Buying Groups, Chains Build Private Labels As Published in OIA CEO

Buying Groups, Chains Build Private Labels As published in OIA CEO Brief 10/6/2009 ©2009 Outdoor Industry Association While facing competition from big box and online retailers, Europe’s independent outdoor specialty retailers enjoy one big advantage over their colleagues in the United States – potent buying groups. Unlike their U.S. counterparts, however, independent outdoor specialty retailers typically are associated with large and very powerful buying groups in Europe. Two of the biggest are Intersport Group or Sport 2000. As a group, the more than 5,000 retailers who buy through Intersport in Europe and Canada generated sales of $13 billion in sporting goods in 2008. That includes all manner of sporting goods retailers, including snow sport and outdoor specialty shops. To help boost margins for its members, Intersport has developed a robust private label business. Last year sales of its exclusive brands declined 3.2 percent to $2.2 billion, or 17 percent sales. Still, that is significantly more than the total sales of either REI or L.L. Bean. In Southern Europe, manufacturers are responding to Decathlon’s private label expansion by taking control of their own distribution, says Renaud Vaschalde, a global sports analyst for ND who is based in France. Other key retailers are also getting into the private label business. “The size of a business is the key component to a successful game plan,” says Vaschalde. “And many medium-sized brands and retailers cannot afford to play it.” With revenues of $7.3 billion in 2008, France’s Oxylane Group has more than enough heft to play in this space. The company’s Decathlon chain carries a full line of outdoor products at its nearly 500 stores, which includes 233 in France, 66 in Spain, 52 in Italy and 10 each in Portugal, Poland and Belgium. Decathlon has developed one of the region’s largest stables of private outdoor labels, including Quechua for hiking and camping gear and WED’ZEE for winter sports. Oxylane has also developed private label apparel for mountain resort shops, said Vaschalde. Revenues rose 11% at Oxylane last year, thanks largely to new stores. Other major sporting goods chains in Europe include SportScheck and Sport Schuster in Germany and SportsDirect in the United Kingdom. These full-line chains generally sell camping, winter sports and other outdoor gear apparel alongside team sports apparel and footwear. Specialty retailers in the United Kingdom and France are under the most pressure from big box chains, notes Vaschalde. Brands, meanwhile, are responding to the private label trend by opening their own stores. Another area where the U.S. and European markets have diverged is in pre-season orders for this fall/winter. As U.S. retailers pulled back their pre-season orders for this fall and winter last January, Europe was enjoying ideal winter sports weather for the second year in a row. “That led retailers to what might be termed ‘an over optimistic’ approach to forward orders for fall 09, spring 10,” said Mark Held, president of the European Outdoor Group, which represents 47 outdoor brands operating in Europe. “The brands, in turn, had to make some hard decisions as to whether or not to put these orders into PO’s and the majority I believe went a bit light. This was no doubt prudent and will only cause problems if the winter is once again a good one.” 4909 Pearl East Circle, Suite 200 | Boulder, Colorado 80301| 303.444.3353 | www.outdoorindustry.org .

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