By Victoria Bryan
FRANKFURT (Reuters) - Makers of outdoor goods from ski jackets to tents and walking trousers are using international expansion, fashionable new products and the financial clout and expertise of big investors as they battle a slowdown in Europe.
The market for outdoor goods has expanded rapidly over the last decade, with growth rates often reaching 10 percent, as people spend more time in the hills and mountains to get away from the stress of work and keep fit.
The two biggest global markets for outdoor goods are Europe, where the market is worth over $12 billion euros, according to figures from the European Outdoor Group, and the United States, worth $6.5 billion, according to the Leisure Trends Group.
However, growth in the outdoor market is slowing in Europe's Nordic and Alpine regions, where walking up mountains or racing down them on skis has a long tradition.
"We've got a saturated market in Europe. There's no playing catch-up anymore, brands are now fighting for market share," Klaus Jost, president of world's biggest sports retailer Intersport International Corp, told Reuters.
Such concerns with be in the sector's minds as it gathers for an annual trade fair in Friedrichshafen in southern Germany, starting on Thursday.
Private-equity owned Jack Wolfskin, for example, saw sales stagnate at 351 million euros ($448.8 million) in 2012, compared with growth of almost 23 percent the previous year.
Although it is the biggest brand in Germany, Wolfskin is still small fry compared with the sector's most familiar brand, VF Corp-owned <VCF.N> The North Face, which had sales of $1.9 billion euros in 2012 and is making a push into Europe, despite what it terms a "soft" consumer environment in the region.
In the face of such competition, small specialist companies like Hagloefs and Schoeffel are also having to come up with new ways to make their products stand out and lure customers in.
Family-owned Schoeffel, which saw flat sales of 93 million euros in 2012, is steeling itself for falling profits over the next two to three years as its invests in new products, advertising and shops. The group called in Ogilvy & Mather to help it come up with a new advertising campaign, which has been running on TV channels, cinema screens and the Internet.
The group declined to provide further details of its earnings or investments, saying only it was still profitable.
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Hagloefs, the Swedish brand that started when Victor Hagloef made backpacks for local foresters and farmers in 1914, has the backing of a strong partner - Japanese owner Asics <7936.T> - and last year grew sales 14 percent.
"This year looks a bit tougher," CEO Nicolas Warchalowski told Reuters. "In today's marketplace, you need to bring something fresh and vibrant to the customer for them to be interested."
Experts say Hagloefs and companies like Arcteryx, owned by Finland's Amer Sports <AMEAS.HE>, have benefited from being part of a bigger company.
Under Asics, the running shoe maker which bought Hagloefs for about $130 million in 2010, Hagloefs has doubled the size of its design team and used Asics gel technology in its hiking and trail running shoes.
It has expanded into Asia and sales there now account for 10 percent of its business, up from 5 percent before the takeover.
"With the footwear technologies, we've hit on something that very few other outdoor brands have," Warchalowski said. Along with that, Hagloefs has brought out a range of neon-colored footwear and clothing to meet a rising demand for products that are not only practical but stylish.
Wang Rui, 24, a student in product design shopping in the North Face shop in Frankfurt, said this was important. "For outdoor gear in general, I would like to see better fusion between function and colors."
Despite lower growth rates, outdoor is a market that's still attracting interest.
German sportswear brand Puma <PUMG.DE> (majority owned by French group Kering <PRTP.PA>) is dipping its toe into the market with plans to bring out trail running shoes. Canada Goose Inc is seeking new investors to help it expand.
Recent deals in the sector include Ontario Teachers' Pension Plan's acquisition of a majority stake in Norwegian outdoor clothing brand Helly Hansen for about $350 million, Blackstone's buy of Jack Wolfskin for about $900 million and Adidas's acquisition of Five Ten for $25 million.
The interest is such that Peter Schoeffel, the seventh generation of Schoeffels to run the eponymous company, has a ready-prepared rejection letter that he gets his assistant to send out to interested parties, whether they be private equity or overseas rivals looking to break into the European market.
"It's a market that's interesting for M&A because it's growing and because of the brands. But I'm not going to sell."
In any case, the market looks set fair for further growth, even if it is not at the levels some had expected.
"People just like being in the great outdoors and that's why outdoor sport is a global trend," Stefan Herzog, CEO of retailer Sportscheck told Reuters. Outdoor products make up about a fifth of its business.
Just-Style.com, an online provider of information to the textiles and apparel industry, forecasts the global market for performance outdoor clothing, which makes up around 50 percent of overall outdoor sales, will grow by almost a quarter to $21.6 billion in 2018, from around $17.5 billion now.
"We're seeing a paradigm change in the industry," Schoeffel told Reuters. "We as an industry have to realize that it's not so wrenching to have sales growth of 2 percent a year." ($1 = 0.7778 euros)
(Additional reporting by Natalia Drozdiak; Editing by David Holmes)