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German Market Insight: A Winter Of Swings & Roundabouts

I’ll start this market insight with news on the inflation rate and the current situation in Germany. Consumer prices rose by 3.7% in December 2023 compared to the same month last year. This means that the inflation rate has climbed slightly again after several months of decline and this could cause energy prices to rise. Added to this is the increase in VAT at restaurants from 7% to 19%. All of this could push the inflation rate towards 4% in January. Meanwhile farmers are on strike and showing their dissatisfaction with the decisions of the German government.
By Toby Hammer

Let’s move on to the situation in the retail sector: As hoped, the winter got off to an extremely good start across Germany and provided plenty of snow throughout the country. Ski resorts were able to open as early as 10 December, in many places. As a result, hardware sales went up and boosted Christmas business significantly. Thankfully for retailers, most of the Black Friday discounts were also removed and it was possible to sell at full margin.

Unfortunately, this was followed by heavy rain throughout Germany and extremely warm temperatures, which led to the closure of the ski resorts in the low mountain ranges. Almost nobody would have thought it possible that all the snow would disappear, but the valleys turned green again. In contrast to the previous year, however, many lifts were open between Christmas and New Year.

I spoke to Sport Kessler in Kleinwalsertal. Max Kessler confirmed that they were very nervous about Christmas. Fortunately, in the end, all the lifts were running and even the Crystal Ground Park opened with some rails. “It felt like the ‘normal’ years. We honestly couldn’t keep up with the ski rental, everything was very positive here. We gave out a lot of snowboards. You can tell that people are keen. On the sales side, it was mainly soft goods such as socks, gloves, etc. that were bought, but we are also very happy with the snowboard sales. And to be honest, the season is only just starting for us.”

The warm weather and wind also brought good waves to the board sports family. The winter swells all over Europe were really good, so surfers packed their board bags and flew to the waves. This was noticeable in the surf shops, Secret Spot in Kiel which has changed hands and moved to a new location, had a small sale and sold quite a few surfboards.

The surf hype can also be felt in Munich: Surfttown Munich started selling tickets shortly after ISPO. The demand for tickets was massive… Munich is ready for the wave. We’re excited too.
And we heard from Ricardo from Santoloco in Munich that he’s going to open a new shop in Sagres, which seems like a crazy decision at the current time. But Santoloco who has focussed strongly on surfing, is seeing this is beginning to pay off: “With the shop in Sagres, we are taking a new path that we have wanted to take for a long time. But now everything has come together, the location is right next to one of the best spots, it’s big enough for a café, a rental area and a shop. This will certainly attract many Germans, and we will also be working with a small hotel run by our landlord. We start in March.”

Its just before the Shops 1st Try and both the brands and the shops are looking forward to testing new products in Alpbachtal, the event registration figures look great. I’ve had a lot of different feedback from the shops I’ve spoken to over the last few days. On the one hand, the season feels good because of the early snow, but on the other hand, everything is getting more expensive and the farmers are on strike, blocking some of the access to retailers. Many small and medium-sized businesses are worried about the future.

I spoke to Alex from Sport Schumacher and he confirmed exactly that. This winter, he had a drop of around 30%, mainly on the sales of new goods. “This was simply slow. Another problem is of course the online price war and even if you don’t want to take part, you’re almost forced to. That’s a shame, because as soon as one starts, the next one follows suit, and so on.”

Max from Rome Snowboards and Low Pressure agrees. The price war had started far too early and his options are limited. Fortunately, there was new snow at the beginning of January and it has become cold again. When asked how the pre-order season was going, Max replied: “It’s getting more and more difficult outerwear, shops are reducing space for outerwear and most core retailers are focussing on snowboard hardware.” He notices this particularly in the boot sector, which is doing very well.

Back to Alex from Sport Schumacher; I wanted to know from him what he was doing for the pre-book season. He answered he would reduce the number of brands and also reduce preorders from the ones he keeps. “I have to think economically here, which means that I will of course order from brands with which we have a good partnership, which offer me a margin and where I also have drop shipping options. We are also thinking we want to position ourselves more broadly.

In any case, the season remains exciting. In my opinion, retailers and industry need to get even closer together in order to continue to do good business. Unfortunately, it will take even more effort in the coming years, because nobody can predict what nature will do. The situation is similar with politics. Here, too, we will have to accept the decisions and can only hope that politicians will once again provide more support for SMEs.

With this in mind, I wish all brands a good pre-book season and good sales. Good luck to the shops and, of course, we wish for snow, good waves and dry skate spots.

See you at Shops 1st Try

Ride on!