The World Federation of the Sporting Goods Industry (WFSGI) is pleased to share with you the outcome of the May 2020 edition of its WFSGI Covid-19 Impact Survey. The results have been compared to the April edition of the survey in order to uncover the true practical impact of COVID-19 on the Industry, provide key insights on the actions of Industry leaders to manage the crisis, and track the key trends of the Sporting Goods Industry as the world progresses through the COVID-19 lockdown and the easing of restrictions into the ‘new normal’.
The WFSGI President & CEO, Robbert de Kock commented ‘The results of our May pulse survey show that COVID-19 is, as expected, having a sustained negative impact on our industry. However, there are flickers of positive information such as the partial recovery of supply chain disruption in Europe and South Asia that seem to suggest we are moving toward the recovery period. We hope that this information continues to be of value to our members and to the broader industry and we thank the companies who have participated to date. We would encourage all companies to participate in the June edition so that we can continue to provide you with timely updates on the key industry trends in the exit and recovery periods.’
Executive Summary of the WFSGI Covid-19 Impact Survey May Edition:
Manufacturing Companies Responses:
Significant order decrease remains a challenge for the sector. While the situation has slightly improved for Europe and Northern America, the survey has shown a slight decrease of the demand in South Asia, the Far East and the African & Middle East region.
With regard to logistics some important improvements can be seen: factories seem to have re-opened at large scale as only half of last months respondents were confronted with closed factories of suppliers. Also, shipping companies seem to have increased their capacities again as only 12 % of respondents face shipping issues which is a significant drop compared to last month.
Still a high 70 % of respondents face supply chain disruption which remains one of the most serious consequences of this pandemic. The situation remains unchanged for the whole of the Americas and the African & Middle East region. However, there seem promising developments taking place in South Asia and Europe where the situation has substantially improved.
Half of the respondents are challenged by labor shortage. There are overall no important changes compared to last month except for: forced company closure has been faced as an issue by half as many people compared to last month. The same goes for shut down of public transportation making it difficult for staff to access the factories.
The numbers remain comparable with regard to regulatory measures taken by local governments specifically for the pandemic. There is a small decrease of less than 10% of respondents who are affected by regulatory requirements.
The same can be said for problems arising from low cash flow. It remains a crucial challenge for nearly 80% percentage of respondents and the situation has only minorly improved over the past month.
Still 90% see their business being impacted by this pandemic. There is close to no change compared to the situation in April, the majority of respondents still expect a drop of their business of 50 %. The most affected regions remain Europe where 80 % see a decline of their business and Northern America with 70 %.
Industry confidence regarding the future outlook and recovery has changed compared to last month: Double as many people have pessimistic outlook as they don’t expect any recovery at all. In return the percentage of respondents expecting a full recovery has increased from zero to 7.5%. Timewise, double the number of respondents in May think that they will need more than one year to recover compared to April.
The selected measures to positively address the impact of the pandemic remain roughly unchanged compared to last month. The only noteworthy changes concern the fact that around 15 % less people than last month will adopt lean production and consolidate production.
Retail and Brand Companies Responses:
Planned measures to mitigate the impact of the pandemic remain generally the same. With 64 % of respondents – that’s 10 % lower compared to April – opting for increasing online sales, this seems to be the most promising solution. The only significant change is the number of respondents that will keep minimum inventories and wait it out. While only 16 % selected this option in April, there are close to 40 % in May.
The most important repercussion for suppliers will remain lower business volume. But while splitting the order volume, brand companies try to maintain their supplier base. This trend has not changed. It’s worth mentioning that 15% less respondents than last month are expecting deferred payments to suppliers.
There is no variation in the answers seen regarding the priorities of the companies, it remains the same as in April with a focus on cash position selected by over 80 %. The same goes for the brand companies expectations towards suppliers where there is just one change. While still close to 90% appreciated flexible suppliers, the importance of stability has doubled.
Regarding the future supply chain transformation the WFSGI has seen a strong adjustment in the answers. Lean supply chains were selected by three quarters last month and only 57 % chose this option in May. Being cost sensitive has gained in importance, as nearly double the respondents opted for this answer. Sourcing priorities will not be changed according to half of respondents, this is an increase of nearly 15 % compared to last month. Other changes are that half as many respondents have opted for both local to local and regional centric sourcing.
Sustainability as a upcoming market trend has suffered a loss as only 50 % of respondents – compared to 70 % last month – consider environmental friendly products as key drivers of the industry post COVID. Also, recycling remains important for 46 %, down 14 %.
On the other side price point centric measures, chosen by over half of respondents, are double as important as last month.
The industry remains split on which sports would be most prevalent post COVID-19. Around 70 % of respondents see running and outdoors as the most appealing sports after the pandemic