| FRANKFURT, July 11
FRANKFURT, July 11 Makers of outdoor goods from
ski jackets to tents and walking trousers are using
international expansion, fashionable new products and the
financial clout and expertise of big investors as they battle a
slowdown in Europe.
The market for outdoor goods has expanded rapidly over the
last decade, with growth rates often reaching 10 percent, as
people spend more time in the hills and mountains to get away
from the stress of work and keep fit.
The two biggest global markets for outdoor goods are Europe,
where the market is worth over $12 billion euros, according to
figures from the European Outdoor Group, and the United States,
worth $6.5 billion, according to the Leisure Trends Group.
However, growth in the outdoor market is slowing in Europe's
Nordic and Alpine regions, where walking up mountains or racing
down them on skis has a long tradition.
"We've got a saturated market in Europe. There's no playing
catch-up anymore, brands are now fighting for market share,"
Klaus Jost, president of world's biggest sports retailer
Intersport International Corp, told Reuters.
Such concerns with be in the sector's minds as it gathers
for an annual trade fair in Friedrichshafen in southern Germany,
starting on Thursday.
Private-equity owned Jack Wolfskin, for example, saw sales
stagnate at 351 million euros ($448.8 million) in 2012, compared
with growth of almost 23 percent the previous year.
Although it is the biggest brand in Germany, Wolfskin is
still small fry compared with the sector's most familiar brand,
VF Corp-owned The North Face, which had sales of $1.9
billion euros in 2012 and is making a push into Europe, despite
what it terms a "soft" consumer environment in the region.
In the face of such competition, small specialist companies
like Hagloefs and Schoeffel are also having to come up with new
ways to make their products stand out and lure customers in.
Family-owned Schoeffel, which saw flat sales of 93 million
euros in 2012, is steeling itself for falling profits over the
next two to three years as its invests in new products,
advertising and shops. The group called in Ogilvy & Mather to
help it come up with a new advertising campaign, which has been
running on TV channels, cinema screens and the Internet.
The group declined to provide further details of its
earnings or investments, saying only it was still profitable.
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Hagloefs, the Swedish brand that started when Victor Hagloef
made backpacks for local foresters and farmers in 1914, has the
backing of a strong partner - Japanese owner Asics -
and last year grew sales 14 percent.
"This year looks a bit tougher," CEO Nicolas Warchalowski
told Reuters. "In today's marketplace, you need to bring
something fresh and vibrant to the customer for them to be
Experts say Hagloefs and companies like Arcteryx, owned by
Finland's Amer Sports, have benefited from being part
of a bigger company.
Under Asics, the running shoe maker which bought Hagloefs
for about $130 million in 2010, Hagloefs has doubled the size of
its design team and used Asics gel technology in its hiking and
trail running shoes.
It has expanded into Asia and sales there now account for 10
percent of its business, up from 5 percent before the takeover.
"With the footwear technologies, we've hit on something that
very few other outdoor brands have," Warchalowski said. Along
with that, Hagloefs has brought out a range of neon-coloured
footwear and clothing to meet a rising demand for products that
are not only practical but stylish.
Wang Rui, 24, a student in product design shopping in the
North Face shop in Frankfurt, said this was important. "For
outdoor gear in general, I would like to see better fusion
between function and colours."
Despite lower growth rates, outdoor is a market that's still
German sportswear brand Puma (majority owned by
French group Kering ) is dipping its toe into the
market with plans to bring out trail running shoes. Canada Goose
Inc is seeking new investors to help it expand.
Recent deals in the sector include Ontario Teachers' Pension
Plan's acquisition of a majority stake in Norwegian outdoor
clothing brand Helly Hansen for about $350 million, Blackstone's
buy of Jack Wolfskin for about $900 million and Adidas's
acquisition of Five Ten for $25 million.
The interest is such that Peter Schoeffel, the seventh
generation of Schoeffels to run the eponymous company, has a
ready-prepared rejection letter that he gets his assistant to
send out to interested parties, whether they be private equity
or overseas rivals looking to break into the European market.
"It's a market that's interesting for M&A because it's
growing and because of the brands. But I'm not going to sell."
In any case, the market looks set fair for further growth,
even if it is not at the levels some had expected.
"People just like being in the great outdoors and that's why
outdoor sport is a global trend," Stefan Herzog, CEO of retailer
Sportscheck told Reuters. Outdoor products make up about a fifth
of its business.
Just-Style.com, an online provider of information to the
textiles and apparel industry, forecasts the global market for
performance outdoor clothing, which makes up around 50 percent
of overall outdoor sales, will grow by almost a quarter to $21.6
billion in 2018, from around $17.5 billion now.
"We're seeing a paradigm change in the industry," Schoeffel
told Reuters. "We as an industry have to realise that it's not
so wrenching to have sales growth of 2 percent a year."