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(Last updated: 10 Oct 2011)
Trends and opportunities
The market
In France, the sporting goods and equipment industry represents a profitable market that in 2009 constituted 19.9 per cent of the total European sports equipment market. The sports equipment market consists of equipment utilised for ball sports, adventure sports, fitness, golf, racket sports and winter sports. In 2009 the French sports equipment market had total revenue of A$5.5 billion. In total, household spending on sporting goods and services amounted to A$1.5 billion in 2008, and accounted for 50 per cent of overall spending in this industry. Moreover, the number of sports and leisure shops in France has more than doubled in the last 25 years, greatly increasing the profitability of the industry.
Sport and physical activity are perceived as a key element of an active, healthy lifestyle in France; however, sports-related activities are pursued more frequently among men than women. The French appreciate and place great importance on the role of fine food in everyday living, an aspect that can inhibit a regular sports ethic amongst citizens. Nonetheless, there is an increasing awareness of the danger of obesity, an ailment which affects 11.6 per cent of the population in France. In addition, 30.3 per cent of the French population is considered to be overweight. As such, the growing popularity of sport in France is reflected in the recent growth in the sporting goods market.
Team sports are particularly popular in France, and consequently, football, tennis and judo have the highest participation rates. Furthermore, the 175,000 sporting associations and clubs in France play an important role in facilitating the public’s involvement in sport – there are 16 million registered members of such clubs and associations.
The sporting goods industry discussed within this report has been divided into three main sectors: the sports equipment sector, the sport nutrition sector and the sporting apparel sector.
Sports equipment sector
The French sports equipment market is the second largest in Europe and generated total revenues of A$5.5 billion, reflecting the compound annual growth rate of 1 per cent for the period spanning 2005-2009. In comparison, Germany accounts for 22.1 per cent of the European sports equipment market value and the United Kingdom for 18.9 per cent. Respectively, the two nations had a compound annual growth rate of 0.8 per cent and 3.8 per cent for the same period, reaching market values of A$6 billion and A$5 billion) in 2009.
Golf equipment was the market’s most lucrative segment in 2009, generating total revenues of A$1.4 billion, equivalent to 26 per cent of the market's overall value. The fitness and athletics equipment sales contributed to 13.8 per cent of the market's aggregate revenues, accounting for A$0.8 billion). The sale of snow sports equipment maintains similar revenue to that of fitness and athletics equipment sales.
Snow sports equipment remains a large industry in France, although the lack of significant snowfalls in many of the major skiing areas has resulted in a recent decline. Other alternatives to skiing, such as snowboarding, are growing, but the long-term trend for snow sports shows an overall decline. Of the snow sports, snowboarding has experienced the most rapid growth in recent years, as adrenaline sports develop and grow in popularity. This has led to a demand for innovation in these particular sectors. Other outdoor activities are also experiencing strong increases in popularity such as canoeing and kayaking, cycling, sailing and paragliding; furthermore, new sports are continually emerging, such as snow-kiting and para-alpinism. France’s largest imports of sporting equipment include bicycles and bicycle accessories, motor boats and sports shoes, totalling A$2.65 billion worth of imports in 2008.
The performance of the market is forecast to decelerate from the 1 per cent growth rate in 2009 to an anticipated growth rate of 0.8 per cent for the five-year period 2009-2014. As such, this deceleration is expected to drive the market to a value of A$4.4 billion by the end of 2014. Comparatively, the German and UK markets will grow at respective rates of 1.3 per cent and 3.6 per cent over the same period, to reach values of A$4.9 billion) and A$4.7 billion in 2014.
Sports nutrition sector
With growing interest in healthier lifestyles, more French people are taking part in sports and investigating the benefits of sports nutrition. Sports nutrition products include ready-to-drink protein, protein bars, protein powder and other sports nutrition products. The increase in pharmacies’ shares in sports nutrition’s sales in recent years has had a positive impact on the image of these products. In 2010, an increasing number of consumers opted for sports nutrition to complement their sporting activities and assist in developing the body that they desired; consequently, volume sales and values sales were stimulated. Indeed, the constant value sales of sports nutrition are expected to increase at a compound annual growth rate of two per cent over the next few years.
In 2010, sports nutrition sales increased by 4 per cent to reach a total value of A$80.1 million. Consumers continue to be attracted by sports nutrition, especially because of the widening distribution of these products via pharmacies and also sport specialist retailers such as Decathlon. This has helped to maintain sales growth. Nonetheless, there was an overall decline in market prices in 2010, which was mainly due to the emergence of several brands from the USA that became available for purchase online for a lower price.
Sporting apparel sector
Whilst the focus of this report is on sporting goods and equipment, there is potential for crossover in the sporting apparel sector. In sectors that are fast-expanding such as snowboarding, mountain biking and cycling, equipment and lifestyle go hand-in-hand. Indeed, with the entry of sporting giants Nike and Adidas into the sportswear and apparel markets in France, the prospects for expansion in this market appear positive. However, the economic downturn of 2008-09 had a significant impact on the sales of sports apparel in France. Indeed, there was a marked decline in casual and fashion spending on sports apparel. In light of the present economic turmoil in Europe in 2011, these trends may well continue and for this reason, retailers who sell solely sports apparel may suffer from any further economic decline. On the other hand, many companies in this industry sell sports equipment, apparel and footwear which reduce their reliance on the success of a sole industry and also may decrease rivalry.
Key focus areas
This section of the report will firstly explain key focus areas and challenges of the respective sporting goods, sports nutrition and sporting apparel sectors. It will secondly highlight the prospective outlook and opportunities available within the three sectors.
Sporting goods
- Extreme, adventure sports are growing in popularity and are fast-expanding sectors that offer opportunities for innovation. Sports such as snowboarding, mountain biking and cycling are part of this evolving market.
- Increasingly there is significant competition from Internet retailers who offer similar services and products as well as customisation, for a lower price.
- Notably, in this industry, there is a need for significant logistical arrangements, such as comprehensive transport and distribution channels. Admittedly, some large, existing sports equipment retailers are able to enter new markets and open their own retail outlets; however, this strategy is often too costly for smaller retailers or start-up companies.
Sports nutrition
- The increasing popularity of Internet shopping has produced a threat to the traditional form of retail and offers a significant number of brands that are available at lower prices. Therefore, the average unit price in retail outlets is expected to decrease in the coming years as a result of the competition from Internet sales.
- Another challenge for the short-term market in France will be to overcome the new requirements of legislation affecting the dietary supplements category. Accordingly, some products such as weight management supplements with L-carnitine and CLA, could be banned or will need to be changed in terms of packaging and/or formulas if they are to remain in the market.
Sporting apparel
- A combination of factors over the last few years has lessened the popularity of sporting apparel purchases from retail outlets. This is due to several reasons including reduced spending following the economic downturn and the growing competition from Internet retailers that offer lower prices and convenient service.
- Outsourcing is an important and prominent feature of the market that facilitates the development of a competitive advantage. In particular, popular sportswear brands such as Nike and Adidas use this strategy to give them a source of competitive advantage via the creation of economies of scale.
Opportunities
Sporting equipment
- Surfing remains a popular sport in France, with the ‘Quiksilver Pro France’ held each year on the South-West coast. The surfing industry in Europe has grown to a value of A$2.6 billion.
- Entry into the sports equipment retail market may be achieved by starting up a new company or by diversifying an existing company's operations into the retail of sports equipment. Although some brands of sports equipment are used across more than one sport (eg. Slazenger, Wilson, Head), a considerable proportion is produced and sold by specialists. As a consequence of this, it is possible to enter this market on a small scale without the need to invest in a large chain of retail outlets. Custom-made sports equipment, such as the Balabushka pool cue, is a good example of this.
- French consumers prefer smaller specialist retailers to other retail outlets; in total, smaller specialist retailers account for 76.1 per cent of total revenues.
Sports nutrition
- There is a changing perception of sports nutrition. Typically, sports nutrition was perceived as a product that was designed specifically for body builders; however recently, this denotation has evolved with an increasingly positive image and sports nutrition has become increasingly more popular for the everyday athlete. This change was in part facilitated by the availability of products on display in specialist sports retailers such as Decathlon, alongside brands such as Nike, Adidas, Isostar and Aptonia that target a wider consumer base.
- Protein-based variants are the most popular form of sports nutrition and distribution for these products is best achieved through sport specialist retailers such as Decathlon. Protein powder is the most popular form of variant as it is easy to transport and consume.
- Over the last few years, major competition has emerged from Internet-based retailers that offer a broader range of products and prices. The majority of these brands are USA-based and are available for purchase on specialist websites; they can also be offered with promotion-based prices.
- At present, the product offer is generally limited in sports specialist retailers (although it is increasing at a steady rate). Further, there is a lack of advice available for consumers as to which type of protein-based variant would be suitable for their needs and the comparative advantages of one product over another for that particular customer.
Sporting apparel
- Recently it has been observed that due to the economic downturn, consumers have become increasingly careful with their purchasing patterns. For the near future, it is forecast that they will turn to brands that offer high quality, and that have a functional, durable image.
- Two main opportunities exist for expansion in the market, these are Internet retailing and customisation of products. Internet retailing offers multiple opportunities for success and allows the company to be more competitive by offering lower prices; an example of this is Adidas’ online store. Likewise, the NikeiD concept has proven appealing for consumers as they are able to customise their footwear.
Competitive environment
Sporting equipment
Three of the largest companies within the French sporting equipment market are Decathlon, InterSport and Go Sport.
Decathlon operates as the Oxylane Group: it designs and manufactures athletic apparel and equipment for some 65 sports, including cross-country cycling, diving, horseback riding, hunting, martial arts, rugby, running, street soccer, and table tennis. The company operates approximately 400 Decathlon, Tobogan, and Decat sporting goods superstores in 15 countries. Its outlets offer services such as tennis racket stringing, ice skate sharpening, and bicycle tune-ups and repairs. Decathlon was founded in 1976 by President Jean-Michel Leclerc and is owned by the Mulliez Group.
InterSport began in 1968 when 10 national buying organisations came together in Paris to form a new, international sports retailer. Since the beginning of the sporting goods retail organisation 41 years ago, InterSport has emerged as the worldwide number one sports retailer. InterSport International Corporation (IIC), with its headquarters in Bern, Switzerland, has today over 5,200 affiliated sporting goods stores in 37 countries, from North America to Europe and the Middle East, with continuing expansion in the Asia/Pacific region.
The Go Sport Group, created in 1978, is one of the leaders in the sporting industry in Europe. Due to poor economic circumstances and a drop in sales of sports equipment, the organisation reported a fall in sales revenue of 8.2 per cent in the first semester of 2010, when compared to the same period in 2009. The company continues to expand however with the opening of five new stores in 2010, bringing the total number of sales outlets to 371.
Sports nutrition
EA Pharma is the leader in the French market, as its popular brand Eafit continues to lead the category with a value share of 45 per cent. The market leader Eafit is widely popular due to its variety of products catering not only to consumers wishing to improve their sporting abilities, but also to general consumers wishing to improve their overall health and wellbeing. Through their partnerships with laboratories in countries such as Russia, Switzerland and Greece, EA Pharma continues to expand the French sports nutrition market internationally and is present in several distribution channels.
In 2010, the Aptonia brand from Decathlon attained the second position in the market, with a market value share of 15 per cent. The Aptonia brand (Decathlon SA) is positioned according to individual sporting and fitness needs or desires, such as muscle building, endurance and weight loss. Although Decathlon has launched specific products for women, the majority of products are for both genders.
Sporting apparel
Nike SA France is ranked 8th in overall apparel with a two per cent value share of the French market in 2010. The company specialises in sports apparel including footwear, clothing and sports equipment. Nike suffered from declining clothing sales during 2009 and 2010 as a result of the economic downturn; however the company nonetheless experienced a good performance in sales from their footwear range. This trend could have stemmed from the introduction of the NikeiD range, whence consumers can customise their footwear both instore and online. As such, the Nike Internet retailing site is popular in France. Furthermore, Nike SA France also benefit from mobile phone marketing and notably, a number of attractive smart phone apps, yet the company is still to launch applications designed specifically for France. In addition Nike has also replaced their rival Adidas as the main official supplier of the French national football team which represents an advantage in terms of marketing.
Adidas AG is the second biggest sportswear manufacturer in the world after their US rival Nike; the company is a German sports apparel manufacturer and is the parent company of the Adidas Group. The product range includes sports footwear, bags, shirts, watches, glasses and other goods as well as beauty and personal care products. The Adidas range is usually sold in France through sports goods chains such as Decathlon and Go Sport; however footwear products are also sold through specialty sports footwear chains such as Foot Locker and Courir. In 2010, Adidas was ranked 18th overall in the overall competitive market in France with one per cent market share. However, there had previously been a decrease in net sales from A$14.2 billion in 2008, to A$13.6 billion. The company’s brand has longstanding presence and an iconic appeal; however Adidas is diligently seeking to overtake their rival company Nike in sports footwear sales and gain an increased market and value share. As such, the company’s position as a pioneer in internet retailing offers an advantage that is they believe is key to maximising their market share. Adidas was the first global sports apparel player to use the Internet to sell its products directly to European consumers. Thus, they have a strong Internet retailing presence and place a strong emphasis on developing online marketing as well as offering user-friendly websites for sales and information.
Sources
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