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UK Market: Tough Times With Strikes & Leaderships Disasters

Whilst preparing this missive, Her Majesty Queen Elizabeth passed away. Whilst her passing will be old news to everyone reading this, I feel it is only right that I start by offering my condolences to her family and to offer a heartfelt ‘Thank you’ to Her Majesty. A life well lived, a life of service to her country and many countries and citizens beyond.
By Gordon Way

Well – we are still in a F-Putin place, but we are also in a WTF place? Since last writing we can now add rampant inflation, wage demands, spiralling energy costs, heatwaves, and global warming like never before plus the prospect of a looming “winter of discontent” with rail strikes, Barristers (yes Barristers) striking, Royal Mail workers and Transport for London strikes, threats from Nurses and Teachers – if you are old enough it sounds like we have gone back in time.

Throw in a new PM to the mix and it makes for an ‘interesting’ time. But as one of the retailers I spoke to for this article said, “we’ve seen it before [not the death of our Queen] and we will see it again – it just means we have to work harder.”

The first thing the new PM did was to try and head off some of the rising energy costs although I think ‘postpone’ is probably a better description. This is good news (I think) and was described by one economist, who had previously predicted a long-lasting recession, that, in view of the energy cap changes, the recession will be ‘short-lived, less severe and inflation will come down sharply in the near future’. Let’s hope he is right.

Rather than go back in time it may be better to fast-forward. For things to get back to anything like normal we need to get through this economic storm. The implications of an instant reduction in consumer discretionary spend is still being felt (despite the energy cap) and a sense of nervousness pervades our consumers. A ‘will-they-wont-they’ feeling as we approach the winter.

It was not so long ago that we were all scrabbling around for whatever stock, of whatever brand we could get. Factories were overloaded and lead times were as far as you see. What a difference a few months make! There’s a glut of products, stock in the pipeline is plentiful, factories are seeing low, low order books and are desperate to fill production capacity. At the same time consumers are scared and still holding on to cash until they feel comfortable. They, like most, are seriously apprehensive.

Winter sports retailers are generally enthusiastic and optimistic reporting some very early positive buying signs. Ben from Big Dreams told me that on a 35-degree heatwave day in August he sold a full snowboard setup. He described this as “mad” – but was, of course, very grateful.

Ben is optimistic about the coming winter and during a visit to our offices in September, I collared him for a comment. “I’m off to Greece for a week, then back for a couple of days preparation and then it’s off the starting blocks”.  As a dedicated snowboard shop Ben has a relatively relaxed time in the summer (he would not agree) but works, in his own words, “my fkn balls off in the winter”.  Making hay whilst the sun shines (or snow falls). He’s always optimistic: “They [customers] want it like never before. They’ve been completely starved and they’re gonna get away to the snow come what may”. Ben continues, “whatever crap is going on around them they need their fix. I think we’re back to where we need to be – don’t get me wrong it’s not going to be easy but for those that put in the work it’s going to be a good one and I am going to put in the work”

He’s right and the sentiment of ‘putting in the hard work’ is repeated by Ian Gregorelli of Boardwise. Ian’s business, together with his partner Doug, is now well into its second generation and, indeed, entering its third generation. They have seen a lot. “We’ve been through it before and no doubt we will go through it again. We’ll have to work harder. We’ll have to be smarter – it’s just part of the cycle of running a business. Sure, it may be tough and sure I’d like it better but we just have to get on with it.”

So how has the summer been? “SUP has dropped off a cliff – it’s completely collapsed. It’s died. Windsurf is slowly recovering and we always do well in that market especially because of our part-exchange approach with customers. Winging is the new thing that everyone wants and so it’s seeing a lot of interest and surf – well we’re not that big into surf but by increasing our footprint we have grown a little so perhaps bucked the trend. I know the market is down.”

And how do you feel about the coming winter? “Really not sure. We have focussed our buy on product that we know will have at least two seasons life – we cannot simply close out and re-buy season after season. Sure, we’ll reduce our snowboard prices in the summer but they’ll go right back up again in the winter and with ever-increasing prices the residual stock should not take such a hammering. It’s a sort of positive but I am very concerned by the level of price rises being indicated.”

So, Ian does feel that winter will be good with people desperate to get away but looking to 2023 summer he is not so optimistic “I think we could see a decline of up to 20% on top of the 10-15% decline we have seen in 2022.”

Finally a quick look at skate with Paul from Blacksheep. “It’s been pretty hard but there are closeout opportunities for sure which will help us. That’s just as well because the £40-£60 deck, which has been with us for decades, is heading to be a £70-£90 deck. This will be the first major shift in base pricing for years and how it will be received is anyone’s guess”.

How has 2022 been and what about 2023? “It’s been OK. We’re at 2019 levels or a bit higher perhaps. We cleared a load of old stuff during the Covid boom and we’ve settled back down now. There’s some stuff that really surprises us – fleece jackets selling at £200 – but that’s not really our scene and we’re going to make sure we stay niche. It’s safer for us. As for 2023 – we’re good. We’re not going to take over the world but we’re solid and skating is solid. It’s no longer going through the 10-year booms and is more settled as a real sport. Of course, we’ll have to work harder but that’s what we do.”

So generally, it seems we will all be working harder for our buck. Nothing new there then. And Putin continues to be a F-Wit.