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UK Market Insight: Good Winter For Snow Biz Despite Rising Inflation

Keep your head down and carry on!

It’s late March and the winter sport tills are still ringing. Stock is looking thin on the ground, and is still being called in where it’s available. Shelves are about as empty as they have ever been. Nobody is panicking and, until very recently, there had really been very little discounting. It seems that for the first time in a long time, we have not only had a great winter but retailers have held their nerve. Could this be a pattern for future years? Could it? Only time will tell.

Whilst many other sectors are massively overstocked and discounting is rife, winter sports is unusually a shining example. Fantastic. I cannot recall having said anything like that before – ever! Interesting this!

And all this is at a time when inflation is running over 10%, strikes have been rife (but now appear to be coming to an end), and the economic outlook for the UK (IMF) is way behind other leading countries – it’s even behind Russia (F Putin).

On first reading a UK Retail Sector report from Tokio Marine HCC it shows that year-on-year retail sales grew 3.1% but digging deeper into the numbers and taking inflation out of the figures it reveals that Q4 sales dropped almost 6% – that’s a big chunk of lost business. Will it be recovered in 2023 – will the UK bounce back? Once again only time will tell but for sure inflation will certainly not help.

‘Revenge Travel’ (following covid lockdown) appears to be helping the travel industry. This is good and bad – good in that some form of normality is returning and consumers are hopefully being exposed to new experiences. Bad because we are fighting for that same discretionary spend.

So winter sports retailers are generally happy – what about others?

Today [late March] Matt from H2O in Bournemouth celebrates his 19th year at the helm of the business. “I prefer to say that we are now entering our 20th year – it sounds better.” He’s right of course. Matt has been involved in the business for a lot longer than he’s saying – having started as a windsurfing instructor when he was just 14 years old and then working for another retailer for 17 years before setting up H2O. So, the one thing that you can say about Matt is that he knows his shit and he has staying power. A quality that he has needed over the years – especially recently. “It’s been a tough winter,” said Matt “Really tough. Of course, we were expecting a downturn, but the Autumn and winter months took us by surprise. There was a massive downturn – consumer confidence eroded rapidly with inflation and energy costs and their nerves got the better of them. They hunkered down and who can blame them?”

Any better now? “I’m optimistic. The first quarter of the year, when compared to a non-covid year, has been pretty good – I feel there has been more interaction with customers. They’ve now got used to the other costs in life and are accepting of the situation and realise that they do have some disposable income left over. After all, our customer base is not exactly poor. They’ll always find some money if they really need their fix”.

“SUP has been the most impacted. Covid brought in a new group of customers who were perhaps not so well healed – but even here we are seeing some movement. So, I am really optimistic for the coming summer – given a fair wind and good weather of course.”

H2O took a strategic decision to move away from fashion and to focus on Neoprene and Hardgoods. “I’m glad we did. Our expertise is in the kit you need to do the sport and that’s going to remain our focus”.

On the other hand, Shore Watersports are maintaining a focus on both fashion and hardware. “For us, the spread is one of our strengths – from the ‘bucket and spade’ brigade which will remain strong in the summer, to high-end solid fashion brands and to our hardware. Having that spread is important to us”. This is Henry from Shore: “The winter has been pretty crap although our shop sales matched last year. Online was down. Yet February beat last year. Why? Who knows?”

How did last summer end? “We anticipated the downturn in business, but we did not anticipate it well enough – it was faster, harder and more brutal than we thought. We forecast appropriately for the winter and our Christmas numbers were bang on the forecast – no growth but we hit our numbers and, as I say, it was pretty solid in store”.

And for the coming summer? “It’s going to be hard, particularly with iSUP and wetsuits. Fashion I think we will be OK although some brands really need to sort out their D2C’s which should not simply be a way to discount and clear out stock. They should be a part of the brand and not a closeout store”.

Without naming names, Henry told me about the new MD of a large EU fashion brand who asked his team how many weeks of the year had their own D2C NOT had an off-price offer. The answer came back – none! That is surely a bit frightening if you are a retailer ordering all those months in advance – I am sure that buyers like Henry will be taking this kind of thing into account.

And skate? Paul at Black Sheep Manchester was his usual self. There’s something great about speaking to Paul – almost no matter what, there is a smile in his voice – even if the conversational subject may not be the happiest. Is that a Mancunian thing? (It is that Mancunian rain – it makes you smile.) Paul did start with a predictable comment when I asked him how was it? “All right”. He’s a man of few words but he did go on “there seems to be a consensus that it’s rubbish but we’re actually doing all right – we’re OK. You have to find what works for your individual business and, I suppose, for your individual customers. I think we get it right. So, it works for us.”

How was the winter? “Well – we got through it so that’s a start. February was good – strangely good – no idea why. I lifted me head and it was March. Weird. Now March looks a little flat so who knows where we will be in April? Depends on the weather really”.

What about the overstock situation? “Yeah – that’s hard but we simply have to work through it. New pricing and stock clearance means that we have decks from £25 right up to £100 – this can make it confusing, but it also means we have opportunities and we just have to make the most of these. The great thing is, as I’ve said before, the sport is more accepted and it is growing. Covid helped the growth, female participation is now normal. It all helps and if you keep your head down it works”.

‘Keep your head down’ – wise words.

– Written by Gordon Way