Cheers, Pyeongchang!

Winter sportswear companies benefit from Olympic boom

Pyeongchang 2018 – Skilanglauf
That could be me, if only I had the right outfit. Source: DPA

The thermometer tells temperatures but it can also predict sales of winter sports gear. When temperatures fall below freezing, people rush to the stores to buy up ski boots, skates and bobsleds. Warm weather, on the other hand, is bad news for store owners, who aren’t much consoled by springtime.

“It’s a volatile and challenging segment,” according to Hannes Rumer, boss of Intersport, Germany’s largest sports retail chain. Times are good right now as the media is dominated by the Winter Olympics. Images of events like the biathlon, cross-country skiing, bobsled and figure skating give retailers of winter sports gear a much-needed boost.

But otherwise it’s uphill all the way. Five years ago, winter items made up 36 percent of sales at Intersport but that’s fallen to 31 percent, and driven countless brands and retailers from the market. Further problems are the fickleness of the weather, the limited appeal of winter sports generally – and a growing shift towards renting skis and other gear instead of buying it.

For Intersport’s 900 retailers, business is bumpy: All benefited from last year’s chilly September: sales of winter gear shot up eight percent year-on-year. But then came a mild October and revenues fell 13 percent. Happily, November and December were very cold, attracting shoppers and leading to higher revenues than the year before.

A further difficulty is that for sports stores, consumers must do all their shopping before Christmas when goods are sold at full price. January is when sales season starts.

The last good – cold – year for winter sports was 2010.

Depending so much on the weather makes business risky, and Andreas Rudolf, who leads dealer association Sport 2000, said the last good – cold – year for winter sports was 2010. Several months of snow in the mountains and cold temperatures in the lowlands is ideal, he noted.

But the sports industry’s problems go beyond the weather. Two-thirds of skiers no longer buy their own gear; according to Ralf Roth, professor at the German Sports University in Cologne, people no longer feel it’s so important to buy new skis every two to three years. Instead, vacationers head for the mountains where they rent their equipment, be it skis, boots, helmets or poles. Less to carry but it means ski sales haven’t budged in years.

An even bigger problem is that globally, most people have no connection to winter sports so won’t be potential customers no matter how many snow scenes they watch from South Korea. The industry’s loyal shoppers live in North America and Japan, central Europe, Scandinavia and Russia. China might be the world’s fastest growing sports market, but that doesn’t mean winter sports: sales are negligible.

Even in Germany, it’s mainly in the south that retailers are moving winter sports gear. Downhill and cross country skiing are roughly equal in terms of popularity; last year, 7 million Germans skied downhill while almost 6 million hit cross-country trails.

Not surprisingly, then, Germany’s leading sports companies – Nike, Adidas and Puma – don’t have much in terms of a winter sports business. The global leader in the sector is the Finnish Amer Group, owner of ski and ski boot brands Atomic and Salomon. But even Amer doesn’t rely on snow and ice, but has a large outdoor business with the Salomon brand, and also owns Wilson, a maker of team sports gear and tennis rackets.

13 p22 The most popular sports brands in Germany-01

But the margins mean it makes sense for brands and retailers to stick with winter sports. They earn much more profit on a good jacket or pair of skis than on a swimsuit or shorts. Helmets, ski goggles, poles and gloves are also very profitable, helping mid-sized businesses such as Uvex and Leki to succeed.

Sports stores don’t face the same kind of challenge from online retailers: some have machines so they can customize ski boots for customers. It’s a popular service, according to Sport 2000 manager Mr. Rudolf, and helps keep people from just buying online.

Mr. Rudolf has another trick up his sleeve: two winter sports collections each season rather than just one. The first at the beginning of the season for the 40 percent of enthusiasts who start the season between October and December. The goods might be more innovative and expensive. After New Year’s, he launches a second collection for the other 60 percent of skiers who spend less time on the slopes and might want to invest less, too.

What counts is that they keep on hitting the stores, as well as the slopes. Let it snow!

Joachim Hofer is Munich correspondent for Handelsblatt. To contact the author: hofer@handelsblatt.com

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