Sep 12, 2017
Sneakernomics: What Sports Retail Can Learn from Fast Fashion
Given this current malaise in the U.S. sports business, it is important for the industry to look across the retail landscape for ideas on how to improve its current condition. The world of fast fashion may offer some clues. While the social costs of fast fashion are great, I believe we can avoid those issues while improving the trajectory of the sports business.
The Spanish fashion retailer Zara is a great example of a successful fast fashion retailer. The average Zara shopper visits a Zara store every three weeks. This is because Zara puts up an entirely new assortment of goods, on average, every two weeks. By contrast, data from The NPD Group shows that the average customer visits the average store about four times a year.
The sports world can improve its visit rate by taking some important lessons from fast fashion. Fast fashion has dramatically reduced production lead times so that products get to the market much quicker. For the most part, their products are seasonless and therefore avoid the vagaries of weather. The average customer has shifted her mindset to “buy now, wear now,” but the fashion customer is focused on “see now, wear now.”
Sports apparel and footwear are excellent examples of “see now, wear now” products. However, by leaking photos of sneakers months before their release, the element of surprise is lost. I have Twitter followers commenting, “I’m already sick of that shoe, and it hasn’t even hit retail yet.” Returning to the days before “influencers” ruled the world could help bring the sports business back.
Fast fashion’s model is based on scarcity and newness to drive traffic. The sports business used to embrace these techniques, but now seems more in tune with squeezing every last dollar out of an item, even at the risk of killing it off for years. An item that sells out can always be brought back; however, an item that is run into the ground is lost for years, and maybe forever.
Fast sellouts mean high turns, which equate to low markdowns. While fast sellouts mean some missed business, the profit gain is enormous. Stuffing the market only results in lower margins.
At the same time, releases must be commercial. In an industry that sells hundreds of millions of pairs of shoes each year, collaborations of 10,000 pairs are just noise. While scarcity is the goal, the pairs made must be in commercial quantities. Any celebrity can sell 10,000 pairs of a shoe, which is less than a teardrop in the ocean. While marketing departments may get excited about mentions in social media, these tiny releases are a massive waste of limited resources. When I wrote that “small is the new big,” I did not mean “microcosmic.”
As I read “Shoe Dog,” a memoir by Phil Knight on how he built the Nike business, it occurred to me that the model we are using for bringing products to market today is exactly the same as it was 40 years ago when Knight created it. I’m sure we all agree that the market is a tad different today than it was 40 years ago.
In order to bring the sports business back to its greatness, it must embrace new ideas and approaches. Fast fashion can offer some clues to a new path. Fresh, timely, and scarce must be the driving principles of the sports business. Premium, unique, new, and young are critical pathways to success.
In the end, these issues in the industry are not strategic, but executional. Strategy does not drive our business; execution does.