There has certainly been a lot of bad news for the U.S. sports industry recently. We cited the dramatic slowdown in the sneaker purchases by Hispanics, as well as a pessimistic prediction for back-to-school. The short term prospects for the industry are not very bright.
Nevertheless, there are some bright spots for the industry which may help reverse its fortunes. I describe those opportunities as PUNY: Premium, Unique, New, and Young. Let’s explore these ideas.
The athletic shoe business in the U.S. has always been built on aspiration and inspiration, with emphasis on better price points. Conspicuous consumption has been a hallmark of the industry. While today’s highly charged promotional environment would seem to argue against this trend, we are still seeing strength at the top price points.
In every channel, much of the growth is coming from the high end of each channel’s pricing. The top seller list is dominated by higher priced items.
There is bifurcation in pricing where the growth is split between better prices and opening prices. Premium products can serve as an effective strategy to build the business.
When asked to describe themselves in one word, Gen Z most frequently called out “unique.” Gen Z has indicated a willingness to spend more for unique products that help this generation define themselves. This cohort wants to buy unique products from unique brands, sold through unique retailers.
However, this uniqueness must not stray too far from the core. I describe this attitude as, “I want to be different, just like my friends.” This opportunity should bolster smaller brands and retailers. Exclusive styles and colors are one way for brands and retailers to leverage this trend. Personalization and customization are also effective strategies.
Millennials and Gen Z are both attracted to the new. They are early adopters of everything from tech to fashion. Technology and innovation are driving their attraction to the new. New products are often unique as well as premium.
Combined, Millennials and Gen Z now represent more than half of the U.S. population. The share of each cohort to the total grows every day. On top of that, Gen Z is now old enough to enter the workforce and become an even stronger economic force.
On the other hand, the Boomer rank has declined by about one million per year – a rate that will only accelerate. Chasing a declining Boomer population is not a recipe for success in this industry.
The one issue with these PUNY opportunities is that not all of them are at scale to offset the weaknesses elsewhere. Brands and retailers must seize these opportunities to reverse the declines the industry faces.
SFIA Virtual Conference
Presenter: Matt Powell, Senior Industry Advisor – U.S. Sports
Presentation Title: Best Practices for Brands & Retail in the Current Environment
Date and Time: Thursday, September 24 at 1:45 - 2:30 PM (EST)
Description: Matt Powell hosts an interactive discussion on marketplace trends and what brands and retailers can do to win post-pandemic. Matt, a well-known and often quoted expert in the sports industry, will be presenting the trends and forces shaping our industry, its response to COVID-19, and its future. Matt will assess the industry across various categories, discuss the forces impacting manufacturers, retailers and consumers, and provide his predictions for the coming year. Drawing upon NPD's sales tracking data, his 40+ years in the industry, and insights from what has been successful in other industries NPD tracks, Matt will focus on best practices and what manufacturers and retailers can do to thrive in today’s rapidly changing marketplace.