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Italian Market Insight: Low Purchasing Power Plagues Q1, Hopes Placed In Q3
The economic situation is seeing some improvements as inflation is lower than in previous months and interest rates seemingly will not rise, but rather take a very small downturn, as some bank institutions seem to anticipate what the ECB will communicate sooner rather than later.
By Franz Hoeller
Christmas shopping is in full swing and a study from Italy’s Confcommercio-imprese reveals some interesting stats. The percentage of Italians who give gifts rose from 72.7% to 73.2% which means more gifts are going to be purchased nationwide. Also interestingly the most gifted products are food and wine followed by toys, beauty products, clothing / shoes and books. Gift cards and subscriptions for streaming platforms are the most purchased gifts online. The average Italian spends €186 for Christmas gifts, in 2022 it was €157, this shows how important Christmas is.
The cold weather for sure helped the boardsport business to generate turnover but reduced spending power is still a problem and many have little spare money to spend to their beloved hobby as costs for renting, gas, electricity etc. have increased a lot over the last years. But luckily the Christmas period is always guaranteed to produce decent turnover, which gives some welcome relief for store owners. Ski resorts are seeing a good start even if ticket prices have risen, which is a very good sign.
Something you do notice is that it’s easy to save money on hardgoods and outerwear this year as many sale offerings have begun much earlier as stores and brands really need to clear inventory. People may have less money but the sale offerings are bigger than ever. This concerns not only the winter boardsport business but also the skate and surf business where stock levels are still very high and where most industry experts agree stock levels will still be a problem in the first two quarters of 2024, especially for skate and surf hardware (including wetsuits). The good numbers of the Corona pandemic times are far away and distributors need to buy less to lower their inventory levels.
Pre-order season for SS25 is already in full swing but when talking to small store owners they wish back the old pre-order windows, as pre-ordering so early and before the sales season officially starts makes it hard to buy, as they have less data available and need to take more risk to get the right goods in store.
Trends which I can report is for sure a return of bulky shoes paired with baggy jeans and box fit tees. Outerwear-wise it’s less bright colours and also more comfortable fits. Outdoor brands are still in high demand as are smaller brands and a clear identity from the brands is an imperative for the new generation of customers.
Small store owners are trying to avoid over-distributed brands and offer smaller brands in order to differentiate themselves from the chain stores and create their own niche. The trend of limited coloured sneakers is still a big thing for Gen Z, with Adidas having made a good comeback starting from Q2 this year whilst Nike / Jordan are still in very high demand. New Balance is also still very strong but with a slightly older target group. Overall, skate shoe brands are still in a difficult business environment with Vans still ruling the category.
2023 stands for more downs then ups, with a difficult market situation not only for stores but also for brands and manufacturers. The positive sign is that most business insiders agree that by the latest Q3’24 we will see a very positive upshift towards a better economic outlook and a growth in turnover overall.
