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10 Questions

with TomአSgalitzer
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By František Bouc
Staff Writer, The Prague Post
January 24th, 2007 issue

RENÉ JAKL/THE PRAGUE POST
Snow-How CR's Tomáš Sgalitzer says what the ski industry needs is a snowy February and March.
No snow, springlike weather — this winter began as a nightmare come true for the winter sports industries. While funicular and ski-lift operators are considering asking the government for an extraordinary subsidy, winter sports equipment producers are counting their losses. Tomáš Sgalitzer, the importer of Blizzard skis in the Czech Republic, talks to The Prague Post about how the adverse weather conditions affect ski sales, and what the future trend within the industry could be.

 

This winter has become a nightmare for skiers, ski-lift operators and the entire skiing industry. How have ski sales been affected?

I must admit that this year's mild winter has had a negative impact on sales of every kind of winter equipment, and not just skis — also other equipment such as winter clothes and accessories. While buyers' demand was at standard levels in November, our sales dropped about 20 percent in December and about 50 percent in January. The low interest in winter sports equipment is also caused by the fact that there's not enough snow even in the Alps.

The Sgalitzer File
  • Job title: General manager, Snow-How CR, the official importer of Blizzard skis
  • Age: 31
  • Nationality: Czech
  • Education: Engineering high school in Prague
  • Previous job: Worked as an entrepreneur for the past 13 years
  • Family: Single

From a business point of view, is it still possible to make sure you make some profit?

Honestly, I've never experienced such a situation. Even if our sales were to suddenly return to usual levels, we could only just hope to avoid losses. But it's most likely we won't be able to sell out our stock this winter. Revenues of all businesses involved in winter industries will be affected.

Is snow your only realistic marketing tool?

Based on our experience, I can say that not even offering discounts of up to 50 percent can help if there is no snow. What we would need most of all would be forecasts for snow conditions in February and March, and also reports from slopes that operators have begun making artificial snow.

Ski-lift and funicular operators are considering asking the government for financial compensation for part of their lost profits this winter. Couldn't it be considered discrimination against other winter sports–

related businesses if the government were to respond to this call?

Well, I believe this will remain just a wish of ski-lift operators. Running winter sports facilities is a regular business like anything else, and there is no reason to consider state subsidies. Also, ski-lift operators made so much money over the past two winters that they can keep their businesses even through this unfavorable season. In fact, return on investments of winter sports facilities providers are among the highest.

Are you worried about meteorological forecasts that say similar warm winters could happen again?

If it happens again, we'll need to get accustomed to it. Retailers focusing on winter equipment would need to add some nonwinter equipment to their portfolios. Some winter equipment producers have begun to merge. But I don't want to predict future winter trends. On the other hand, the recent winter seasons were actually long and cold and businesses involved in winter industries had above-standard revenues.

Last fall, ski producers Nordica and Blizzard merged. Do you think more mergers will follow, thus downsizing the number of competitors?

Nowadays, it seems all viable mergers have been completed. There are only a few market players right now and they produce more [ski] brands. Needless to say, the reason for the mergers is to cut costs and to capitalize on synergy effects of shared marketing.

Also, you mentioned that winter equipment dealers might need to expand their portfolios by adding nonwinter equipment. Is it likely that ski producers will also one day turn out equipment for summer sports or sports that don't depend on the weather?

I don't think ski producers would expand to summer sports. First of all, it's not that easy to launch a brand-new product outside the market segment which producers have already explored. I think producers will keep merging in order to further cut costs. A mild winter such as this year's cannot jeopardize the business of any major winter equipment producer. In fact, they are already now getting orders for the new season.

Blizzard made no secrets of its plan to expand production further to the East, notably Ukraine. Could climate and the pressures to cut costs make producers move?

Well, in fact, all of the major ski manufacturers already had plants in the East, so it was a necessity for us to move there in order to keep the pace with our competitors. On the other hand, we must admit that plants in the East produce mostly skis for children or tourists. The development and production of top models is still being kept in producers' headquarters.

You work as a designer for Blizzard. Does the company adjust its design to various markets, or does it deliver the same design to all markets?

Blizzard's catalog offer is international and is the same on all markets where we are selling. Every market can also have its own unique design under the condition that at least 1,200 skis can be placed on the market. For example, we've developed six unique designs for the Czech Republic and Eastern Europe this winter. Generally, design is a significant marketing tool. There are customers who are willing to buy a particular pair of skis only if they like their design. The design factor constitutes about 50 percent of customers' decision making. Our loyal customers usually request special designs.

Do Czech skiers follow the sport's icons when buying skis?

The World Cup appearance is significant for all ski producers. Based on Blizzard's research, it is not essential to have particular icons for every single market, but rather someone who could have marketing appeal on multiple markets. Blizzard currently sponsors [Austrian skier] Reinfried Herbst. Generally, people who follow the World Cup very well know who's skiing on what.

 

František Bouc can be reached at fbouc@praguepost.com


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