After what was a lackluster year for U.S. sports retail, my expectations are mixed for 2020.
The athletic footwear market eked out a small gain in 2019, and I do not expect the trend to improve in 2020. Why? The industry lacks a true hot item, as well as a hot brand of scale. Through DTC, brands continue to bleed sales, and margin, from their wholesale partners.
Brands will continue to grow their DTC platform aggressively via a very promotional path. There will not be true organic growth here, but rather a share grab from their wholesale partners. Smaller brands, if they control the marketplace, will thrive in 2020, but even in aggregate they will likely not offset weakness elsewhere. More generally speaking, footwear brands will find mid-tier department stores and shoe chains to be a fertile area for growth, as there is a much more equitable brand scenario here. I also wouldn’t be surprised if some footwear brands expand their product offerings within the mass merchants.
The sport lifestyle segment will continue to drive whatever gains we see in athletic footwear. Retro will dominate again, but brands must manage the marketplace. For the time being, there is no sign that performance footwear will make a fashion comeback in 2020. Brands that focus on performance will find it increasingly challenging. I expect that performance basketball will be relegated to a “team” shoe like football and baseball. Brands will see little to no return on mega basketball endorsement contracts because the business is much smaller now and continues to decline.
We will likely see some rationalization in the footwear resale space as the business plateaus and brands increase allocations. Influencers will start to play themselves out in 2020, as consumers recognize the inauthenticity of paid endorsers.
I expect the activewear market will again have a soft year as it did in 2019, but will outperform fashion apparel. Again, there are no new looks or a hot brand of scale to ignite the category. The focus will remain on sportswear as opposed to gym wear. Smaller vertical brands will thrive. In terms of brand stars, my prediction is that Lululemon will be the leader in activewear. In the next one to two years, I believe Lululemon will become the largest women's activewear brand in the U.S. Private label in activewear will plateau. Fashion brands that attempted to make performance apparel will exit the category.
Looking at the equipment categories, team sports equipment is poised to have another decent year, driven by retiring Boomers. Brands and retailers who address the needs of this (often entry level) consumer can see gains in the short term. I expect golf will have a decent performance this year, even as it fails to attract new, young consumers. Baseball will grow at the expense of other sports that are facing challenges largely due to parental concussion concerns. Protective gear should also have a good year, for the same reasons.
Health and fitness equipment will struggle again this year, but there will be bright spots as it relates to connected devices and recovery equipment.
Within the outdoor market, hydration remains strong, driven by new players in the space. Climbing is still a thing, but for how long? Continued emphasis on pinnacle products limits any upside to this industry.
While I expect that overall it will be a disappointing year in sports retail, there are glimmers of growth that will grow brighter in this new year.
Athletic footwear encompasses the sport leisure, performance, outdoor, and work/occupational/safety categories.
The 2018 retail calendar accounted for a 53rd week in January, making the comparison 52 weeks in 2019 versus 53 weeks in 2018.
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 12:05 p.m.
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.