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Sneakernomics: Holiday Predictions for the Sports Industry 2016

Nov 29, 2016
Matt Powell, Vice President, Industry Analyst ;
Sports , Footwear

Last holiday season was a particularly strong one for many major aspects of the sports business. There are several factors making this year’s challenging for the industry, but while this year won’t top last, I still expect a fair holiday performance for the world of sports retail.

Sports Authority’s fate puts pressure on the industry: The biggest factor for this year’s holiday selling season in sports is the loss of The Sports Authority. Where there were adjacent big box competitors to TSA we have seen transference, and surely some of the TSA business has gone to the internet; however, much of the TSA business has simply evaporated. This has had a deep impact on the sports industry as a whole. The vacuum created by the TSA closing has had a profound impact on Nike, Under Armour, and Champion, but virtually every brand that did business with TSA is affected.

Chilly sales for cold weather categories: Another variable that’s proving to be unfavorable to the industry thus far is the weather. While it has turned somewhat colder in many parts of the country, we have not seen true winter weather seize the attention of the nation. This will throw shade across the entire industry.

The cold weather categories have been hurt the most. Data from NPD’s Retail Tracking Service show considerable weakness in weather-related categories for October. Outerwear sales declined in the low teens, cold weather undergarments were down double-digits, and the cold weather boot business declined over 20 percent. Retailers have already been much more promotional around the boot categories.

Early sales for the snow sports category have started off much softer than in seasons past. This, along with a delayed winter, poses a challenge. While some of these sales could be made up late, the sales will likely come at the expense of profit.

Ups and downs in the outdoors: The outdoor industry has seen a slow-down this year as well. After very nice growth, outdoor sports categories combined are just flat for 2016. Even the hot premium cooler business has started to plateau. While Millennials drove this trend for the last few years, the “herd, binge, abandon” phenomenon appears to be in effect. Right now, the climbing business is a bright spot for the industry, but overall I expect a mediocre season for the overall outdoor industry.

A slowdown for cycling: The cycling business has continued to be soft for some time and this holiday season is no exception. Sales have been boosted somewhat by a promotional environment as retailers try to clear old stock, but overall I don’t expect it will be as great of a year as last for the cycling categories.

Rise in retro and casual running styles: The run specialty categories have struggled for some time and I expect this to continue through the holidays, as retro and casual running reigns supreme. Recently, sales have improved slightly as the shops have added accessory categories and worked hard on the add-on sales. However, the core shoe business remains in decline as the rise of casual running continues to hurt the technical business.  

A mixed bag for athletic apparel and footwear: The activewear category was having a decent year until we came against the TSA closings. Since then, sales have been soft. Layer on the lack of cold weather and prospects are not bright for a great holiday season. Also, as I identified in early fall, another interesting and important story in activewear is the number of new brands and retailers who are trying to crash the party. More brands and retailers are competing for a place in what has become an oversaturated space, and this influx has created a lot of noise and confusion. I predict that it will be a messy holiday for the activewear business. Beyond activewear, an emerging athletic apparel trend to watch is sports licensed apparel as street wear. There is something bubbling under the surface here, and it’s quite possible that it will arise as the next big fashion trend.

The athletic footwear business was decent up until the TSA closure, which caused sales to soften dramatically. One positive is that the Black Friday Jordan release is far better than last year’s, which should generate store traffic and boost sales. Another positive is that inventories are very clean at retail, which means the danger to margins should be mitigated. Adidas and Puma will remain the hot brands as Under Armour slows up and Nike stays soft. With that said, I foresee a decent holiday for athletic footwear.

It’s all about the click: Looking at shopping outlets, e-commerce and mobile will be big drivers for whatever gains we get in the sports world this holiday. Retailers both large and small that do not have an e-commerce platform will woefully under perform. Those with a great mobile interface will outperform those that do not.

Black Friday’s not a deal-breaker: In many instances, Black Friday started on Tuesday. The day itself has never been that meaningful for sports and this year it will be less so. The same goes for Cyber Monday. These artificial holiday constructs are largely based on price – a tactic that the sports industry has for the most part been able to avoid. What promotions we have seen have been broader in scope, not in depth of discount.

While the sports business is not off to as great of a start this holiday season as others, it doesn’t mean there’s no chance for it to catch up. Various circumstances are leading it to be a challenging holiday for the industry, but overall I still expect the industry to pull through and see some decent gains to close out 2016.

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