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Italian Market Insight: Tough Challenges Despite Modest Growth
The economic environment is still the same, GDP growth is expected to be 1% in 2024 and 1.1% in 2025, with no big increases as expected but still showing a moderate acceleration compared to 2023. Private consumption continues to be supported by the strengthening labour market and real wage increases. This dynamic will lead to +0.4% growth in household consumption in 2024 and +1% in 2025. A sign of positivity which is much needed for many business owners nationwide.
Nevertheless the forecast remains characterised by the persistence of high uncertainty in the international outlook, determined by the evolution of geopolitical tensions which do not seem to be slowing down during 2024. This data comes from ISTAT, the official national statistics provider, and shows growth but the overall reality in the boardsport business is experiencing a pretty tough time. The 2024 season started slow with heavy rainfalls in April, May and June affecting the sell-through meaning most stores not reaching their turnovers and we’re still seeing many stores closing as the overall profitability does not allow for many retailers to go on and remain in business. Sadly the list of closed skate, snow, surf and streetwear dealers gets longer and longer during this first half of 2024.
Store owners try to stay positive but the overall outlook is that it will take another 1 or 2 seasons to get into a more healthier market situation again. Stock levels on skate, snow and surf hardgoods are simply still too high and demand is not high enough to lower it within a short period of time. The problem that goods only move on sale is eating margins offline and especially online which makes it even harder. It is not all bad and there is some light with certain brands doing well but the overall trend is reducing costs, ordering less and trying to make it through these very uncertain times.
When talking to retailers, distributors and agents you quickly realise that a new era has started and that numbers we did past or pre-covid are not possible to reach within the next couple of seasons for many businesses. The customer has changed and many B2C only brands are making their way into the market with their direct to consumer communications and lifestyle.
Boardsports are alive more than ever, but this does not mean that it naturally translates into good sell-through numbers for core retailers as they compete against more mainstream players with wider brand and trend selections. A simple example is baggy jeans which are heavily trending but you can find them everywhere which mean less sales for our traditional boardsport channels.
July brings us good weather, good vibes and many events are back on the calendar such as local skate contests and store based events. The SS25 pre-book season is foreshadowed by a slow-down modus operandi from many retailers to make 2025 successful again. Many companies have to re-organise themselves and reduce costs to make it through this very difficult 2024, but as it is not only business, but also passion it will make them survive.
Peace and love. By F.J.