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2017 Sustainability Report
published 2018/08/01

VAUDE – strong in Europe

VAUDE is a German company. Our primary markets are Germany and its surrounding EU countries. VAUDE distributes its products through retailers, the Internet, franchise stores and its own outlets. Corresponding with retail development in general, Internet product sales are also increasing at VAUDE.

Mountain Sports - our most important segment, VAUDE Professional - a new business segment

To date, VAUDE has stood on three pillars: the strongest – and the roots of the company - is Mountain Sports. Following this are Bike Sports and Packs ’n Bags. The percentage distribution of these segments has not changed for several years. The distribution of revenue across multiple business segments is intended to give the company stability. In Mountain Sports and Bike Sports we have achieved significant growth rates in recent years. Packs ’n Bags has stagnated or even declined slightly.


Sales Breakdown by Market Segment 2017

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Sales Breakdown by Main Product Groups 2017

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With 65 percent of sales, apparel is our largest product group. It has grown disproportionately over the last five years and is now significantly above the EU average for apparel in the outdoor market, which was about 52 percent according to EOG data in 2016.


The second largest product group, backpacks, accounts for 25 percent of our sales. This is also well above the EU average of 8 percent. Backpacks were VAUDE’s first product, and are represented in all three market segments in roughly equal proportions. In many countries, VAUDE is still perceived as a backpack brand. About 20 percent of our backpacks are manufactured in Germany at the company headquarters and the numbers are still rising.


VAUDE backpacks

It all began with backpacks. And even today, they are in high demand. Nearly 20 percent of VAUDE backpacks are made in Germany.

Industrial customers as a new business field

In 2017, we decided to take on an additional business segment for professional customers from the industry, public authorities and associations. Our intention is to reduce dependency on retail sales and to optimize production at our manufacturing facilities by reducing cyclical production with orders that aren't dependent on seasonal sales. This segment will initially be strongly promoted in German speaking countries. Based on experience gained, it will be extended to other EU countries in 3-5 years.


The target customers in this area are diverse. They include industrial companies of all sizes, from companies that trade on the Frankfurt Stock Exchange to local southern German craftsmen's businesses. The customer portfolio also includes public authorities, associations and other public institutions. 


The product range is correspondingly broad. It contains garments as well as backpacks of all kinds. Tents, sleeping bags and accessories also play a role. The range includes completely new product developments as well as articles from the collection that are adapted to the needs of the customer.


Products manufactured here in Obereisenbach are also very popular. These products include articles made from post-consumer recycled materials such as the discontinued fabric skins of zeppelins from Friedrichshafen. 


For this business field, VAUDE also pays close attention to the application of its strict corporate code, which includes regulations regarding which industrial sectors, authorities and organizations in which countries may be supplied (white-list). Our strict ecological requirements for materials and the high social standards for producers apply here just as in the normal product range production process. 

 
These factors are also issues that are very important for our customers and motivate them to buy VAUDE products.


We want to expand the percentage of exports in Europe

VAUDE sells over 60 % of its products in Germany, another 30 % in Europe. Following Germany, our Objective-1 countries are Switzerland, Austria, the Netherlands and Belgium. In these countries, the sales percentage of product groups is basically the same as the overall averages at VAUDE. Great Britain, also an Objective-1 country, is strongly represented in backpacks and tents. Apparel plays a disproportionately large role here for a variety of reasons.


In general, we want to expand our export share, with a particular focus on Europe. This is where we see the biggest growth opportunities and the best profitability of resources used. Outside of Europe, we are concentrating on a few major markets in Asia and North America. VAUDE has grown rapidly both in Germany and in Europe in recent years - double digits over many years. We've also achieved strong growth in many European countries. This allowed an increase in market shares and expansion of sales of VAUDE products. Due to the high level of domestic growth, it has been a special challenge to significantly increase the percentage of exports. So though it has remained constant, the level has been higher.


VAUDE products around the world

Overall, VAUDE delivers to approximately 50 countries. In Germany, VAUDE works with a team of in-house sales representatives in all 3 market segments and the VAUDE Professional segment. Spain relies on its own sales organization; VAUDE works with permanent employees in the Netherlands. In other EU countries, VAUDE works with agencies, while in non-EU countries it works with distributors. The benefits of agencies are obvious: The entire product range in the country can be offered by the central warehouse in Obereisenbach and shipped directly to the customer. The distributors first buy the goods, then stock them and sell to retailers in each country. This means that the product range is greatly restricted in such countries.


Sales by country –Top 10 (excluding outlet stores)


Customer Country 2017

Germany

72.8 %

Switzerland

5.4 %

Austria

3.4 %

Belgium

2.8 %

The Netherlands

2.8 %

France

2.5 %

Italy

2.0 %

Spain

1.9 %

Great Britain

1.7 %

Sweden

0.6 %

The following countries have also accounted for turnover in the past year: Finland, Hong Kong, Canada, USA, S. Korea, Singapore, Turkey, Estonia, Japan, Denmark, Czech Republic, Ukraine, Luxemburg, Norway, United Arab Emirates, Iran, New Zealand, Taiwan, Hungary, Poland, V.R. China, Latvia, Slovakia, Israel, Colombia, Greece, Slovenia, Spain, Thailand, Mongolia, Andorra, Kazakhstan, Tanzania, Croatia, Italy, Lithuania, Bulgaria, Rumania, Qatar, Ireland, Principality of Liechtenstein, San Marino


Our focus is on product distribution through specialized retailers

VAUDE delivers exclusively to (specialized) retailers – not directly to consumers. This also applies to the ever-growing online business at vaude.com. Orders here go through a retailer who acts as a shipping partner.

 
In addition, VAUDE operates a range of VAUDE Franchise Stores. These are also retail partners. The franchisor is VAUDE Franchise GmbH, whose second shareholder (in addition to VAUDE) is also a retailer. VAUDE holds the majority of the shareholders’ shares.

The four outlets run by VAUDE are an exception. These stores sell outdated merchandise, sample merchandise, merchandise from leftover fabrics as well as other merchandise stemming from returns from retailers. As such, these outlets are an important part of the VAUDE marketing and service chain. Economical marketing of retail inventories wouldn't be possible without them.


Our distribution channels

Distribution Channels Sales percentage

Brick-and-mortar specialized stores and multi-channel (incl. vaude.com)

70%

Internet retailers (specialized dealers who earn at least 90% of sales online, including vaude.com)

22%

Retailers – VAUDE Franchise GmbH stores

3%

Retailers - Outlets

5%

All three market segments can be depicted in these structures. The differences between on and offline sales between the market segments are relatively low. A special feature of the Packs ’n Bags segment is that they are strongly marketed in leather goods stores, especially in Germany.


For the Mountain Sports segment, specialized sports stores play a major role in addition to outdoor recreation stores, In addition, it is clear that there are significant overlaps, especially between the Mountain and Bike segments in terms of sales of the product ranges. This applies to apparel and backpacks.


Revenue shares of our customer groups

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Notes: 1. "Internet Trade" includes all companies that are expected to make at least 90 percent of their sales online. 2. Many international customers are billed through Germany, but the products are sold abroad. 3. Revenue from license transactions is not included in the presentation. This is included in VAUDE revenues and not as turnover.

70 percent of sales from 10 percent of customers

The international outdoor market today is characterized by cut-throat competition and strong concentration processes. Many small and medium-sized corporate customers have disappeared in the last few years or have been swallowed by larger companies. This is also reflected in VAUDE's customer structure. The absolute number of corporate customers has not increased over the last 5 years - despite strong growth in sales and market share and the emergence of many online customers.


As a result, a relatively small number of corporate customers account for a large proportion of VAUDE sales. Although A-customers represent only about 10 percent of our total customer count, they are responsible for approximately 70 percent of our revenues. This is a general trend in the market. In particular, the percentage of medium-sized corporate customers is decreasing. 

GRI:   102-6
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