In the week that the European Championships kicks off in France, let’s have a look at how sporting events can affect local and global business. The business of sport can be described in as direct terms as tourism local to the event, but it can also extend to the wider international ramifications that come from millions of people gathering together to view sport.
Seasonality in terms of UK retail is most apparent at Christmas, when the typical turnover of a retailer can multiply 10-20 times. Less frequent and more susceptible to fluctuations though, is the British Summer when there’s a football tournament on. For a few weeks, patriotism and football fever grips the nation and this is reflected in our spending habits.
The summer per se, depending on how many days of sunshine we get, can drive lots of business for retailers such as supermarkets and home/garden centres. These businesses need to plan each year for a possible heatwave resulting in a surge in sales of barbecues, patio furniture, buffet food and alcohol. This obviously affects in-store activity as these out-of-town retailers change their shop displays, but the knock-on effect on the supply chain industry is much wider. As supply chain deals chiefly with the planning stage of a season, the high volumes of seasonal business must always be forecast.
A World Cup or European Championships tournament involving England increases the level of purchasing activity by the British public further than those ‘odd’ years when there’s a rest from football. The licensing trade is closely affected by the plight of the Home Nations, as high-profile matches can virtually guarantee a high turnout at participating pubs across the country. What affects the wider supply chain, though, is the products in supermarkets. Flags, commemorative garments, beer, footballs, charcoal, the list goes on. Some time at the end of last year these large retailers will have planned for these goods to be sourced, and the process of course involves freight forwarding, warehousing and manual processing of consignments.
The down side with this ultra-concentrated period of high-volume sales activity, related to the business of sport, is that there is a huge risk of overstocks. Something like a sack of charcoal or patio furniture can be stored for the next year. This involves extra cost of moving to bulk storage (which is typically not as worthwhile as clearing the stock at a discount), but at least there isn’t the impending danger of spoilage, such as with sausages, salad and other fresh barbecue food. The inevitable result of a shorter-than-predicted festival season is too much inventory eating into profits.
If Roy Hodgson’s England team perform like they did at the recent World Cup, then an early exit will cost hundreds of British businesses significantly. Retailers will be left with an excess of stocks that need to be discounted, transferred or wasted. However, a championship-winning team would involve four extra matches, i.e. the prospect of four more increasingly intense consumer booms.
We will find out in the coming weeks whether the business of sport has reached its full potential for the British economy.