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What’s Really Happening In The U.S. Sneaker Business

Jun 6, 2016
Matt Powell, Vice President, Industry Analyst ;
Sports

According to NPD, which represents the most comprehensive roster of reporting retailers, comprising more than 50 percent of the U.S. retail athletic shoe market, sales of athletic footwear in the U.S. for the first third of the year (January-April 2016) were solid. Both dollar and unit sales grew in the low single-digits with average selling price up slightly, mostly on mix.

So far, the bankruptcies in the industry have had little impact on sales, but that could change over the next 90 days. I expect these “going out of business” sales to have a minimal impact on the industry. The greatest impact will likely come early, when the assortments are best. Channel checks revealed obsolete and broken inventories in the stores slated to close.

The big driver of growth for the year so far remained the classics category, with sales growing more than 25 percent. The largest branch of the classics is retro basketball, driven by Brand Jordan. Retro tennis has had the greatest percentage growth, paced by the Adidas Stan Smith franchise. Retro running has also had a healthy increase. Virtually every major brand in retro running is showing strong increases. I expect the retro trend to last for some time to come.

Weakness in performance basketball has been cited by several retailers over the last few quarters.  Performance basketball was one of the few categories that saw a decline in average selling price for the year so far (declines in average selling price often accompany a soft business). Of the major brands, only Under Armour has shown growth here. I expect the declines to moderate as we come against easier comparisons in the second half, but I do expect basketball will remain challenged.

Running is the largest of the athletic footwear categories, but remains bifurcated. Total running sales are up in the low-singles; however, performance running (80 percent of the category) is down in the high-singles, while lifestyle running grew more than 40 percent for the year so far. Most of the major brands in performance running have struggled, with Adidas being a standout exception. We can expect lifestyle running to continue to expand.

Casual athletic grew in the mid-single digits, mostly on robust growth from the Adidas Neo collection.  Converse Casual has also been strong. We clearly are in a major non-performance cycle right now. I expect the short term will remain challenging for the performance-focused brands. Brands that have a diverse portfolio of products should be thriving.

Sport slides are back in fashion, no doubt driven by the retro trend. Sales for the year grew about 10 percent. Nike is a big winner here. We can expect this trend to continue and should be on the lookout for new emerging brands in this space.

Outdoor sandals did not fare as well, likely due to the wet spring. Chaco, Skechers, and Teva all had nice increases, counter to the overall market trend.

Walking continued to decline after several years of good growth. Skechers struggled here. Hiking had a low single-digit increase. This category was hot in 2015, but again was suppressed by the wet spring. Columbia and Nike outperformed in hiking.

Men’s and women’s both had low single-digit increases for the year so far. Men’s was hurt by poor basketball results. Women’s was weakest in walking. Kids grew in the high single-digits for the year so far. It is important to remember that a significant driver of the kids business is teen girls buying “boys’” shoes.

By channel for the year so far in athletic footwear, shoe chains led the pack with sales up in the mid-single digits. Athletic specialty/sporting goods rode out the negative basketball trend with a low single-digit increase, and average selling prices increased overall. Department stores and national chains both had low single-digit declines. Running specialty stores declined in the mid-single digits.

Looking at positive brand growth year to date, Nike/Brand Jordan and Converse performed well, but it’s Adidas and Under Armour, with sales up more than 40 percent and 70 percent, respectively, that stand out. Adidas is having a fabulous year, now reclaiming #2 share in the U.S. sneaker market. Asics and Brooks sales declined in the low teens, as robust retro growth could not offset weakness in performance. Saucony sales grew in the mid-single digits. Puma is clearly riding the retro trend with sales up about a third. Vans sales grew in the low teens.

The second quarter has typically never been that important for the sneaker business. I expect sales to be a little choppy early on, as the bankruptcies will be most disruptive then. By the time back-to-school arrives, the bankrupt stores will be out of good shoes. The negative basketball trend will have abated and the Olympics will give a lift to the business. I expect sneaker sales in the second half to bounce back to previous levels. With 10 percent of the sporting goods retail space closing by Labor Day, the remaining market will be stronger and healthier.

Source: The NPD Group, Inc. / Monthly Retail Tracking Service, January-April 2016
Data is collected from the athletic specialty, sporting goods, chain store, department store, and other channels. Athletic footwear includes the following categories: Sport Leisure, Outdoor, Performance, and Work/Occupational/Safety.