Outdoori June 2011

No let-up in sight for current trading conditions

With UK consumer confidence falling and real wages lagging behind inflation, the prognosis for the UK retail sector, with a few notable exceptions, does not appear to be promising. Consumer reluctance to spend is now becoming all too apparent.

Previous research showed that, despite the recent economic downturn, consumers remained loyal and continued to invest in outdoor products. However, at the start of 2011 consumer confidence went into sharp decline and there are currently no signs of any relief. Consumers are choosing not to buy, either continuing with existing kit or replacing only when necessary; reports also suggest that customers are not being seduced by discounts unless they are unsustainably substantial. The knock-on effect is more worrying with retailers reducing or cancelling forward orders and any surplus, open-to-buy product remaining in warehouses adding to a growing stockpile.

To try and gain a more informed understanding of current conditions, Outdoor i invited 40 suppliers to complete a short survey. By the cut-off date, we had received 34 replies - an 85% return. These suppliers represent a balanced cross-section of the market by size and product mix.

In summary, where there was once cautious optimism there is now general concern. When asked about business confidence compared with last year, 40% of suppliers felt ‘less confident’ while 26.7% felt ‘about the same,’16.7% were ‘still cautiously optimistic’ and 16.7% remain ‘more confident'

More worrying is that just under half (47%) expect a ‘further decline’ when asked how they expected sales to pan out this year; 50% expect them to remain static or better and 3% ‘don’t know.’

Given two strong winters, orders for autumn/winter 2011/ 12 were previously described by several suppliers as being solid; 40% now expect sales to increase while 30% believe they will stay the same and 30% believe they will decline.

Asked ‘What are the key issues currently affecting trade?’, an overwhelming 93% said consumer confidence, 67% rising prices, 60% Far Eastern production costs, 50% discounting and 40% supply chain issues. All results suggest tough times ahead.

While 38.7% expect rises of between 1-6%, over half (58%) are forecasting increases within the region of 7-15% and 3.2% 15%+. Our survey would indicate that on average we can expect increases of around 7-9% which will put further pressure on key price points leading many suppliers facing the dilemma whether to either de-spec existing product or reposition.

What degree do you expect prices to rise for spring/summer 2012?

Between 1-3%             12.9%
Between 4-6%             25.8%
Between 7-9%             29.0%
Between 10-15%         29.0%
15%+                              3.2%

 

CONTACT

Outdoori
PO Box 50, Kendal
Cumbria LA9 4GW, UK

T: +44 (0)1539 730400
F: +44 (0)1539 725514
E: peter@outdoori.com