth in 2005 was in stark contrast to no growth in 2004 when compared to 2003. In the Germany retail segment, the group showed growth of 0.5 percent.
What a turnaround from reports in late spring and summer that used words like "dismal," "weak" and "unsure." A Bloomberg index of retail purchasing in May showed that Euro-zone retail sales "continued to fall."
It's unlikely 2006 will be described as dismal, with high-profile, sports-oriented events this year, such as the Turin Olympics and the soccer World Cup. Most are now thinking positively about consumer buying and the industry's outlook for 2006.
"In spite of the stagnant economy at the end of the year, we mustn't give up hope for an upswing in business this year," stated the Bundesbank (Germany's central bank) Feb. 28 in its monthly economic report. "There are some very good reasons to expect a good business outlook in the first quarter."
The Bundesbank has forecast overall economic growth in Germany of 1.5 percent for 2006 on the heels of a growth of a mere 0.9 percent in 2005. In addition, it stated that consumer hesitancy to spend money is beginning to change. Several other economic research groups, including the IFO-Institut and the GfK, are seeing the first signs of consumers loosening their purse strings in purchases in the automobile and furniture areas, which the groups see spreading to other industries.
Winners and losers
Nevertheless, although the markets ended positively in 2005, there were huge winners (cross-country skiing, Nordic walking and running), big losers (tennis and fitness) and a lot of mediocre segment performances. Although sales in outdoor categories often depend on the weather, fitness can be even more fickle. Intersport still pins hopes on the fitness arena this year, pointing to a German survey out in December that revealed 44 percent of respondents intended to take part in more fitness and sports activities and 23 percent intended to lose weight.
Smiles evident on retailer, manufacturer and buying group executives' faces in late January at ispo's European sporting goods show only began to appear in the fourth quarter when storms hit Europe and ski and snowsport equipment began to leap off shelves. In fact, reports are that cross-country equipment was simply not to be found in some areas for any price by late December. The fourth quarter's double-digit growth therefore helped the year end well for the industry.
"All's well that ends well," Jost added.
Both Intersport and Sport 2000, the two largest buying groups, showed similar rates of growth for the year, or 2 percent and 1.8 percent, respectively.
Not only did cross-country ski equipment help save the year as it neared its close, but in general, equipment and gear purchased for running, walking and Nordic walking carried the year overall, Intersport reported.
"Running is stronger than it's ever been," Jost said. "Shoes are sports equipment. We haven't even scratched the surface."
Nordic walking, too, has turned into a boom that no one could have forecast, with Euro 40 million (about USD $47.7 million) in retail sales from poles alone in Germany.
Growth in 2006
Especially with the energy of the Winter Olympics in Turin, Italy, and the World Cup of soccer whipping up fervor, representatives of buying groups agree with a positive outlook for 2006.
"There is every reason for optimism," said Sport 2000's financial manager Jens Fischer.
Intersport goes so far as to set itself a goal of 5 percent growth for 2006.
However, one shadow on the horizon, at least in Germany, is the scheduled increase of the VAT on Jan. 1, 2007, from 16 percent to 19 percent. (SNEWS® will take a closer look at those expectations and how the VAT sits in other European countries in an upcoming issue.) Some think consumers will take advantage of purchasing larger items during 2006 to beat the tax. However, a survey reported in the German papers in February revealed that just over three in four (78 percent) said they had no plans for such purchases or to shop any differently to beat the tax increase. A mere 17 percent said they were considering a purchase this year.
The biggest stories for the future in sports categories are safety gear (helmets, lights, avalanche gear, etc.), fitness equipment, plus the continued strength of running/walking/Nordic walking.
Both Intersport and Sport 2000 list adidas as their stores' top supplier and Nike as the second. Then the places diverge slightly.
Of note on Sport 2000's list:
>> Asics is third, up from fourth, and even leaping ahead of Puma, which the group points out has soccer shoes lacking in the Asics collection.
>> Reebok leapt to 7th from 19th strictly from the power of its walking/Nordic walking segments.
>> Amer Group dropped to 10th from 8th, primarily because of weakening markets in ski and tennis.
>> Kettler stepped up four places to 16th from 20th.
>> Leki continued its vault upward, landing this year in 18th from 26th the year before, leaning more than ever on its Nordic walking poles.
>> Specialist Mammut also gained on the list, going from 29th to 21st, while generalists Vaude, Columbia and Salewa all fell slightly.
Of note on Intersport's list:
>> Fischer leapt from 10th to 8th, after going from 14th to 10th in 2004, based on its strength in cross-country skiing.
>> Jack Wolfskin continued its upward climb to 9th from 13th, after a gigantic leap a year earlier from 53rd.
>> Amer Group continued its trickle downward to 11th from 9th in 2004 and 7th in 2003.
>> Kettler hung steady at 13th, only down from a previous two years at 12th.
>> The VF Group is now in 17th, up from 22nd last year and 26th the year before.
>> Polar, now with more competition in the heart-rate monitoring arena, is in 40th, down from 38th in 2004 and from 34th in 2003.