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UK Market Insight: What Will The Tariffs Bring?

Happy Christmas!

It’s been more than four months since the last UK Market Intel – so Happy Christmas!

A lot of water has gone under the bridge since then and it is probably a distant memory. But that bridge really has seen a lot of water giving us all plenty to talk about…and worry about!

How about the President of the USA? How about the Tariff war? How will it impact the UK? With Trump and the Tesla Tit in charge, we simply cannot predict what tomorrow will bring…or the day after tomorrow…next week…next month.

There’s a couple of things that every single one of us in business craves – stability and predictability. The ability to forecast in some sane fashion not only helps our businesses but helps the overall industry – minimum over supply, reduced discounting pressure etc. But we are so far away from that at this time – about as far as I can ever recall.

One thing for sure is that tariffs will impact every one of us – even if a product is not directly impacted the overall disposable income of our end-users will, without a doubt, fall. It is also likely that some of our products will be directly impacted – either with retaliatory tariffs or protectionist tariffs to hinder other countries, such as China, targeting our shores in an attempt to replace lost US business.

By the time you read this I guess we will all know whether the UK has hit back and perhaps things will have settled down a bit – but right now (April 4th) it is like the Wild West with Cowboy Trump (Sheriff or Outlaw) riding a big white Stallion through the middle of business.

That’s the future, but looking back it is fair to say that winter ended pretty well for most. Brands and retailers appear to be (relatively) happy, sales were positive, stocks are low. Is this not the second season in a row that has been the case?

Slide OTS Trade Show in January ended well. This is the show where we all get our Crystal Balls out (careful!) and predict the future, it seems that winter retailers were positively looking towards next season. Whilst visitor numbers to the show are never anything to shout about it is always quality over quantity that matters – and in that Slide OTS delivered.

It’s not all been plain sailing “The Euro’s are hitting our margins hard” – this is Matt from Absolute Snow “the problem is that they’re targeting the UK as a ‘boost’ to their overall business and don’t give a damn about RRP’s and appear not to give much of a damn about margins! It certainly does not help us”

Any other headaches? “Yes – returns – particularly of softgoods. These have probably doubled over the past few years – people don’t think twice about sending something back if it does not 100% fit the bill. This all-impacts margins. It’s not easy.”

And of the future? “We’re positive. Snowboarding is where our roots are and still the core of the business. I see further rationalisation amongst brands and I see us being more and more particular in what we offer. At the same time we have to consider the impact that brand D2C’s are having and react to this. Even with all these headwinds we’re really positive on the future of snowboarding – absolutely”.

Overall I think we can summarise winter as being a success and that people are looking forward with cautious optimism. WOW. Happy Christmas.

What about water?

Unlike winter the watersports market is still suffering a massive glut of over-supply and under-demand. It feels like winter has been longer than normal but, if nothing else, the watersports community is pretty resilient and, in the main, we’re all intact. Perhaps a little bruised and battered but ready for the season ahead.

And here we are in early April – the sunshine is out in force – March was the best sunshine month since records began. Easter is just around the corner; school holidays start today and by the time you read this you will know whether the weather stayed with us. There’s nothing better than a great sunny Easter School holiday season to deliver a well needed injection of positivity to the watersports market.

The last UK Market Intel was pretty doom and gloom and I received an email from Mark Thorn at Piran Surf who had this to say “Brands are peddling too much stock to stores that don’t need it. How many new models of surfboard do we need each year? Shops need to hear this and stop their staff buying and buying”.

He’s right of course but is anyone listening? Happy to chat to brands about this – get in touch.

Anyway I thought I would give Mark a call “It’s been a long hard winter and in particular the over-crowded neoprene space has really not helped us but finally the sun is shining and the schools break up today so we should really start to see business warming up”.

“To try and shield us from the general havoc we have adopted an ‘own brands’ approach which protects us somewhat from the overcrowded market. As I said in my email there’s simply too many shortboards chasing too few customers. When will brands realise that there’s no point in continuing to bring out V4, V5 of a perfectly good board – it just results in too many boards sitting at the back of the stockroom which ultimately will have to be sold at a discount. I don’t see this cycle coming to an end which is why we try to isolate ourselves from it as much as possible”

So are you confident about the future “Yes, absolutely. I’m comfortable that we have things right and whilst it’s too early to tell I think we are going to have a great season”.

Generally shelves are beginning to show some spaces but refill orders are still cautious. The biggest areas still plaguing the market remain neoprene and iSUP where the glut continues.

Looking for other glimmers of hope you could say that windsurfing is growing (it is) but from a small base, foiling is still “taking off” – but it is all relative and perspective is needed. SUP remains in the toilet.

The Tariff war could reintroduce the 25% charge on USA Boats – so that’s another nail in the coffin for boat wakeboarding which already has a seriously diminishing market. Thank the Lord for cable wake which, if the weather plays ball, will almost certainly grow this year. It’s good to see cable operators not just investing in their aquapark activities and still prepared to invest in cable wake.

The sun is shining – Happy Christmas!

By Gordon Way