Evidence of the global recession was apparent August 3 to 6 at the ISPO trade show in Munich, Germany, where European skateboard distributors and retailers converge twice a year. Approximately 1,000 fewer exhibitors than last summer meant spottier halls with noticeably wider aisles, closed-off areas, and glaring empty spaces. Buyer traffic was also thinner, with some attendees calling Sunday (August 4) the only truly busy day.

The recession was not the only factor contributing to the declining number of exhibitors and buyers–the 2002 Summer ISPO overlapped the traditional European vacation season more than usual. Further, European expos in general have reportedly been shrinking since before the current economic troubles began, and ISPO is the most expensive trade show on the continent.

All reports, and a comparatively full ISPO skate hall, suggest that the European skateboard business is nonetheless relatively stable. “During the late 1990s, our business was increasing twenty to 40 percent every year,” says Jörg Ludewig, founder of German distributor Urban Supplies. “Two-thousand and 2001 were good, too. But the economic problems of the last eighteen months have finally hit the kid market, which is the last place to feel it.”

For all that, Ludewig reported that his hardgoods sales this year have so far been flat, not down, while his clothing sales were up through April and only decreased when bad weather struck Germany in May, June, and July.

Christian Schollmeyer, the owner of nine-year-old Munich retail shop Boarder’s Sportsproducts, has seen strong growth since 1995. He agrees that in recent months the German skateboard market–the largest in Europe–has merely leveled, not shrunk.

But Schollmeyer has strong words about one factor that may have contributed to the market’s vulnerability to current economic circumstances. “Distributors and shops complain about a lame market, but they actually created it,” he says, adding that they cater strictly to street skaters and their subculture, while offering little or nothing to smaller but more diverse and flexible groups such as old-school cruisers, longboarders, slalom racers, and freestylists.

Andreas Kramer, founder of Kramer Elastics, offers another indicator of the relative health of the European skateboard business. By all accounts Kramer is Europe’s only large-scale deck producer, and the three-year-old German manufacturer has grown tremendously since its inception, with 200,000 decks sold during the first half of 2002.

Kramer predicts that after this year, the German market will level but not shrink. Yet his own sales grew 250 percent on the basis of orders from the Summer 2002 ISPO alone.

Compared to the global recession, the fluctuating currency exchange rates have had a more varied impact on the state of the European skateboard business. “The strong dollar during the last two years cost us a lot of money because it decreased our margins, even though we raised pricing twice,” says Ludewig. “In 2000, our profits were 70 percent lower than they would have been with proper margins. The weaker dollar is now giving back the margins we need. A U.S. recession is nice for us, as long as we don’t have one, too, which of course we do. But we always buy what we need, and we eat some of our margin when necessary.”

Kramer is enjoying perhaps the most immediate benefits of the weak dollar: “A lot of customers are coming to us, even from the U.S., to take advantage of the currency situation, by having us manufacture decks in our factory and drop them directly to their distributors.”

From Schollmeyer’s perspective as a retailer, a dollar that is weak against the euro means price stabilization and, some months down the line, price reduction. “Our purchase prices were rising when the dollar was strong against the euro,” he says. “It will take half a year for my distributors to react to the current situation with better pricing. But a weak dollar is not a bad fit forr shops.”

For Schollmeyer and other retailers, the effect of the recession is more clear-cut. “Customers aren’t playing around so much with their money,” he says. “Before this year, they used to buy items on impulse, even if they were a bit expensive. Now they’ll go home and think about it before purchasing. We’re focusing on what we need to do right now so that we can react quickly. Competitors who make large pre-orders can only react by lowering prices. I see it (recession) as a good opportunity to reorganize our business in a positive way.”

Kramer and Ludewig are clearly optimistic about the future. “We see a lot of potential growth after 2003,” says Kramer. “The X-Games and European sports television are having a tremendous influence. And new European deck brands like Strange (Italy) and White Dog (Czech Republic) are having a growing impact on the European market.”

“We’re experiencing a dip because of economic circumstances, not a declining market,” adds Ludewig. “The infrastructure for future growth is perfect–we have more skate halls and parks than ever, and the quality is so high that U.S. pros are sometimes envious. Unlike the U.S., Germany has not yet experienced full media coverage of skateboarding. The top athletes are not household names, and the sport is still somewhat underground here. Skateboarding’s media profile is slowly increasing here, and we expect market growth to follow.”

Schollmeyer tempers his optimism with concerns about an ongoing tension between the hardcore and mainstream markets. “A lot of last year’s growth was with wannabes, people who just want the cool look of real skaters,” he says. “The industry was forcing the development of that category instead of the real sporting category. But this marketing approach can turn off people who really love the sport. Also, it’s easier to influence the wannabe in the short term to make fast easy money, but you can?t control that consumer–he’ll leave the sport quickly.”

Industry veteran Tom Peterson, founder of Hyper and now head of start-up wheel factory Go Urethane, observed a new trend with potentially far-reaching consequences. “Compared to America, there are not many ‘core skateboard shops left in Europe–only 30, for instance, in all of Sweden. Big-box chains like Intersport are now hiring experienced American managers to build their own branded product lines. They’re going direct to retail in Europe with low-cost goods manufactured in Asia using American materials and know-how.”

This puts a lot of price pressure on the U.S. manufacturers to protect their foreign markets, in the short term, and continue to build brand loyalty at home. While chain-store box boards and Asian manufacturers don’t stand out as well as the ?core brands at shows like ISPO, price-conscious buyers are looking for more than just hype in the current economy.