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Nov 4, 2019

Sneakernomics: Holiday 2019 Predictions for Sports Retail

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Based on my observations, I am predicting a challenged holiday season for sports retail, though I hope I’m wrong. The lack of truly “hot” items is a void that will put pressure on the athletic footwear and activewear markets, and I expect that both environments will be extremely promotional. On the other hand, I anticipate we’ll see a merrier performance stemming from smaller brands in the space, as well as from some of the outdoor and sports equipment categories.

In the third quarter, U.S. athletic footwear sales were up in the low single digits, as brands increased their quantities of limited edition shoes. Last year, brands dramatically increased those releases in the heat of the holiday season instead, so offsetting those releases this year will be challenging. So far, I see no catalyst to drive sales into the positive column for Holiday.

Performance footwear continues to struggle, as we have been observing for some time. We are now in the fourth year of performance shoes remaining out of fashion, and this is not poised to change during the holidays, as athleisure will continue to maintain its grip on consumers. Despite this trend, brands continue to force performance shoes on consumers who have made clear they are uninterested.

Sport lifestyle, the largest athletic footwear category, continues to experience sales growth but at a slowing pace. I expect this rate to continue for Holiday.

One surprise last year was Q4 gains in the cold/all weather boot category despite warmer October weather. If the weather prediction of a continued warm and dry fall were to hold true, these results will be hard to offset.

Looking at major brands, Adidas sales have been challenged all year and the inability to offset last year’s Yeezy releases won’t help this year’s holiday performance. Nike sales were up for Q3, but I expect it will be tricky to eke out a gain for Holiday. Brand Jordan sales grew in Q3 due to an increase in new releases, but I do not believe this growth is sustainable through Q4. Converse continues to struggle, largely in part due to Vans’ strength as the two brands appeal to same customer. But, with Vans continuing to introduce new models it is showing an upper hand when comparing the two brands’ performances in the marketplace.

Nike Tanjun, the top selling athletic shoe for 2017 and 2018 is now in decline, and there is currently no replacement for this shoe. The mid-tier channel and shoe chains will likely struggle in Q4 because of this.  

Smaller brands represent a bright spot for the athletic footwear industry, as well as for the activewear market. We should keep an eye on Vans, Puma, Fila, Hoka One One, and On Running, as well as Champion and Brooks – they are all outperforming the market.

Looking at the outdoor market for Holiday, the climbing business will remain positive, but it is not large enough to offset areas of weakness. Hydration products, including insulated water bottles and thermal/insulated containers, continue to be a bright spot. The secondary market of rentals, leases, and used equipment remains an opportunity for outdoor.

Fitness equipment sales will be challenged for Holiday, as consumers are choosing clubs over ownership. Brands and retailers should follow the example of the outdoor industry and explore the secondary market.

Looking at sports-specific equipment, the golf business has been on the upswing, particularly when it comes to opening price-points for complete sets as well as golf ball sales. I mostly attribute this to the surge in retiring Baby Boomers. Baseball continues to show strength as parents see it as a safer sport than collision sports such as football or soccer. Basketball hoop systems have shown recent strength as Millennial parents are buying homes and having kids. Products tied to these activities and consumers have giftable potential and may help drive sales in Q4.

With the shorter holiday season this year, gift cards will represent an opportunity and retailers need to flaunt the convenience factor that they represent. We can also expect online sales to surge due to the short season. Ease and convenience have the potential to make or break consumers’ purchasing decisions.

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