Volume 9 Issue 1. Macro Trends Participation Trends Facility Trends Wholesale Market Retail Market Consumer Trends

Transcription

1 Volume 9 Issue 1 Macro Trends Participation Trends Facility Trends Wholesale Market Retail Market Consumer Trends

2 JON MUIR, President JOLYN de BOER, Executive Director 1 Corpus Christie Place 117 Executive Center Hilton Head Is., SC Tel: Fax: BOARD OF DIRECTORS Stacey Allaster, WTA Tour Dave Bone, USRSA Kevin Callanan, IMG Linda Clark, ATP Tom Cove, SGMA Rick Devereux, IHRSA David Egdes, Tennis Channel John Embree, Prince Sports Group Don Galliers, SportMaster Sport Surfaces John Graham, DecoTurf Dave Haggerty, HEAD/Penn Racquet Sports Tim Heckler, USPTA Kurt Kamperman, U.S. Tennis Association Ilana Kloss, World TeamTennis Tim McCool, Babolat Jon Muir, Wilson Sporting Goods Company Kai Nitsche, Dunlop Sports Group Dan Santorum, PTR Mark Stenning, ITHF John Welborn, Lee Tennis Products Jeff Williams, Tennis The growth in tennis participation made headlines in, as the number of players in the U.S. increased to nearly 27 million (see page 4) and the number of play occasions grew, too. This upward trend in participation is expected to continue, which is the good news. The bad news is the economy and changing consumer habits, which are affecting many tennis businesses and their profitability. Despite racquet and ball shipments Jolyn de Boer, showing positive growth through much of, by the fourth quarter, the flagging Executive Director economy started to take effect and year-end numbers which were flat became the new up. Retailers predicted the largest net decrease in sales by pro/specialty store dealers since (see page 11), confirming the nervous nature of the current market. Becoming more and more evident is the need for retailers to pay closer attention to what consumers want online services, accessibility, affordability and a positive user experience that combines customer service, technology and information to make choices simpler and social connections more rewarding. As an industry, we are looking at ways to better measure tennis health beyond just participation numbers, to deliver more in-depth research analytics and help highlight the new technology tools and resources that can build a stronger infrastructure for the entire tennis marketplace. Traditional Sports Change from 2000 to Tennis Racquetball Basketball Soccer (Indoor or Outdoor) Golf on a 9/18 Hole Course Baseball Football (Tackle) Fishing (Freshwater-Other) Badminton Gymnastics Ice Hockey Softball (Slow-Pitch) -17.5% -20.4% -21.8% -27.6% -0.6% -0.9% -5.2% -6.5% % 11.6% 43. P AGE TWO Source: SGMA/Sports Marketing Surveys

3 CONSUMER CONFIDENCE CONTINU TO FALL Consumer confidence has shown signs in recent months of the recession bottoming out, but caution in predicting the end should be adhered to. However many of the measures in this report demonstrate that tennis is generally outperforming the economy and participation continues to grow. So tennis is well-placed to survive the recession and move ahead when things improve. Consumer Confidence Index Index 1985= Jan-05 Feb-05 Mar-05 Apr-05 May-05 Jun-05 Jul-05 Aug-05 Sep-05 Oct-05 Nov-05 Dec-05 Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 Source: Conference Board, Consumer Confidence Survey Participation & Shipment Indices vs. Dow Industrial & Consumer Confidence (Indexed to ) Ball index Consumer Confidence Racquet index Frequent player index Dow index Player index Comparing the Dow Jones Industrial Average and Consumer Confidence against player and shipment indices reveals the tennisrelated indices are holding up well against the poorly performing economic indicators. 0 P AGE THREE

4 TENNIS PARTICIPATION POSITIVE NEWS FOR THE TENNIS INDUSTRY The latest TIA/USTA tennis participation study shows total players continues to increase, up from. All categories increased up 7.6% for tennis players, 6.5% for regular players and 7. for frequent players. Tennis Participation (Millions) by Play Frequency 30M 25M 20M 15M 10M 5M 24.0M 23.6M 24.7M 24.2M 25.1M 26.9M 4.6M 4.8M 5.2M 5.2M 10.8M 10.6M 11.2M 10.8M 5.3M 11.0M 5.6M 11.7M 8.6M 8.3M 8.3M 8.2M 8.9M 9.5M Frequent players ( 21+ times, age 6+) Regular players (4~20 times, age 6+) Tennis players (1~3 times, age 6+) 0M Composition of Players Tennis players (1 3 times, age 6+) 8.6M 8.3M 8.3M 8.2M 8.9M 9.5M Regular players (4 20 times, age 6+) 10.8M 10.6M 11.2M 10.8M 11.0M 11.7M Frequent players (21+ times, age 6+) 4.6M 4.8M 5.2M 5.2M 5.3M 5.6M Total players (1+ times, age 6+) 24.0M 23.6M 24.7M 24.2M 25.1M 26.9M Tennis play occasions increased in, up 13% to 603 million. Tennis play occasions increased by 39% for frequent players since. Tennis Play Occasions 2-Year Non-Rolling Average 700M 600M 500M 400M 300M 200M 100M 454M 491M 558M 517M 533M 603M 17M 96M 341M 17M 94M 380M 16M 98M 444M 16M 96M 405M 17M 99M 417M 20M 108M 475M Tennis players (1~3 times, age 6+) Regular players (4~20 times, age 6+) Frequent players ( 21+ times, age 6+) P AGE FOUR 0M

5 COURT ACTIVITY MONITOR Tennis participation has increased by nearly 3 million players since. Play occasions are now considerably ahead of (up 33%). Players are playing more frequently, up from an annual average of 18.9 in to 22.4 in. Even frequent players are playing more, up to an average of 84.8 times a year from 74.1 in. Court Activity Monitor: Category Increases/Decreases July through end September Decreased Increased New players -9% 56% Total courts used/booked -13% 4 League play -9% 38% Tournament play -15% 23% The Court Activity Monitor (CAM) study identified the largest net increase in the new players category. Total court bookings/usage and league play still see healthy increases. Facilities also indicated that Tournament play increased, but by the least amount in all four categories. % of facilities saying "increased or decreased" Increase/Decrease Trends - New players (07) -4% New players (07) -6% New players (08) -6% New players (08) -9% Total courts used/booked (07) -4% Total courts used/booked (07) -6% Total courts used/booked (08) -8% Total courts used/booked (08) -13% League play (07) -8% League play (07) - League play (08) -8% League play (08) -9% Tournament play (07) -9% Tournament play (07) -8% Tournament play (08) -11% Tournament play (08) -15% Decreased Increased 2 29% 29% 23% 41% 38% % 6 63% 56% 61% 59% 55% Overall Court Activity Monitor (CAM) all categories show net increases from, however the increases are smaller than in the previous survey period % of facilities saying "increased or decreased" P AGE FIVE

6 CARDIO TENNIS The Cardio Tennis website surveys its visitors to better understand how they received news of and learned about Cardio Tennis. And while paid advertising and marketing declined, players are increasingly hearing more about Cardio Tennis through word of mouth and internet searches. How did you hear about Cardio Tennis? % of respondents (ARTICLE in magazines) Tennis Fitness Health Men s Health Tennis Week Florida Sports Shape Woman s Health & Fitness Tennis Life Fitness RX How did you hear about Cardio Tennis? % of respondents (ADVERTISING in magazines) Tennis Fitness Health Men s Health How did you hear about Cardio Tennis? % of respondents (Story on TV show) Shape Tennis Life Tennis Week Atlanta Sports & Fitness Florida Sports Woman s Health & Fitness Did you hear about Cardio Tennis at your local club? % of respondents 5 8 N0 Yes Tennis Channel News Story PN FitTV CNN PBS Website Advertising Friend Word of Mouth Website Article Internet Search Reader s Digest P AGE SIX

7 PLAYER STUDY DATA In, finding someone to play with and having more time were the 2 most important reasons for playing more tennis. Coincidentally, the same 2 reasons were the primary factors in preventing players from playing as much as they would like. Compared to, more players indicated they were playing as much tennis as they wanted in. For those that were dissatisfied with their court time, increased work commitments and increased family commitments were identified as the primary reasons for them not playing as much tennis as they wanted. What influenced you to play more tennis this past year than you did the previous year? Found someone/new people to play with Had more time to play this year Tennis courts became more accessible Weather was better this past year Took tennis lessons Joined a tennis league Played in more tournaments Watch tennis on TV Moved Matches arranged by someone else/club Recovered from an injury Joined a tennis club Was a fan of a pro tennis player so 23% 18% 15% 11% 11% 9% 8% 8% 4% 53% 44% 36% 6 Would the following get you to play a lot more tennis, a little more tennis, or would it have no effect on how much tennis you play? Could Play On A Team With Friends Had A Local Park Nearby With An Active Program Could Participate In A "Cardio Tennis" Class Had A Teaching Pro Give Lessons/Improve Skills If Could Find Partners/ Schedules Online Could Play In Local Tennis Tournament Could Sign Up And Pay For Local Tennis Program Online There Was More Tennis On TV Source: USTA/TIA: US Tennis Player Study No effect A little more tennis A lot more tennis 31% 3 32% 43% 30 26% 43% 34% 23% 41% 3 22% 51% 18% 6 26% 14% 71% 19% 78% 16% 6% Why aren t you playing as much tennis as you would like? Not enough time No one to play with Injury / Health problem Other Prefer other sports 4% 13% 18% No courts nearby 4% 3% 6 Which of the following have you purchased in the last 12 months? Tennis balls Tennis shoes A tennis racquet P AGE SEVEN 51% 56% Tennis clothing 3 34% % 45% 46% 54% 72% 8

8 WHOLALE MARKET Wholesale ball shipment units have also suffered from the adverse economy. While maintaining a positive annual growth, wholesale units only increased 1%. Wholesale shipment units of balls at year end are up 16% since. Racquet Shipments Wholesale Dollars - Ball Shipments Units Total Racquet Shipments $89 $96 $107 $108 $121 $ Total Ball Shipments Ball and Racquet Shipments Total Ball Shipments Total Racquet Shipments Millions of Balls (Units) Solid growth period -: Balls increased 16% since Racquet units increased 44% since Millions of Racquet (Units) P AGE EIGHT

9 WHOLALE MARKET Wholesale dollars for racquet shipments have suffered slightly from the poor economy, showing an annual decrease of 6% in dollars. However, compared to wholesale dollars for racquet shipments are up 19%. Youth & Adult Racquets Unit Shipments (millions) Youth Racquets Adult Racquets Shipments in the Youth racquet market continue to rise, up 4.3% from last year and up 88% since. Adult racquets were up a marginal 0.4% since but still posted an impressive 31% increase over By Type Units Units Units Units Units Units % Change since Adult 2,395,924 2,688,239 2,941,843 2,962,553 3,120,679 3,132,682 31% Youth 745, ,502 1,080,921 1,110,883 1,341,106 1,398,431 88% Total 3,140,935 3,637,741 4,022,764 4,073,436 4,461,785 4,531,113 44% Source: TIA Census Reports P AGE NINE

10 RETAIL MARKET In the specialty retail market, dollar sales of tennis racquets were down 3% for the year. Over a sixyear period ( to ), tennis racquet sales at specialty stores have demonstrated considerable growth, year end they were up 26% from. Dollar Sales [Tennis Racquets] Quarterly to (Specialty Stores) st Quarter 2nd Quarter 3rd Quarter 4th Quarter Full Year SPECIALTY STOR Top Selling Tennis Racquets By Year-To-Date Dollars, January December, BT SELLERS 1 BABOLAT AEROPRO DRIVE CORTEX (MP) 2 BABOLAT PURE DRIVE CORTEX (MP) 3 WION K BLADE (MP) 4 PRINCE O3 SPEEDPORT BLACK (MP) 5 WION K SIXONE 95 (16X18) (MS) 6 WION K SIXONE TOUR 90 (MS) 7 HEAD MICROGEL RADICAL (MP) 8 WION K SIXONE TEAM 95 (MS) 9 WION K BLADE TOUR (MS) 10 WION K PRO OPEN (MP) HOT NEW RACQUETS (introduced in the past 12 months) 1 WION K BLADE (MP) 2 WION K BLADE TOUR (MS) 3 WION K PRO OPEN (MP) 4 PRINCE O3 SPEEDPORT WHITE (MP) 5 WION K TOUR (MS) 6 WION K BLADE TEAM (MP) 7 HEAD MICROGEL PRTIGE (MP) 8 PRINCE O3 SP PLATINUM (OS) 9 PRINCE O3 HYBRID LITE (OS) 10 PRINCE O3 SPEEDPORT GOLD (OS) P AGE TEN

11 DEALER TRENDS Pro/specialty store dealers were asked to estimate the percentage change for tennis racquet sales for next year. As to be expected during a recession, the dealers proved to be less optimistic about the future of racquet sales compared to previous years. Pro/Specialty Dealer Forecasts: Trended Racquet Sales Increase, Same, Decrease N ET Decrease Same Increase Net (increase minus decrease) Largest net decrease in sales predicted by pro/specialty store dealers since. Racquet Inventory Levels: % of carrying dealers % 52% 49% 43% 54% 23% 7 36% 61% 41% 55% 26% 63% 33% 6 26% 61% 26% 59% 32% 59% Over RightUnder Over Well managed inventory levels by pro/specialty dealers. The effects of the recession start to surface in the late season numbers, but overall they are still significantly better than inventory levels. 3% 4% 11% 4% 3% 3% 11% 13% 16% P AGE ELEVEN

12 RETAIL MARKET PRO/SPECIALTY RETAILER INDEX Pro/Specialty Retailer Index The retailer index, comprised of six components and measured during early and late season snapshots, provides an indication of the health of specialty retailing in the tennis market. decreased by 1.6% from, representing the first decrease in the index since Racquets Balls Shoes Future racquets Racquet Units Racquet Dollars Pro/Specialty Retailer Index P AGE TWELVE

13 COST OF DOING BUSINS FOR TENNIS RETAILERS The cost of doing business study for pro/specialty retailers provides a benchmarking tool for retailers to see where their business fits compared to national averages. In general the report produced very similar results to. Retailers have managed to keep profitable despite a small increase in business expenses. Key Findings Cost of Doing Business % share of retail space - Racquets 34% 31% - Footwear 14% 16% - Apparel 3 34% - Accessories 15% 19% Racquets per sq.ft Revenue per sq.ft. $296 per sq.ft $215 per sq.ft % using Point-of-sale system NA 49% % with shopping website 14% 23% Tennis specialty retailers are generating slightly less revenue per square foot in compared to. More retailers (up 9%) are providing websites with shopping capability. Gross Margin - Racquet stringing Accessories 46% 44% - Women s apparel 39% 38% - Men s apparel 39% 38% - Racquets 34% 3 - Shoes 33% 33% - Balls 26% 22% Retailing operation future - Up 53% 58% - Same 35% 21% - Down 12% 21% Profit & Loss - COGS 51% 49% - Business expenses 26% 28% - Net profit 23% 23% Racquet stringing continues to provide the largest gross margin, however the margin is trimmed down 13% since the previous survey. P AGE THIRTEEN

14 CONSUMER POINT OF PURCHASE TRENDS Frequent tennis players are regaining their enthusiasm to purchase racquets from the pro/ specialty channel. Although there was a slight drop in late season, overall purchases at pro/specialty are nearly back to the levels of. Since frequent tennis players have demonstrated an increasing confidence to buy tennis products online. The latest survey showed that over 1 in 4 players buy their racquets online; 29% buy tennis shoes online; and the percentage of frequent players purchasing tennis apparel over the internet has risen from in to 23% in late season. Frequent tennis players continue to have a lukewarm reception to buying tennis balls online. % of Purchases Made at Pro/Specialty Frequent tennis players % 41% 31% Racquets Shoes Apparel Balls 39% % of Purchases Made Over the Internet Frequent tennis players 35% 25% 15% 5% 14% 2 13% 29% 32% 28% Racquets Shoes Apparel Balls 23% 5% 28% 5% P AGE FOURTEEN

15 CONSUMER POINT OF PURCHASE TRENDS % of Purchases Made At Chain Sporting Goods Frequent Tennis Players 45% 35% 25% 15% 5% 18% 12% 35% Racquets Shoes Apparel Balls % of Purchases Made At Mass Merchants/Department Stores Frequent Tennis Players 45% 35% 25% 15% 5% 1% 1% 6% Racquets Shoes Apparel Balls 38% 13% 34% 12% 24% 3 35% 32% Since, frequent tennis players have purchased fewer tennis-related items in all categories from chain sporting goods stores. However, the late season indicated a possible halt in these declines, up in all categories from the early season. Mass merchants/ department stores are primarily attractive to frequent tennis players for purchasing tennis balls. Mass merchants have yet to have a major impact on frequent player purchases for racquets, shoes and apparel. However, as more shoppers are attracted to mass merchants for general shopping during the recession, we may see frequent players making more tennis related purchases in this domain. Mass merchants may also start to cater to this market with some higher performance products. P AGE FIFTEEN

16 YEAR-END EXECUTIVE SUMMARY Research and Market Intelligence Highlights About This Report This End of Season Executive Summary contains highlights from the following research studies. These complete reports are available for purchase by contacting the Tennis Industry Association. Tennis Participation This research was carried out by Taylor Research and Consulting Group on behalf of the USTA and the TIA. Results are based on 5,120 random screening household interviews (covering 15,000 individuals) across the USA. The survey methodology was designed to be comparable with previous studies: 1988, 1989, 1992, 1995, and 1996 for the TIA conducted by Audits and Surveys 1999, 2000 and 2001 for the TIA conducted by Sports Marketing Surveys 2002,, and conducted by Taylor Research and Sports Marketing Surveys, and conducted by Taylor Research. Tennis Consumer Study The results are based on 1,041 interviews with tennis players across the country. Tennis players were recruited from spectators at a wide range of professional and amateur tennis events during the season and online using a number of tennis websites. This is the eighth year of this research. The questions asked enable results to be trended from There were also several new areas of investigation to improve our knowledge of the tennis consumer. Research was carried out by Sports Marketing Surveys. Dealer Trends Study The results are based on 113 in-depth interviews with pro/specialty tennis retailers across the US. The panel is representative of dealers in terms of store size and of regional distribution. Research was carried out by Sports Marketing Surveys. Retail Market Overview Pro/specialty Retail Audit The Retail Audit measures actual sales at the model level using a panel of representative retailers across the USA. Sports Marketing Surveys has been tracking tennis racquets in this channel for 18 years. The Tennis Industry Association is a not-forprofit trade association representing all areas of the industry. TENNIS INDUSTRY ASSOCIATION 1 Corpus Christie Place 117 Executive Center Hilton Head Island, SC Telephone: Fax: info@tennisindustry.org