This past year, hardly a month has gone by that we haven’t heard some conspiracy theory about Intersport, a buying group of several-thousand stores around the world. It seemed everyone had an opinion about what this organization was all about and how it was ruining snowboarding. So we went to the source to get the truth. Nigel Rothwell is the Product Manager of the snow and ice business unit of Intersport International Corporation (IIC).
SNOWboarding Business: What is Intersport?
Nigel Rothwell: We are the largest group of sporting-goods retailers in the world, with around 4,000 stores. These are divided into national organizations operating in 27 countries-mostly Europe, but also in Asia and very small North American interests.
Intersport International Corporation IIC sets marketing and store-format guidelines but also operates as a buying group for the national member organizations. Depending on the country, national organizations may own all their stores directly, or may be a group of member stores, or some system of joint ventures. In some countries there might be 100 members, but each member might have eight or ten stores.
Our largest market is Germany with 1,100 outlets. These are then divided into A, B, and C category members depending on store size. In Austria there are more than 600 outlets.
In snowboarding, we estimate the Intersport Group has a market share of approximately 25 percent of boards sold in Europe, which is close to 100,000 boards.
SB: How does Intersport operate as a buying group?
NR: My job as “product manager, snow and ice” is to find products every national organization can then sell to its members. National organizations are obligated to do a certain portion of their purchasing through IIC.
First we have our exclusive brands that are only available through IIC and are marketed under the Crazy Creek brand. Then we select international prime brands that are multi-category companies such as Salomon, Bennetton, or Nike.
We choose prime brands based on their international presence and marketshare. We aim to find brands that have an equal marketshare across Europe and also a strong international profile. The prime-brand snowboarding program is still young and has few qualifiers. So far, our only partners are K2, Nidecker, Oxygen, and Scott. It’s tough to find suitable brands. We selected Scott for its international presence only a short time before it pulled out of the U.S. market. Other brands-for example, Generics-which are strong in just a couple of markets, would be difficult to bring in as a partner.
SB: So the smaller brands can’t make it into Intersport?
NR: That’s wrong. IIC is only selling to the national organizations. A small brand can sell to national organizations, which all have their own buying programs, or they can go directly to retailers. We can’t dictate that every store has to buy a fixed percentage of their open-to-buy from the national organization. Those details are worked out at the national level to reflect the needs of local markets. For example, Burton isn’t a prime IIC brand, but is still probably the best-selling nonexclusive brand at a retail level.
SB: Why isn’t Burton a prime brand?
NR: Burton seems to think that we are discounters, so we can’t bring them in at an international level-although we would like to.
The national organizations are working with them, but this is actually creating conflict. Burton likes to work closely with its retailers. But by also going directly to retailers, they are pissing off the national organizations that would prefer to steer all the sales. The conflict is especially acute if Burton offers retailers lower prices than they could get through their national organization.
SB: Are you discounters?
NR: That’s simply not our image in Europe. We are not perceived as a discount chain.
Our goal is stock rotation and better margins. In many markets we have nowhernear the cheapest prices. We are offering better products and better margins to our retailers. Even in Switzerland, which is a healthy market for us, the market is bombarded by discounters such as Migros and Athletico that are driving prices down because of suppliers in a panic pulling their pants down on pricing.
We get the best prices in Europe because of our buying power. But that doesn’t mean we intend to set our retail prices lowest. We are not responsible for driving down prices-we are responding to our competitors and are forced to use the tools we have available to be competitive, and that includes our exclusive branded products
SB: How important is the Crazy Creek brand?
NR: We sell between 25,000 and 30,000 Crazy Creek snowboards. We currently manufacture Crazy Creek in Central Europe, but would go wherever we think the best place is. We don’t buy production time as SNOWboarding Business reported last year-we are an OEM customer like every other OEM customer. We develop our own molds-some lower-end molds are shared under agreement-but we never use old molds as you also reported. Our higher-end boards feature our own topsheet material, own inlays, and some exclusive features built in.
Also the rumor that we ordered of 30,000 pairs of Crazy Creek branded Clicker bindings-which supposedly left U.S. retailers without supply last season-is false. The whole European market for Clickers is nowhere near that high. We bought about 3,000 pairs and remain exclusively committed to the Clicker program at an IIC level.
SB: So if not discounters, what is your market position?
NR: Currently there is little differentiation in the market between department stores and specialty retailers. Most sporting-good retailers in Europe aim for the middle market with a generalized platform.
We are trying to position ourselves as the technical and product “experts” rather than simply a general sporting-goods retailer. We perceive this as a big gap in the market.
SB: Is the European snowboard market changing?
The increase in age in the snowboarding demographic is similar to the U.S.
In Europe as a whole, there is a slow shift toward greater homogeneity in graphics and styles, which are increasingly similar to those in the United States. But the local retail scene remains deeply fragmented. There are so many languages, cultures, and tastes, consumer needs are more complex. For example, Switzerland and France are geographically adjacent, but France is more price-driven, whereas in Switzerland consumers can afford to pay a little more.
SB: Is this why American brands remain relatively unsuccessful in Europe?
NR: It’s not just the different markets. The distribution infrastructures U.S. companies have set up and their grassroots activities fail to build confidence with the retailers.
Burton is successful in Europe because it owns its own distribution network centralized out of Austria. That’s expensive, but it works far better than using a national distributor that also sells sunglasses and skate shoes from other companies. That makes it hard for brands to control service, promotional support-and especially pricing.
Salomon has been successful because it owns its subsidiaries. What the head office says, every country does. There’s a pricing strategy for a certain product at a certain level that’s the same across Europe. But most U.S. snowboard brands are faced with one agent shipping boards to a remote town in Scandinavia and another selling in Munich. The different costs involved means that pan-European pricing is almost impossible.
Then when I speak to major brands in the U.S., they seem a little naive and still don’t understand how fragmented the European market remains. It’s not that nobody wants to do business with U.S. brands-the products look good and in some cases the prices are really good. But our national members complain they seldom meet the very top guys from the U.S. manufacturers as they would with European brands. And when they do, the vendor seldom understands the specifics of their local market. This makes it appear that the typical U.S. manufacturer doesn’t really care about local European business.from the U.S. manufacturers as they would with European brands. And when they do, the vendor seldom understands the specifics of their local market. This makes it appear that the typical U.S. manufacturer doesn’t really care about local European business.