Pro Content

French Market 2022 Annual Roundup: Purchasing Power Lower Than 2021, Optimism For 2023

Gross domestic product (GDP) shrunk by 0.2 percent in the fourth quarter according to the French National Institute for Statistics and Economic Studies (INSEE). Inflation, on the other hand, seems to be stabilising.
By Benoit Brecq

Indeed, the year-on-year increase was 6.2% at the end of the year. This stabilisation can be explained by energy price rises slowing down although food prices continue to rise by an average of 12%. Under the influence of inflation, households are cutting back on consumption and companies are producing less to compensate for the spike in energy prices: with these two growth engines slowing down, the French economy is ending 2022 on a cold note. Despite the energy crisis, France should escape a recession and the unemployment rate is set to remain stable. However, inflation could peak at 7% in January and February 2023 and so far wages are not fully keeping up. 2023, annus horribilis for the French economy? The Governor of the Banque de France is currently forecasting weak growth in 2023, not even reaching 2.6% like in 2022. In its latest estimate, the institution was predicting growth of between -0.5 and 0.8% GDP in 2023, a more pessimistic estimate than the government who are hoping for 1% growth. Given the signs of resilience and growth in France, which is expected to reach 0.1% in the fourth quarter of 2022, a hard landing for the French and European economy seems to have been ruled out. After 2023, the government expects to return to a more normal trajectory with gradually less inflation and more growth.

How did our industry fare at the end of 2022 and how does it look for the new year, 2023? It’s difficult to say because the situation seems to be quite different from one shop to another and one case to another. In resort, Romain Foche from Black Cats in Tignes, a snowboard shop opened in 2005 says: “The season has started pretty well with a good early December, both in turnout and turnover,” he adds: “We seem to be on the same path as last year which was all about the return of a post COVID clientele.” This observation needs to be confirmed though because the shop had only been open for two weeks – for the launch of the winter season – when we interviewed him. At GlissAttitude in Marseille, Shop Manager Eric Colard seems to agree: “business and footfall are similar to last year in the ski and winter sector in general”, but he does add that: “on the other hand, it’s a little bit weaker than last year for the nautical section.” At HAWAII SURF, a major player in e-commerce in France, the mood is a little more mixed. Purchaser Julien Rechu confides to us that: “Business is decent but online traffic is down compared to the beginning of last winter”, before adding: “technical snow products in particular are moving less than last year”.

As far as in-store stocks are concerned, generally they are quite high. For shops in resorts, it’s the very beginning of the season and the bulk of sales haven’t taken place yet. Romain from Black Cats confides to us that: “the stock is at its highest because we only really started to work 2 weeks ago”. However, he notes: “Deliveries are really messy this year: cancellations and delays are unfortunately much more common than usual.” At GlissAttitude, Eric is also suffering from the same problems: “Deliveries of pre-orders are quite late and we are having difficulties restocking winter products.” Others seem to be less affected, like at HAWAII SURF where Julien says that: “We have a fairly large stock for this winter so we will not do much restocking in this tricky context.”

Regarding the product lines at HAWAII SURF, it seems that the abnormally warm temperatures in autumn have held back sales in the winter section. As Julien tells us: “Winter technical clothing, ski and snow gear are overall down on last year” although he does add: “It’s true that last year was quite exceptional in terms of snow and with people returning to resorts after COVID.” As a multi action sport shop, he notes: “This year it’s more the neoprene, roller and street clothing sections that are doing better”. At Black Cats Romain notes: “The flagship product of the early season is the easy access bindings, just as it was last winter for Burton’s Step On,” adding, “the trend is for new generation bindings such as the Nidecker Supermatic.”

Purchasing behaviour also seems to have changed a bit compared to last year. In 2021 purchases seemed to be quite impulsive but at the beginning of winter 2022 they seem to be much more carefully weighed up. Julien from HAWAII SURF explains to us that: “Customers are once again spending a lot more time gathering information before buying”, adding: “Pleasure buying is less common than last year, general price increases mean that people are thinking twice before investing.” This feeling is shared by Eric at GlissAttitude: “The current situation with high inflation everywhere in France is forcing people to limit their pleasure purchases, like boardsports equipment, and we are starting to feel this in the shop.” It’s only the start of winter though so it’s still a bit too soon to generalise. We have to get through the holidays and the beginning of the season before the first signs of this slowdown can be confirmed.

Obviously the weather will play a role again this year. If the snow keeps falling then our enthusiasts will come for their holidays to make the most of it, despite the dreary situation on the news every day…

Could the football World Cup prove beneficial to growth in France? Could the superb performance and second place of the French soccer team give a (small) boost to the French economy? According to a study by the Dutch bank ABN Amro who have examined the effects on finalist countries since 1970, there is a small boost to gross domestic product when the national team reaches the final. Thanks to their superb performance, ‘Les Bleus’ might bring us back a few tenths of a growth point from Qatar.

How can this positive effect be explained? Well, first of all, the success of the national team affects national happiness. This means a bit more confidence, a lift to morale, a bit less saving and a bit more spending. For France in general, we could also hope for a positive effect on the country’s image and its reach, maybe attracting more tourists for example. Watch this space…