A year of two halves for sporting goods
The World Federation of the Sporting Goods Industry (WFSGI) has published a second annual report on the state of the industry with professional services company McKinsey. The new report, focusing on the industry’s performance in 2022, came out on January 23.
It said that when 2022 started, consumer sentiment seemed to be improving month on month, reflecting looser covid-19 restrictions in most markets. According to the report, companies were placing large orders, in anticipation of strong demand from the buying public and to avoid the supply chain challenges of 2021.
As a result, performance in the first half of the year was “widely positive”, WFSGI and McKinsey said.
After that, however, inflation began to pick up, owing to the impacts of the war in Ukraine, with higher raw material and energy costs prompting some companies to raise prices. In the meantime, consumer sentiment showed signs of deterioration and discretionary spending declined. There was a sudden increase in available product paired with declines in spending and this led to widespread overstocking.
In the second half of the year, the report’s authors concluded, “the economic outlook darkened, amid rising concern over geopolitical instability and the trajectory of interest rates”. The impact of these factors was “a significant weakening in industry performance compared with 2021”.
Against this backdrop, 2023 is expected to be a challenging economic environment, with continuing subdued consumer sentiment.
The report concluded that sporting goods companies should focus on four key themes in 2023 to preserve demand and build resilience. The themes are: brand relevance, sustainability, nearshoring and investment in the industry.
Image: Intersport.
