Pro Content
French Market Insight: Rain, Inflation, and Elections:it’s Tough in 2024
Purchasing power is at half-mast, gloomy weather, an uncertain political climate and the Olympic Games in France, what a combination. Unfortunately, the start of the tourist season is not exactly what the industry had hoped for; the first factor was the weather. A lot of rain in June and July in France, and below-average temperatures, have dampened the spirits of visitors. Inflation and its impact on purchasing power is also having an impact, pushing tourists back to less popular and less expensive areas. Added to this is the election campaign following Emmanuel Macron’s dissolution of the National Assembly.
Election years are always a bit complicated on the tourism front, it’s like the stock market. It does well when you have confidence in the economy. In tourism, it’s a kind of the same thing: election years create uncertainty, and household morale is low.
Uncertainty has therefore soared this summer. The announcement of the dissolution and then the results of the early parliamentary elections had an immediate effect on the mood of businesses and the French. Since the announcement of the dissolution on the evening of June 9, everything has contributed to fuelling this feeling: the population’s wait-and-see attitude, the postponement of certain investments, the freeze on recruitment due to a lack of visibility on the evolution of wage costs. Indeed, employers’ associations are warning that business leaders are cautious, as they wait for a clearer picture. Unsurprisingly, the main factor cited is the electoral context.
“The dissolution has created uncertainty. And uncertainty is never good for the economy”, insists Economy Minister Bruno Le Maire. In the second quarter, GDP growth will be limited to 0.1%, according to the central bank. Prior to the dissolution, the monetary institution was forecasting 0.8% growth in France this year. The INSEE forecasts, which were also made before the parliamentary elections, were for 1.1%. But the reconfiguration of the political landscape will not be without effect on growth.
Will the French economy finally take a dive in 2024? Nothing is less certain. After a month of political storms, marked by the thunderous announcement of the dissolution of the National Assembly and the tormented legislative elections, companies and households are concerned by the electric political context.
Far from providing the clarification announced by Emmanuel Macron, the results of the legislative elections ultimately failed to produce a clear majority in the National Assembly. The electric shock of the first round, which saw the RN (far-right) in the lead, ultimately saw the Nouveau Front Populaire (left-wing alliance) win the most seats in the evening of the second round through the Republican barrage. The Head of State suspended the resignation of the Attal government, and the forces of the Left are currently in the midst of negotiations to find the ideal candidate for Matignon. Despite this thick fog, INSEE is not forecasting a collapse in the economy. At least for the time being.
In this climate of uncertainty, how is the French surf retail market faring at the start of the 2024 season? At Cocoa Gliss & Co, a surf shop set up on the island of Oléron in 2002, CEO Frédéric GROOT tells us: “We’ve had a fairly complicated start to the season since March. The months of April and May were relatively spared by low general consumption, but June and the start of July are well below our targets, and much lower than in 2023”. He adds: “The figure was down 15% in June compared with last year, and at the start of July we’re closer to -20%.”
In the South of France, Karukera Surf Shop in Saint Aygulf, VAR, co-managers Cédric & Brice tell us: “Visitor numbers were low in the spring, and the start of summer is more difficult than last year. They add: “We’re seeing a sharp drop in sales. We explain this largely by the poor weather, which is rather unusual on the Mediterranean coast at this time of year, even if the political climate and the elections are creating a climate of uncertainty which must also have an impact.”
Frédéric from Cocoa Gliss & Co also explains: “The drop is contained for clothing, but much more significant for technical equipment such as surfing and skateboarding. Snowboarders are very price-conscious about technical products, and are often no longer in a position to renew their equipment. He adds: “Purchasing power on non-essential goods has dropped significantly, and the political context is too anxiety-provoking. To put the finishing touches to the desire to buy, the weather has been miserable since the beginning of April.”
Cédric gives us an update on stock levels, supplier deliveries and restocking: “We have carried out some restocking in clothing, which is selling well, but we still have overstock on technical goods in general.” He notes: “There’s too much stock on all brands. Too many websites and stores are doing anything and everything, with special offers every day, all year round, and it’s pretty complicated to fight to keep margins.” He adds: “There have been too many price rises over the last few years among all the brands, especially on neoprene, to end up with crazy promotions. Today’s customers are looking for and waiting for the big discounts!”
At Cocoa Gliss & Co, Frédéric confides: “The brands have been delivering on the clothing side, but we’re way behind on the high-end surfboards. But our stock levels are well above the average of other years for surf equipment in general.”
Frederic & Brice of Karukera Surf Shop agree on the change in consumer behaviour: “There are more and more customers who come to get information and then go buy at the low price, the customer is no longer willing to pay the recommended price.” A feeling confirmed by Frédéric at Cocoa Gliss & Co: “Customers are increasingly using their smartphones to check if prices are in line, or even if they can find a cheaper price on the net. As soon as the product exceeds a certain amount, we notice that the sale is much more considered. We’ve even seen consumers buy a product on special offer when it wasn’t their first choice”.
At Colors of Surfing, a store with a unique and experimental concept set up 2 years ago in Biarritz, where Antonin Villiers, co-manager, tells us: “Summer has started off quite well for us. We’ve had a lot of footfall, the 3 main activities of our concept store are doing very well: clothing, board rental/testing and the café section. We had a good pre-season, with an excellent month of May. A slight drop in activity in June, which was to be expected, and a good start to July. At this time of year, a large proportion of our clientele are foreigners. He adds: “The store has grown steadily since we opened in 2020. With an increase of 25% so far in 2024. This can be explained by several factors, notably by the store’s growing reputation, an increase in opening hours, but also a growing interest for this type of different retail concept.” Antonin qualifies: “However, we have noticed a slight drop in sales of new surfboards, probably linked to purchasing power. Finally, our business obviously fluctuates according to the weather. Surfboard testing is undoubtedly linked to surfing conditions. As for the weather, it plays a part in the store’s activity, often more crowded on grey, rainy days (no beach, more going out on the town).”
While for most stores, at the time of writing, the summer season doesn’t seem to have really begun. A few isolated stores, with a different concept and clientele, seem to be doing well. Uncertainty and the weather are two factors that explain the late start. Let’s hope that the Paris Olympics and the month of August save this season, which is struggling to get off the ground…
By Benoit Brecq