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French Market Insight: Spring? What Spring?
The French economy is experiencing a more sluggish start to 2024 than expected, penalized by the effects of rising interest rates and industry difficulties. Economic activity continues to stagnate in the first quarter but is expected to rebound by 0.3% in the second quarter, according to the National Institute of Statistics and Economic Studies.
By Benoit Brecq
The French economy is taking time to emerge from its lethargy and the recovery has not arrived yet, the INSS reveals in a scenario somewhat different from what they presented last December, when an increase in GDP of 0.2% was forecast for each of the two quarters at the end of last year.
The growth will therefore not be very different over the whole period, underline the experts of the statistics institute, who also revised upwards the growth in the fourth quarter of 2023, to +0.1%, instead of 0. The growth momentum at mid-2024 would thus still stand at 0.5%. However, this makes the government’s target of a 1% GDP growth in 2024 uncertain. To reach its target, it will probably require positive trends to materialize during the first semester. Otherwise, a GDP increase of 0.7% in the third and fourth quarters will be necessary, an assumption that seems unlikely in the current context.
The spring of 2024 seems sluggish in France economically, whereas normally it is generally synonymous with the start of the season; what is its impact on the world of sliding?
The first quarter of 2024 seems to have been mixed for stores. As François Wuest, manager of the Vega Skateshop in Paris explains: “As usual the winter sales are more than mixed because there are now promotions all year round and everywhere.” He adds: “Spring has been slow to arrive, and as specialists in skateboarding, we depend heavily on the weather. This means that equipment sales are still low.” He continued: “Our situation is comparable to the same time last year with high stock (even though it is decreasing) and fairly low cash flow.”
Further south on the Atlantic coast, the situation is not very different. Alban Causse from the Hawaii Surf store in Mimizan comments: “Winter has been quite tough with a decrease of nearly 40%…For coastal stores like us, we are starting to consider closing part of the winter. This year in particular, spring is struggling to start, it’s very slow. At the beginning of April, the weather was not as expected and like every year, we are counting on the Easter holidays and the May long weekends to truly kick off the season.”
It’s the same feeling at Olo Surf Shop in Hossegor where Antoine Sechet, co-manager of the 2 stores, commented: “Spring is quite gloomy for the moment, the trend is rather downward in purchasing power and consumption and thus turnover.” He added: “The recovery in early April is timid for the moment since it’s not our area that is on vacation. We keep our fingers crossed for the weather to cooperate because it will once again be key this year.”
At OGM Bodyboard Shop, one of the only ultra-specialized bodyboard stores in Europe, the assessment doesn’t seem very different: “Winter has been really quiet, and we felt it from the end of October. The return of Easter holidays and especially the weekend of April 15th should allow us to see the return of customers to the store,” said Founder Gontrand Marchal. He continued: “It remains quite typical since we are more or less on the same trends as last year in terms of floor traffic and turnover.”
As for the stock, it seems that it is still high although for some it is decreasing. Wuest, from Vega commented: “The level of stock is very high, especially on skate decks and completes, but on usual consumables like wheels, bearings, screws, etc., we are doing some restocking.”
At Olo, Sechet is more measured: “The stock is generally under control. We have been quite cautious on pre-orders; we have a residual but healthy stock that will gradually be sold. He comments: “Regarding neoprene, it’s true that the stock remains relatively high compared to the current sales volume.”
Marchal from OGM comments: “Our stock is rather healthy because we anticipated the decline in 2023 and particularly the slowdown in the technical field.” In line with Sechet, Marchal adds: “The neoprene remains at fairly high stock levels, considering the massive clearance sales of all players and particularly the major surf brands.”
For others like Alban Causse in Mimizan, the situation still seems quite complicated in terms of stock: “The stock level remains too high despite everything, we had asked to postpone the deliveries of our pre-order for May/June but a large part of the suppliers have already delivered.” He adds: “the pressure on cash flow is felt by everyone, supplier and retailer, and it’s the banks that are rejoicing with most notably factoring which is becoming more and more important and pushes brands to deliver early to recover cash flow.”
As for the products, it seems that textiles are faring better compared to technical products. Indeed, Sechet tells us: “it’s mainly ready-to-wear and accessories that are selling the best at the beginning of the season. While the technical department is struggling a bit with a clear slowdown in equipment renewal.” A situation also observed at Vega in Paris, Wuest confirms: “At the beginning of the season, it’s clothing that works best, such as pants, and also our own range of textiles.”
At OGM, an ultra-specialized store that has been a pioneer for 22 years in its field, loyal “Core” customers seem to still be present with sales of high-end products with “purchases of premium and quality boards.”
Causse from Hawaii Surf informs us of a change in consumer mentality: “Customers are primarily looking for discounts, purchasing power and consumption habits have changed. The society’s emphasis on the ecological dimension of not over-consuming by promoting second choices has greatly developed the second-hand market, which is a good thing, but buying new at normal price has almost developed a feeling of guilt in the consumer.” He adds: “the normal purchasing process has almost become isolated, foreign tourists and notably Germans and Swiss continue to buy as before and seem less affected than the French when they come through the store’s door.”
The season is about to start, but for now, the start seems complicated. The end of winter is struggling to arrive. As every year, Easter holidays and the May long weekends will set the trend for the upcoming summer. The weather and the waves are eagerly awaited and will once again play the role of barometer. Stay tuned…
Recap our last French market insight.
