While there were certainly bright spots for U.S. sports retail in 2020, last year was one many of us would like to forget. Kicking off the New Year, we are seeing that 2021 will be faced with its own set of challenges to overcome, and opportunities to be had.
In the shorter term, the stimulus checks will have little impact on sports retail. Based on my observations with the earlier checks, many recipients put that money towards paying down previous debt or adding to their savings. While the vaccine news is certainly encouraging, it is clear that it will take months before a level will be reached to allow for sports retail to return to normalcy.
Further dampened by soft holiday results, we can expect a new round of store and mall closures. There will likely be fewer sports retail stores at the end of 2021 than there were closing out 2020, and mergers and acquisitions will accelerate.
Looking further out, we must be prepared for the fact that sales trends will be lumpy. The peaks of 2020 will be difficult to offset, while the lows will create a false sense of well-being. Without an additional unemployment supplement, the summer months, in particular will be challenging. Brands that benefited from increasing their limited releases will find year-over-year growth difficult.
I expect Gen Z will become an even greater force in sports retail. Their demands for transparency and activism on social issues will not abate. Brands and retailers will be under greater pressure to “do the right thing.” The emphasis on sustainability will be stronger than ever, which means that brands and retailers will have to work even harder on this initiative and be more open about their efforts.
The “shared economy” concept will also be more important than ever, driven by Gen Z’s “less is more” approach towards apparel and footwear purchasing. Versatile and practical products will win over single use goods. Regional/local focus will also be a factor in consumer choice. Comfortable and cozy will remain important attributes.
I also anticipate an elevated level of concern when it comes to healthy living. Consumers will try to stay fit (or at least dress and purchase like they are). Social distancing will remain, and consumers will continue to feel safer outdoors rather than indoors. All of this supports the new “outside” lifestyle.
E-commerce will remain the primary driver in sales. Brands and retailers who do not have a robust e-commerce platform will be challenged. Brands’ investments in their direct-to-consumer businesses will not abate. And as more stores close, e-commerce will gain.
At this point in time, I expect the athletic footwear and activewear markets will grow sales in the low single-digits in 2021 – above 2020 levels, but still below 2019. Performance running and hiking will lead the footwear categories, while sweatshirts and active bottoms will lead activewear. We can expect many new brands to enter the activewear space, creating competition and noise.
The sports categories that support social distancing—namely cycling, golf, and racquet sports—will continue to do well against 2019 levels, though the peaks in 2020 will be tough to offset. New opportunities lie in add-ons, including accessories to support purchases already made. Home fitness will follow a similar trend. If schools are open and scholastic sports played, categories such as baseball and soccer should see strong sales results in 2021.
The trend line in 2021 will be very bumpy, but opportunities for growth remain.