Sport and camping equipment retailers have run a tough race over the past five years. Strong competition from external operators (namely department stores and footwear retailers) has created less than ideal trading conditions for players.
Added to this, consumer demand has also been affected by trends in real household disposable income, sports participation rates and leisure time availability. As a result, sales growth has been hindered, rising by just 0.4% per annum over the five years to 2009-10.
Following a downturn in retail sales in 2008-09, trading conditions for sport and camping good operators are set to improve in 2009-10, leading to stable sales growth of about 1.9% to $3.63 billion. Demand will be driven by an upturn in disposable income levels and a rise in consumer sentiment. Competition levels between operators will continue to be intense with sales spurred by a modest rise in participation rates. Demand will also be driven by the Winter Olympic Games in Vancouver (held during February 2010) and the FIFA World Cup (held during June/July 2010) which will renew interest in a range of sporting activities.
On a broader scale, industry sales over the past five years have benefited from key events such as the Rugby World Cup (2003), the Olympic Games (2004 and 2008), FIFA World Cup (2006) and the Commonwealth Games (2006). However, retail sales have continued to experience increasing competition from external operators such as clothing retailers, department stores, footwear retailers and toy and game retailers.
Overall, IBISWorld estimates that this industry accounts for about 45% of total sporting and camping equipment with the remaining 55% derived from sales by other retailers such as those listed above. Hence, the total retail market for sporting and camping equipment items is estimated by IBISWorld to average $8.0 billion.
Sports and camping equipment retailers will hold serve and play out a stronger game over the five years to 2014-15. With sales rising by 2.0% per annum, demand for sports and camping equipment will continue to be driven by fluctuations in the level of real household disposable income, the level of sports participation, leisure time availability and competition from external operators such as department stores and footwear retailers.
There are five key areas for the success and growth of this industry according to the Sports Industry of Australia. These include revitalised school sports, balanced and sustainable sports funding, affordable insurance, manageable taxation and better sports facilities. Ongoing concern over the rising level of insurance costs and the burden of GST compliance will be heightened over the next five years, which will ultimately risk affordability and participation levels.
Other factors include access to public parks and exercise venues. According to Melbourne’s International Diabetes Institute, societal trends such as these can determine how much a person participates in outdoor activities. Giving the general public greater access to sporting facilities such as tennis and basketball courts and bicycle and walking tracks, in addition to more public park space may increase outdoor activity over the next five years.
Entry into the retail market for sport and camping equipment is relatively unhindered. Prospective operators are draw to this industry due to is low start-up costs and expansive product market. While the day to day running of operations in this industry are considered to be mainly labour intensive, prospective operators still require substantial capital to enter the industry.
Initial capital requirements include franchise fee or the cost of establishing a new store (cost of fit-outs, capital stock). Prospective operators may also be hindered from entering the industry through the difficulty in finding suitably sized premises. Operators also need to consider the location of the store and ensure that customer parking needs are catered for.
Robert Bryant is the general manager of business information firm IBISWorld.
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