Europe’s Specialty Retailers Resist Powerful Mass and Hyper Channels
Unique products and specialized knowledge keep specialists ahead in retailing
By Isabelle Grenet
Vice President, European Retailer Group
NPD Europe

While the mass channel dominates U.S. consumers’ attention, in Europe, smaller specialty stores are strongly defending their territory in the retail marketplace. This is particularly evident when considering two of the markets NPD monitors in Europe: sports footwear and toys.

Sports Specialists Lead the Race

In the sports market, consumer purchases are driven by two major criteria: “technicity” (technical factors of footwear designed for specific sports activities), and style/vintage. Specialty stores have proven themselves a winning format for retailing athletic footwear. In 2005, 57% of athletic footwear sales in the “Big 5” countries – U.K., Germany, France, Italy and Spain – were through stores known as “sport specialists.”

In these specialty environments, consumers can try on athletic shoes and ask advice of trained store staff who understand the requirements of footwear for competition and regular sport practice. Additionally, we know teens and young adult consumers are sensitive to store atmosphere when they purchase vintage-style or lifestyle shoes used not for sport, but for wearing to school and social events. Forty percent of sport footwear purchases are made by consumers ages 15 to 35. The young consumers who buy athletic footwear for sport and everyday use shop in Europe’s specialty stores and “lifestyle boutiques” located in big cities and city centers – they are less likely than older consumers to visit family-oriented mass merchants and hypermarkets, where consumers purchase food along with other product categories.

The importance of sport specialists to the athletic footwear market is also linked to a strategy employed by many of the main sport footwear brands. These brands have partnered with specialty stores to launch new products and promote their top sellers. Technical sport brands and, more recently, lifestyle footwear brands, rely on the sport specialist stores’ small retailing format, trendy atmosphere and city-center locations to bring in the target consumers. Often, brands create special models for their specialist partners, so the consumer sees new styles at each specialist.

Toy Specialists Don’t Play Around

Toy specialty stores are the primary channel in the European toy market, capturing 38% of total value sales. Unlike the sport footwear market, where young consumers tend to make their own purchases, in the toy market, retailers must appeal to the parents and grandparents who make the bulk of toy purchases (67% of purchases in value are made by parents and grandparents). These consumers give careful consideration to brands, play value and safety, and they prefer a large assortment of choices and informed recommendations by shop keepers. For these reasons, toy specialists in Europe (defined here as U.K., Germany, France, Italy, The Netherlands and Belgium) experience very strong sales. The mass, hypermarket and supermarket channels, however, still represent nearly a quarter of toy sales across Europe, most likely because of the convenience of purchasing toys on trips to the stores where they make their food purchases.

Over the past five years, new toy specialists and toy chains have opened across Europe. As we have observed in the sport footwear marketplace, these specialized outlets have developed an attractive retail format in city centers and big-city malls, and they’ve been able to withstand the growth of mass merchants and hypermarkets. Specialists provide an assortment of toys and sales expertise the mass channel can’t match. And like the sport footwear market, toy specialists have developed manufacturer and licensor partnerships that allow them to focus on particular niches and offer exclusive products.

Early Learning Centre (ELC), a U.K.-based chain, is one example of a toy specialist with a product range for children under six. More than 80% of ELC’s product offerings are private label; the stores also offer a limited range of licensed character products. This specialist attracts parents and grandparents with a promise of quality, a focus on education and attractive proximity with a high street presence. The stores, complemented by a semi-annual catalogue for bulk products and online sales, have an excellent reputation among consumers, and the chain ranks among the Top 5 toy retailers in the U.K. Other examples of dynamic toy specialists in Europe are La Grande Récré and King Jouet, which began in France and are now expanding to other European countries.

In Europe’s sports footwear and toy markets, specialized retailers are resisting encroachment by general stores and mass distribution. For manufacturers and retailers in both industries, creativity, innovation and specialization will be critical to maintaining consumers’ interest and attracting their sales.

For more information about sports services, contact Eva Dorobek 49 911 395 3275 (eva_dorobek@npd.com). To learn more about toys services, contact Frederique Tutt 44 1932 355 580 (frederique_tutt@npd.com). Visit us at www.npd.com.