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French Market Insight: Year Ends Weaker Than Prior Year

The French economy narrowly avoided the bleak scenario of a recession at the end of 2023. After a negative third quarter,  gross domestic product (GDP) is expected to slightly increase by +0.1% for the fourth quarter. The Bank of France has revised its growth forecasts downward for the last quarter, initially expected to be between 0.1% and 0.2%,  it should remain very slightly positive, just avoiding a recession. Overall the Bank of France forecasts a growth of 0.9% for both 2023 and 2024, compared to the government’s anticipated 1% and 1.4%.
By Benoit Brecq 

Activity was maintained in the fourth quarter, notably thanks to the services sector. According to 8,500 business leaders surveyed at the end of 2023, activity increased in services in November and continued to grow in December. Management consulting for businesses, information services, and automobile repair, which where more in demand after the storms, all performed well, unlike advertising and temporary employment services. The floods and storms that hit France in November had a limited impact on economic activity. Businesses are still particularly counting on the holiday season, especially in the restaurant sector.

Industrial activity contracted in December after stagnating in November. The dynamism of the aerospace and pharmaceutical sectors was offset by declines in the automotive and information technology products sectors. A worrisome sign for future activity is that companies generally foresee a continued deterioration in their order books. However, regarding prices, the trend is towards “normalization,” with more companies reducing their production prices than those increasing them.

If we specifically examine our industry, what is the assessment at the end of 2023? What is the sentiment and situation among retailers?

The year-end period is generally crucial for store revenue, but this year, it seems that customers were not very present. Ocean Gate, an iconic Surf Shop in Saint Pierre de Quiberon, Lionel Collin, the store’s manager, confides, “At the end of 2023, we are generally down compared to 2022.” He explains, “The calendar may not have been favourable with holiday dates, and the early November storm also did not help sales.” Lionel says, “There were fewer transactions, leading to a general decrease of about 15% compared to 2022.”

If the situation is not very positive in Brittany, it is not much better in the Mediterranean. At Welcome Surf Shop in Hyères, a store established since 1988 with 6 year-round employees, Ingrid Granger, the store manager, notes, “While Black Friday has little influence in-store, it was less effective than last year online.” She adds, “It seems that things are picking up a bit more in December; it should accelerate, as usual, in the last days before Christmas.” Her outlook for the year is more measured: “We are quite satisfied; revenue continues to grow. We support our customers as much as possible, providing advice before, during, and after the sale. We build customer loyalty, regardless of purchasing power; we always have solutions to get riders in the water.”

At Someride in Hossegor, Benjamin Blanchard observes, “We are fortunate to be in an attractive tourist area, so we are not doing too badly.” He adds, “There is increasing disparity in our sector, with some looking for better prices, others looking for even lower prices, and the more affluent customers who does not look at prices at all.” Benjamin notes, “However, we are seeing a significant increase in in-store theft despite security systems, perhaps due to consumers’ increasingly tight purchasing power.” At Pickle Skate shop, Teddy Blondeau, the store manager, confesses, “The end of the year is not great compared to last year. However, annual revenue is slightly up.” Still in Hossegor, Sylvain GINER, manager of Hossegor Conspiracy Skateshop and Burton Outlet stores, reveals, “For this period, our sales are rather stable compared to last year, even without applying any particular discounts for Black Friday.” He adds, “At Burton Outlet, we see a slight increase in November and a decrease in December. Whereas at Hossegor Conspiracy, there has been a continuous and increasing decline in the sale of Hardgoods for the past 2 years. We also observe a decrease in foot traffic, even though the sale of clothing is not doing too badly.”

Regarding stock levels and market trends, the assessment is as follows. Ingrid from Welcome says, “Everything is fluid; one day there is too much stock, and the next day not enough. You have to adapt to the market quickly. Today, for example, there is too many neoprene suits on the market.” At Ocean Gate, Lionel notes, “Our stock is still quite high, so we don’t plan to replenish for now.” A sentiment shared by Sylvain from Hossegor Conspiracy, “We have been overstocked in hardgoods for two years. We hardly order any equipment anymore.” Teddy from Pickle Skateshop seems to agree, “The sale of equipment is really slow; we don’t restock.” A unanimous observation since Lionel from Ocean Gate confirms, “Textiles are overtaking neoprene and equipment in 2023 and 2024 will likely see this trend continue.” He adds, “Sales of equipment like surfboards are declining, and the season in Brittany with gloomy weather has not helped (rain, storms, few good surfing conditions).”

Benjamin from Someride seems to confirm, “It is much easier for the consumer to find products compared to the last 2 years; we notice a slowdown in equipment sales, with our best sellers being textiles such as T-shirts, shoes, or waterproof jackets.” Sylvain from Hossegor Conspiracy also tells us, “We hardly order any equipment. We have even reduced the hardgoods section in favour of textiles.”

So, the end of 2023 seems mixed for equipment, with stocks slowly stabilizing. Textiles, which have suffered in recent years, seem to have turned the tide, allowing stores to have a rather decent 2023 despite a generally uncertain economic situation. Snow is starting to cover the Alps, and as we write these lines, the winter season is about to begin. The holiday season is often a time for a break and relaxation before the start of a 2024 that will undoubtedly bring new twists and turns.