21 May 2014
The Shanghai market for outdoor sports equipment: challenges and opportunities
Though Shanghai lacks mountains for climbing and its waterways are not suitable for boating, its mid- to high-income consumers are now keener than ever to engage in various kinds of outdoor activities, seeking physical and mental health amid work pressure and willing to spend money in acquiring necessary sports equipment. In buying products for outdoor activities, Rmb1,000 is a price this group of consumers would readily pay.
Mid- to high-end products dominate
As income rises, the citizens of Shanghai have greater health awareness. Facing the enormous pressure of living and working in the city, more and more people are seeking to unwind outdoors, thereby triggering the gradual expansion of the outdoor sports equipment market.
Wang Liang, who has been in sales management of outdoor sports equipment for many years, says, “Currently in Shanghai, outdoor enthusiasts are mostly aged 30 or above with middle-level incomes or above, compared to aged 30 or under 10 years ago. Today’s outdoor enthusiasts mostly hold a stable job, have a defined career plan and possess the spending power to engage in outdoor activities.”
Wang is regional sales manager for outdoor sports equipment in Nike Shanghai and is well versed in the outdoor equipment market. In the interview, he points out that, aside from traditional sports such as basketball, football and badminton, various types of outdoor activities such as hiking, golfing and mountain biking have become new favourites of Shanghai citizens, and enthusiasts are mainly in their 30s. Golf in particular is considered a wholesome high-end outdoor sport where participants are basically successful people aged above 40.
Moreover, as income levels go up, the majority of consumers with middle-level incomes or above who like outdoor sports can afford and are ready to pay for outdoor sports equipment costing more than Rmb1,000. This has allowed the rapid development of the mid- to high-end outdoor sports equipment market in Shanghai.
Market entry considerations
In fact, a considerable number of famous brands are bullish on the Shanghai outdoor sports equipment market and their entry has resulted in fierce competition. For Hong Kong companies wanting to enter the mainland market, Wang believes that first-tier cities like Beijing, Shanghai and Guangzhou are more suitable entry points. Since geographically Hong Kong is endowed with mountains and seas, outdoor activities and related sports are well developed. Hong Kong companies which can bring their experience in the outdoor sports equipment market to the mainland should enjoy definite advantages.
“But that entails ‘throwing money’.” Wang reckons that, to introduce a brand into the mainland market, it is necessary to spend money to build brand recognition by advertising or carrying out online or offline promotion activities. Alternatively, one can consider “importing” one’s goods slowly through large sports supermarket chains. Currently, the largest and best-known sports supermarket chain in Shanghai is Decathlon from France that mainly sells sports and outdoor activity items at mass-market prices. Wang says that Decathlon has almost become a household name for sports supermarkets in Shanghai. The French brand has successfully established itself in Shanghai and Decathlon products produced by OEM factories are increasingly well received by Shanghai consumers.
Large numbers of professional sports competitions and outdoor activities take place throughout the year. Regular scale events understandably do not have a significant impact on the sales of related products. Only major events such as the Olympics can ignite people’s passion for a certain activity within a short time. But Wang believes that sponsorship of a sports team or title sponsorship of a competition by a brand would raise its brand profile, while star endorsement would also have a positive effect on a brand and the event concerned. When a sponsored team is engaged in an event or a title sponsored competition is underway, there can be substantial increases in sales of the branded products concerned.
Online shopping a major channel
When it comes to buying sports or mass-market outdoor activity equipment, Shanghai consumers prefer famous global brands such as Nike and Adidas. Wang explains that the way these brands market their products is to use their own sales team to supply products directly to retailers and wholesalers. Using Nike as an example, he says that their products are directly supplied by their regional sales team to dealers, including large shopping malls, department stores and sports supermarkets but seldom through agents. Actually, this is the sales mode adopted by almost all branded outdoor products present in China.
As e-commerce has become all the rage in China, the outdoor sports equipment market has also capitalised on this trend. Wang says that consumers who are accustomed to online shopping also like to shop for various types of sports and outdoor activity equipment on the internet. Currently the sales of tennis and badminton online shops have already exceeded those of physical stores. Even for a tennis racket priced at several thousand yuan, sales volume over the internet is still remarkable.
Nonetheless, for other outdoor sports equipment that are higher in prices or with many functional features (such as golf and other specialty products), enthusiasts still prefer to buy their equipment and outfit at specialty stores or department store counters in large shopping malls. For other outdoor activities such as hiking and mountain biking, a considerable number of consumers would still like to go to outdoor sports clubs and specialty stores so that they can buy more professional and better quality equipment and accessories rather than going through online shops.
Ting Ting, Special Correspondent, Shanghai