By Matt Powell, Vice President, Senior Industry Advisor, Sports and Tamara Szames, Industry Advisor, Canada Fashion and Retail
I teamed up with my Canadian counterpart Tamara Szames to debunk a commonly-held myth that the U.S. may serve as a proxy for understanding the athletic footwear market of its northern relative. While the U.S. and Canadian footwear markets share commonalities, there are distinct points of difference that, if operating under this myth, could turn a brand’s North American retail strategy on its head. COVID-19 has added another layer of intricacy, as the U.S. and Canadian markets are recovering at different paces and in unique ways.
While both the Canadian and U.S. athletic footwear markets have regained their 2020 revenue losses, according to NPD’s Retail Tracking data, the timeline and speed of the recovery differed. In fact, the U.S. market recovered two-times faster than the Canadian market, with revenue up 14% in 2021, versus 2019.
“By now, Canada has endured four variations of COVID-19 peak periods that include lockdowns and retail restrictions,” Tamara said. “The Canada lag was heavily influenced by the third peak in April 2021.”
April and May 2021 were crucial months for the Canadian recovery. This is where the separation began, as Canada struggled to recover, and the U.S. experienced a rebound due to pent-up demand.
In Canada, the men’s athletic footwear segment was the hardest hit and sales declined two-times faster than the U.S. men’s market. This sharp decline led to a steeper hill for Canada to climb, and softer recovery year-to-date.
Sport-lifestyle footwear was the dominant category leading the recovery, in both the men’s U.S. and Canada markets. However, the magnitude of the category is quite different in the two countries. In the U.S., sport leisure footwear represents 50% of the men’s athletic footwear market, whereas in Canada it is 40%. The influence and growth of men’s sport leisure footwear in the U.S. was the reason behind a softer sales decline in 2020, compared to Canada.
Looking at the cold/all-weather boot category, we also see key differences between the two markets — the most dramatic is the importance of the men’s and children’s segments. The cold/all-weather boot category has a market share that is three-times greater in Canada than in the U.S. And despite the multiple COVID-19 peak periods in Canada, this category has not only recovered, but also posted growth in 2021, compared to 2019. The story differs in the U.S., as men’s cold/all-weather boot sales are yet to experience the recuperation back to 2019 volumes.
When we look across wearers, the largest point of difference is in the growth of women’s products. In Canada, women’s styles currently represent one-third of the total athletic footwear market sales, and they continue to grow in market share. In both countries, the women’s segment is also the segment of the athletic footwear business that recovered fastest and posted growth, versus 2019.
In Canada, running shoes played a big role in the women’s athletic footwear market recovery, driving 33% of the revenue growth. Women invested more in their running footwear, as both unit sales and average prices increased compared to 2019. In 2021, running shoes represented 27% of women’s athletic footwear sales in Canada. However, running shoes in the U.S. make up only 20% of women’s athletic footwear revenue.
“Brands need to take note of the size of the presence women hold in Canada’s athletic footwear space,” Tamara said. “What’s interesting is that performance footwear was even more critical to the recovery of the women’s business, than the more casual sport-lifestyle footwear. Women were looking to get outside, to not only become active for the time being, but also to stay active.”
The Canadian market over-indexes with women, compared to the U.S. market. As brands attempt to grow their U.S. women’s athletic footwear business, they can gain important insights about the Canadian market.
Pricing is also a key factor when comparing the U.S. and Canadian athletic footwear markets. In 2019, Canadian consumers were paying upwards of 20% more for sneakers, compared to the U.S. consumer. Today, average selling prices are in line at about $38 in local currency, but this has started to change, specifically in the children’s side of the business. In the U.S., the average price for children’s athletic footwear increased by 13% in 2021, versus 2019, while in Canada it declined by 9%.
Finally, more key differences become apparent when looking at the top 10 brands in the athletic footwear market. While the top three brands are consistent across both countries, their dominance is not. Canada is far more fragmented, with the top three brands accounting for 38% of the athletic footwear market, compared to nearly 50% in the U.S. Bestselling brand Nike is far more developed in the U.S., holding 30% market share. Looking beyond the top three brands, you start to see why it is important to understand and embrace the differences. Brands like ASICS and Merrell are ranked among the top 10 brands in Canada, yet they do not currently make the list in the U.S.
The assumption that the U.S. is a proxy for the Canadian athletic footwear market is false. Canada is not the 51st state. Brands and retailers that operate under the notion that the countries’ similar ties outweigh their points of difference are at risk of missing out on significant business opportunities.