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French Market: Clothing Performed Well But Technical Product Slow in Q2

After exceeding expectations in the second quarter, the French economy stabilised in July-August. In an economic environment that’s still troublesome, with pressure on raw material markets and difficulties in supply and recruitment, productivity continues to hold strong.
By Benoit Brecq

Buoyed by the extensions to household support, energy subsidies and the strength of the tourism industry, GDP growth was better than expected in the second quarter. It ended up reaching 0.5 per cent compared to the previous quarter, while GDP had declined by 0.2% during the first three months of the year.

After two years of pandemic, and despite a summer marked by annual inflation of +6.1%, heat waves and fires, the French tourism industry had a really good 2022 summer season and the indicators caught up with figures from 2019 (before COVID). All sectors of the tourism industry experienced an unprecedented bounce back in activity this year despite the increase in prices; 86% of players think that the summer season was very good.

The pre-season was already looking very promising, as indicated by the accommodation industry. In May, hotel and outdoor accommodation operators were already reporting booking rates of over 80% for July and 85% for August. In mainland France, the occupancy rate reached 80% for both months despite a significant increase in prices. The hotel industry in particular has seen a 22% increase in revenue per available room compared to 2019. With buying power reduced by inflation, holidaymakers’ spending did fall: an average of €1,600 for a week’s vacation for four people, down 8% compared to 2019. The economic situation seems to have forced households to adapt and favour domestic tourism. The year 2022 also marks the return of international visitors. In July-August, 25 million of them visited France, with spending nudging 15 billion Euros. France hopes to welcome 65 to 70 million foreign tourists in 2022, compared to 90 million in 2019.

The French economy seems to have had a period of relative recovery in 2022. This is reassuring for the government, who are counting on growth of 2.5% this year. However, the shock will surely come in 2023, with the 1.3% growth target currently set by the President seeming hard to imagine. Energy prices will certainly hit businesses hard-with gas and electricity prices continuing to break records-as will the rise in interest rates bringing an end to abundant cash flow. Magic money is no longer the order of the day, and this will probably lead to budget cuts after three years of heavy spending, particularly with the gradual end to household aid. Up to now, measures such as the energy price cap have prevented a sharp slowdown in activity. But these measures are too costly, and the State will have no choice but to withdraw them in 2023.

On a national level the economic balance sheet for the summer of 2022 seems rather positive despite the current global crisis, but what does it really mean for the momentum of our boardsports industry, consumption and in-store traffic this season?

In general, the summer of 2021 was exceptional in terms of visitors and sales in shops. The Coronavirus crisis boosted participation in outdoor sports as a whole and boardsports naturally benefited from this boom. The vast majority of shops had an exceptional summer season. Everyone was wondering how summer 2022 would go. In Brittany, the situation between 2021 and 2022 seems quite different. From Action Line in Guidel, we were told: “Compared to last year, people bought less overall, we are far from the COVID years”, before adding: “Turnover was retained though because we sold much more clothing this summer but much less technical product.” They explain: “This summer we had far fewer technical customers, but many more looking for clothing, especially brands like Picture shifted really well.”

Further south in Vendée at Mika Surf Shop in Saint Gilles Croix de Vie, the situation is a little less positive. Shop Manager Mickael Rigollage, confided to us that: “We have seen rather different consumption this year, customers are holding back more.” He adds: “Customers are more anxious and careful with their spending, so the turnover is slightly down compared to last year.” Mickael also mentioned fairly substantial stock levels even at the end of the season: “We took much more stock in the pre-season to be able to cover sales this summer and we greatly reduced our restocks. Even so, our stock levels remain high even at the end of the season.” He adds: “Next year we are going to return to normal, like before COVID, and plan on reasonable pre-season orders so we can play more with the restocks available from suppliers.”

At Hawaii Surf in Bayonne, Purchasing Manager Julien Rechu, says that: “Overall activity is down slightly by about 5%. We have noticed a significant drop in traffic and people are looking for special offers. Customers are particularly picky about prices this year and we can see that they are paying more attention.” He then adds, “Board sales are down this summer but this is a trend we’re feeling across all product categories. Despite everything, the clothing and surfing sections worked well, especially the brands Picture, Patagonia and Torq. Just like Mickael, Julien noted: “Our stock remains relatively high for the end of summer. We are going to limit the quantities we buy for next summer in favour of restocking during the season to avoid surpluses.”

At SB3 in Hossegor, it’s a similar story. Shop Salesman Gauthier tells us: “We have seen much less activity in the shop. In spite of the huge influx of tourists to Hossegor, the beautiful weather and the heat wave this summer were not beneficial. Customers preferred to go to the beach rather than the shops, although we still had good footfall”. On the sales side, once again it was the clothing section that seems to have worked well. Gauthier tells us: “The clothing department has done pretty well. In particular, the products on special offer from previous collections worked really well.”

On the Mediterranean, Pat from Aloha in Six Fours also notes a slight drop in shop traffic, but on the plus side: “We have a slight increase in overall sales this year thanks to a higher average spend,” he adds, “Our clothing department worked well this year compared to previous years, unlike technical products such as foam boards, which sold less well.” A similar observation comes from Le Marin in Martigues where Nicolas says: “We had fewer people in the shop this summer, but the turnover is quite stable because there were bigger tickets than last summer.” However, he does add: “People are discussing less and less about technical aspects and more and more about prices. They are constantly looking for deals and special offers. The same goes for the Atlantic coast: “We did not restock this summer, we used our stock because we were overstocked. Given our end-of-season stock levels, obviously we will order less for next year.”

Although in general summer 2022 was a little poorer in terms of in-shop traffic, it would appear that business was pretty decent and even better than the pre-COVID summer. Clothing seems to have made up for the slowdown in technical equipment sales, which exploded during the pandemic. Shop inventories appear to be high, and a return to the pattern of limiting pre-orders and restocking more seems to be the preferred option for the coming years.

Will the autumn, back-to-school period and the return of the waves boost sales of surf and skate equipment? Inflation and French buying power may once again weigh heavy in the balance in the months to come…