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Swiss Market: CHF Strong, Declining Euro Drives Away Biz
With a half-hearted summer behind it, the Swiss boardsports market is now setting its sights on the approaching winter season. Despite being especially sunny and conducive to multiple outdoor activities, this season did not live up to expectations for several different reasons.
By Fabien Grisel
The first one is quite obvious: the desire to travel after two years of pandemic was quite pronounced amongst the Swiss population to say the least. Most people who could afford it chose to leave this year, much to the detriment of local tourism which we’d enjoyed during the health crisis. Leisure budgets were clearly dedicated to travel rather than buying things in shops. Participation in outdoor sports also decreased in Switzerland for the same reason… people were just not here. The threat of a recession looming over us in the last few months has done nothing to encourage people to buy equipment and since it’s now possible to travel abroad, that’s what people are preferring to do.
If you take a closer look you can see that the skateboard market really suffered this summer, the growth of the last two years was too fast and not really healthy, so now we are seeing the downside to it with leftover stock everywhere and poor results compared to the last two years. In most cases, post-pandemic figures have not matched up. The watersports market is bearing up well, although not exactly killing it, while the bike market is still really tricky, partly due to products coming in late. Many bikes are now being delivered just before winter. Worried about further price rises and ongoing stock difficulties, shops are still accepting these deliveries in order to secure their future but only if they have enough cash flow and space, which is obviously problematic for many. Streetwear and footwear are stagnating a bit, they’re never great but never really too bad either.
Obviously, the economic problems in Europe are making people wonder about this winter, but even when you concede that buying power remains more or less stable and that the threat of shortages is fading, Switzerland is once again facing the problem of having a strong currency, especially next to its neighbour, the Euro, which is depreciating. Obviously there are always winners and losers in this kind of situation but the first thing that strikes you is that Switzerland is once again much more expensive than her neighbours, so not that appealing for tourism in ski resorts. This makes it extremely difficult for our shops who are no longer competitive at all compared to the prices in the Euro zone because of the current exchange rate. It used to be normal to have a difference of between 5% and 10% when comparing prices in CHF and EUR, this was acceptable and could be explained in part by Swiss buying power, but today the differences are often 15% to 20% without even factoring in any discounts. Add to that the difference in VAT and you have a gap of 25%, which starts to sting very hard. With items being seasonal and therefore prices not dynamic, the difference between the rate when distributors calculate the prices and the rate when the articles are on the shelves plays a very important role. Some are now lowering their prices but not all distributors can manage it, depending mainly on which currency they are buying in before reselling in Switzerland. So, more than ever with this recession looming, another war, the price war, is sure to be raging this winter.
