Retail success in 2021 will be complicated to measure – and the sports industry is not exempt from these challenges. Across the industry, we saw both extreme lows and unprecedented highs – both of which will present challenges when making comparisons to this year’s sales. In athletic footwear, we saw the single worst monthly results on record in March 2020 and the single best in June. One should be a cinch to beat and the other likely impossible. Looking at other aspects of the market, as soon as the lockdowns started sales of bicycles and home fitness equipment took off, soaring to heights never seen before. While I believe that consumer interest in these categories will remain high, maintaining or exceeding the momentum of those sensational results will prove difficult. Brands that promoted aggressively and drove their direct-to-consumer sales to unprecedented levels may not be able to grow on top of these already high sales without promoting even more in 2021.
With all of this taken into consideration, how should the industry measure success in 2021?
One thought is to compare 2021 results to 2019, when things were “normal.” Certainly, viewing trends through that lens will be more stable; however, 2021 itself will not be a “normal” year. For instance, sports equipment sales in January will likely be up by more than 50%, which is hardly the norm. So, comparisons to 2019 need to be viewed with caution.
Another way to measure success in 2021 is through capturing market share profitably. That term profitably is an important caveat here. There are two pillar ways companies can take share: profitably or promotionally.
Share is a zero-sum game either way; for one company to win, another must lose. However, viewing share in a vacuum is dangerous. How share gain is achieved impacts the health of a company in very different ways.
Promotions may help brands to grow share in the short-term, but this does not necessarily result in profits. The share gains brands captured via promotions in 2020 will be challenging to replicate, without promoting even more in 2021, and companies do not want to find themselves in this corner of finding growth at any cost.
Today’s circumstances present an opportunity for companies to change the narrative in 2021, to step back and transform their business. Over the last year, the sports industry has exceled in using unrequited demand to drive consumer interest. I say let’s take those principles to the next level. By constraining supply, sales may be dampened but profits will grow.
Instead of focusing on growth at a perilous cost, the industry can focus on profitably gaining market share. Increased profits have many long-term benefits. Investments in marketing or innovation are rewarded with higher profit. Companies’ images are elevated and not bound to short-term thinking and results.
Managing the marketplace remains the sports retail industry’s greatest opportunity. Smart and practical management of our industry focused on improving profitable share gains is a strong measure of success in 2021 and beyond.