Are European retailers hampering market potential?

A lot has happened to the structure of the European supply channels of Fishing Tackle in recent years.

Twenty years ago, the supply channel would comprise a manufacturer/vendor, an export agent, an importer/national distributor, a regional wholesaler and finally the independent retailer who would sell the product to the final consumer.

Many importers/national distributors could depend on regional wholesalers for anything up to 80% of their turnover.

The regional wholesaler was the first to go when desire for growth and competition began to cause a decrease in the number of intermediaries in the market. Most big brands started by-passing the wholesaler in order to get direct access to the larger retailers and obtain better control of their market share on the shop floor. This process was rapidly followed by the smaller national brands and the regional wholesaler structure collapsed in a matter of years. Very few of these are left in the “developed” European markets, and practically none managed to convert from a wholesaler to a national brand by developing an own range of products.

As the road haulage service improved to next day delivery, dealers also found no further needs for these intermediaries as they could obtain the products directly from the importer/distributor with a better discount and free freight as long as minimum conditions were met.

Export agents were next in line; many factories recruited English speaking staff to allow them to communicate directly with the importers and these were happy to reduce their purchasing cost by buying direct.

The present channels tend to now consist of only three levels: Manufacturer/vendor à Importer/national distributor à Retailer

Drastic change has occurred at manufacturer level during this period of time as sourcing moved away from Japan to Taiwan then to South Korea and now to China.

Change has also occurred at the importer/distributor level: Retailers changed their way of purchasing and season orders disappeared. They have been replaced by a “buy as you need” policy where the distributor is treated like a “cash and carry” and expected to carry permanent stock and provide rapid delivery but is certainly not paid cash on delivery and in many cases has to finance the stock at retailer level on top of financing the stock in his warehouse.

Being an importer/distributor in Europe these days is a real balancing act that requires first class stock management, shrewd financial control, good marketing, an aggressive sales force and a lot of working capital.

The biggest handicap to the development of the sales of the importer/distributors remains the old fashioned structure of the retail channel.

It is sad to state that a large part of the European independent retailers in do not have a annual product selection strategy and are generally open to purchase from any supplier if the salesman turns up at the right time. That most of them only know how much stock they have and how much profit they made once they have closed their books at the end of the year. These two factors cause further pressure on the cash flow of the distributors as invoiced goods are scarcely paid on time.

Only a few European markets have been forced to modernize their retail channels. The best example is France. Change was forced on the retailers by the pan-European sports-chain Decathlon. This retail giant took over 20% market share of the French fishing tackle trade in the early nineties causing the closure of hundreds of shops. Those that remained either invested in larger sales units or united into buying groups. New retail chains such as Pacific Pêche and Mondial Pêche developed in the market with a concept of large stores, strategically positioned across the country, centralized buying and good management. Some of these stores are over 1000m2 in size with concepts inspired by the US mass retail models. Turnover however remains a problem as the sales volume does not increase in proportion to the size of the shop.

Similar concepts have been tried in Germany with relative success and although these large retailers usually add mail order to their service and have their own brands that they import directly. Profitability is usually a problem and their financial situation has often been quite shaky.

In most other countries and particularly in Southern Europe, little or no change has occurred within the retail channel and unless a large player like Decathlon acts as a catalyst for transformation, things are likely to remain as they are for many more years to come.

Will the distributors and the brands be able to accept for much longer such a weak link in the sales channel or will they be tempted to create their own outlets and reach out directly to the consumer? This is certainly a permanent thorn in the foot of conglomerates such as VMC-Rapala-Shimano and Pure Fishing-Shakespeare-Penn. I have thought of this solution many times at my own small level in Portugal so I imagine these groups are also often thinking the same!

Another possibility will be the takeover of the fishing tackle retail channel by the sports retailers or more likely by the upcoming outdoor and leisure sports specialists. Or could it be by one of the large US outdoor retail groups deciding to invest in Europe?

Whatever the future holds for the independent European retailer; one thing is certain: It is certainly time for most shops to modernize and improve administration and presentation as our faithful customers the anglers are nowadays expert consumers. They are used to shopping in the most modern mass retail outlets and shopping centers. They have the right to expect similar qualities of service from the independent fishing tackle retailer when they wish to purchase some equipment for their favorite hobby.