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German Market Insight: Covid Continues to Bring Both Opportunities & Disappointment

The pandemic continues, and we hope to see a development towards lower numbers, balancing political unrest with increasing options for outdoor sport and holidays. As the Omicron variant of the virus continues to spread worldwide, the German situation is tense with ongoing discussions upon a vaccination duty. As we are speaking, the numbers are breaking records and don’t suggest an early easing to the situation.
By Laurids Belle

The corona pandemic continues to influence our behaviour and business practices. Although, studies show that an increasing number of citizens (19%) believe that positive economic development is taking place again (Rudnicka, 2022). Yet, the numbers are considerably lower, but a positive trend can be seen compared to the previous month. However, the inflation rate has increased steadily and is over 5%. These inflation levels were last reached 1992 after the fall of the Berlin wall (Statista, 2022). The crisis as we know has led to unforeseeable changes to the boardsports business, with many sectors experiencing great demand for their products.

The global supply chain strongly influenced the skate market last year because shipping prices skyrocketed in line with the reduced availability of containers. Furthermore, new customers to the sport created enormous demand for complete boards. Therefore, the demand was much larger than supply. Jörg Ludewig from Urban Supplies underlines this fact “as the demand was approximately double the supply, it was impossible for the manufacturers to cover because their production sites could not simply increase their output.” However, the situation has now normalised, and materials are available again, and production has started and can catch up again to restore the logistic cycles. Nevertheless, the fragile global supply chain last year delayed the cycle by 2-3 months. “We see an ongoing participation in the skate community, which is much influenced by the 90’s in softgoods and in growing numbers in online retail”, states David Morgan from Search & Destroy in Berlin.

Similar developments took place in the SUP industry. With countries locked up, and the corona regulations heavily influencing holiday choices, tourists preferred to stay around their region or holiday in Germany. Furthermore SUPs can be enjoyed in many environments from lakes, to rivers to the ocean. Although the latter was not reachable for most German tourists; instead, their choice fell on their own country’s rivers and lakes. As a result, the need for physical engagement rose and consequently the demand for SUP as a water sport. “The SUP sector outgrew the windsurf sector significantly although the demand increased for every sector such as surfing or wakeboarding”, explains Nicolas Wendelken from Choppywater. The reasoning for the unparalleled growth lies in the freedom and individuality of the sport. Moreover, the entry barriers are comparably small, and the range of applications to make use of a SUP is very wide compared to wave surfing, which needs the appropriate environment to be executed. Consequently, the demand for surfboards will only pick up this summer if the travel regulations allow it. The SUP sector faces different challenges due to cheap production in Asian countries. Big retailers offer very affordable products to meet the demand curve for the growing SUP market and have often outplayed smaller retailers. However, because of the rising prices in production and logistics, even bigger retailers are now dealing with problematic price increases. “We hope to see that the bigger discounters will have problems providing cheap hardgoods so that the specialist retailer can profit as well from higher prices”, expresses Nicolas Wendelken from Choppywater in Kiel, Germany.

In addition, the e-commerce demand is rising for both hard and soft goods, with a few shops even specialising in specific sectors to meet a growing market. On the other hand, industry experts still predict a balance between retail and e-commerce because the customer enjoys the services offered by the physical shop and clients often prefer trying on softgoods such as wetsuits or hardgoods such as snowboard boots to find the right fit.

As we are writing, the mountains in Austria will see moderate numbers of tourists arriving from Germany, but the season is still young. The last year overall the snowboard industry was hit hard because many of the biggest ski resorts in Europe remained closed, whilst the split boarding sector boomed. The snowboard industry will pick up again as production, and the availability of materials is steady again. Eric Bruweleit from Good Question Supplies has adapted his strategy to cope with what’s happening globally with the supply chain. “A lockdown in Vietnam delayed some product, but overall, we’re fine with our supply chain logistics though working with freight forwarder companies has become very time consuming to ensure our orders are kept moving.”  However, importing goods from Asia has become an issue as prices have skyrocketed. Meanwhile hybrid products which worked very well last year are already selling very well again. For instance, certain products are already sold out, such as Crab Grab gloves and helmets.

So far this season with a booster vaccination, the slopes of Austria can be used, and people are keen to go snowboarding. The political and regulatory processes will influence how the snowboarding industry can recover its post-pandemic state. Generally, people have changed their travel patterns to travel destinations in their vicinity. SUPs and skating will continue to experience growth and strong demand because regulations encourage people to participate in these individual outdoor sports. Another trend within the industry is the ongoing integration of online shops in the B2C and the B2B market. The company Good Question Supplies, for instance, set up a new online store with an improved login section. “This helps dealers to put in a reorder easily and quickly, and we’re stoked to see more dealers use that tool!” confirms Eric Bruweleit, the CEO of Good Question Supplies. However, as the industry experiences unusual demand for the online purchase of softgoods, the demand for physical retailers remains as customers are still willing to pay for their face-to-face services.