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Athletic and Outdoor Segmentation
Identify and reach specific consumer groups so you can efficiently target and capture your most valuable consumers. Use our athletic and Outdoor Segmentation to drive more sales using targeted messaging. It also can help you refine your merchandising mix and assortment once you understand the differences among key consumer segments. Seven athletic segments and four outdoor segments are included.
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Leisure Sneakers Lead U.S. Footwear Sales Gains, with Added Boost from Other Comfort-Oriented Styles
Comfort is in style year-round as leisure sneakers dominate U.S. footwear sales gains. Other growing styles include sports and fashion slides, strappy sandals and mules/clogs.
The U.S. athletic footwear industry grew by 2 percent in 2017, generating $19.6 billion in sales, according to global information company The NPD Group. Unit sales also grew by 2 percent and average selling price remained flat, at $58.16.
The three key components of the $334 billion retail fashion segment, apparel, footwear, and fashion accessories, are each in different positions when it comes to the business, according to leading global information company The NPD Group. The apparel industry, which represents 65 percent of total U.S. retail fashion dollar sales and spans everything from basics to jeans, continues to enjoy the consistent growth experienced over the past few years. Conversely, the more trend-driven footwear and fashion accessories industries are now experiencing sales declines, keeping overall retail fashion sales in the 12 months ending February 2017 even with results from the prior year.
The U.S. fashion industry is rapidly changing. At the same time, a flurry of factors – including shifts in consumer shopping behavior, retail closures, new celebrity influencers, and today’s macro trends – are having an impact on consumer spending. Here’s a look at 5 fashion trends we’re watching right now.
Many footwear brands are struggling in today’s changing retail environment, offering others a chance to capture market share. Are you taking advantage?
The back-to-school season now includes more options for the consumer than ever before. We took a look at how U.S. consumers shopped for back-to-school products in 2017 to help you plan for the 2018 season.
The back-to-school season isn't about one-stop shopping anymore. Find out what it is about these days.
Our client, a footwear manufacturer, wanted to win floor space for a premium product designed exclusively for a major retailer. The manufacturer needed to prove to the retailer that the return on the new product would be worth the incremental spend. Our client turned to us to build a compelling case.
The back-to-school season is the second largest retail shopping season. To gauge what’s to come this year, we looked back on last year’s back-to-school shopping behavior
Identifying top-selling and fast-growing styles is key to your success in today's competitive U.S. independent footwear market. Go to the source for ongoing insight that details exactly what's happening in the independent shoe channel and how it relates to your market. Identifying top-selling and fast-growing styles is key to your success in today's competitive U.S. independent footwear market. Go to the source for ongoing insight that details exactly what's happening in the independent shoe channel and how it relates to your market.
Want to make killer products people love? If so, you need to distinguish the winning ideas from the losers, move fast to keep ahead of trends, and prepare yourself for the possibility of a hot category’s decline.
CT-Athletes’ feet (and what they wear on them)
The footwear market is changing fast. In-store foot traffic is down, and retailers are fighting for share. How will you expand your brand's value at your current retailers and make a case for new retailers?
Insights and Opinions from our Analysts and Experts
Two events happened recently that highlight the dilemma that sports markets face.
Last week, LeBron James emerged from the “Decision Cave” and announced that he was taking his talents to LA. Then, Roger Federer agreed to be paid $30 million per year for 10 years to endorse Japanese retailer Uniqlo.
Many have assumed that LeBron’s change would somehow benefit sales, but in my opinion this is not the case. Yes, a lot of Lakers “number 23” jerseys will be sold, but there are thousands and thousands of Cleveland 23’s still left in inventory. These jerseys started at 50 percent off two weeks ago. Today, they are merely historic artifacts that could take years to clear.
I do not expect to see a big lift in basketball shoe sales either. When Kobe Bryant was at the height of his game, he had the top-selling jersey in the NBA, but he never sold a lot of shoes in the U.S. Los Angeles is more of a flip-flop market than basketball shoe market. Given the lead times in the sneaker industry, it will take many months to have LeBron shoes in Laker colors. And even then, there will be little appetite; performance basketball shoes remain solidly out of fashion in the U.S.
As a side note, it is important to point out that Kobe’s shoes sold in much greater quantities in China than they did in the U.S. However, LeBron has never been that popular a player in China. If U.S. basketball goes out of fashion with Chinese consumers who follow the sport, brands will surely struggle in China.
Turning to tennis, Federer played his first match at Wimbledon in Uniqlo apparel. It was announced that he would be paid for 10 years, regardless of whether he played tennis or not.
Tennis players earn amazing endorsement deals even as participation has stagnated. Their appeal is more to the ultra-wealthy than it is to the average consumer. Teen consumers are not even in the picture.
I’m in London as I write this, surrounded by fans of Fedo. Some might be interested in what he wears or which liquor he drinks, but none of these folks appear to have set foot in a mall, let alone a fast fashion retailer.
What we are realizing is that the paid endorser model is simply broken. Fans know that athletes and celebrities are paid to wear products, and only wear them because they are paid. Celebrities’ relationships with brands are based on compensation, and not on any true emotional attachments.
Consumers have begun to realize how phony these pay-to-wear deals are. Celebrities have not loyalty to brands, or fans. They simply will endorse whatever they are paid to wear.
The sports industry needs to return to the days of authentic and honest endorsement, where the relationship is guided by passion and emotion, not by big paychecks.
The February through April 2018 period (compared to the same three month timeframe in 2017) was a solid one for the U.S. team sports equipment industry. Sales grew in the mid-single digits, as the new baseball bat regulations drove baseball sales growth in the mid-teens. Composite bats improved by nearly half and pulled all the other categories up with it. These gains will be difficult to offset next year.
In composite bats, Rawlings more than doubled sales. Louisville Slugger grew in the high teens while DeMarini had a decline. Market share leader Easton grew by more than half.
Golf equipment also performed well, likely driven by the peak in Baby Boomer retirements, with sales up in the low teens. Golf club sales grew in the low teens, indicating new entrants, while ball sales only grew in the high singles, likely dampened by the decline in golf rounds played in April.
April posted the coldest temperatures in two decades, which put a damper on spring sports (with the exception of baseball). Soccer equipment sales were flat, while lacrosse had a mid-single digit decline. Field hockey had a surprising mid-teens increase. Tennis declined in the low singles.
Basketball equipment sales declined in the low teens, in line with weak basketball shoe sales.
Combat and wrestling-related sales grew in the low teens.
Protective gear, a standout category in 2017, slowed to a low single-digit increase.
Looking at team sports equipment brands, Callaway grew by a third, taking share from those who have exited the golf business. TaylorMade grew in the high singles, and Titleist in the high teens.
Rawlings grew by nearly a third and Easton by nearly half.
Spalding and Wilson both posted declines.
My expectation is that golf sales will flatten out as we move through the year, and baseball will hold up until the new bats are replaced, while the rest of team sports equipment market will be challenged.
Activewear sales in the U.S. from February through April 2018 were essentially flat, as the proliferation of fashion brands emulating performance wear continues to take its toll.
Women’s activewear sales declined in the low single-digits, with particular weakness in active bottoms and bras. Kids’ activewear was flat, while the men’s market was a bright spot – sales grew in the low singles driven by sweatshirts and active bottoms.
As we saw in footwear, premium department stores grew in the mid-teens, while mid-tier grew in the mid singles. Athletic specialty/sporting goods had a low single digit decline. Department stores now capture more activewear sales than the true sports channels.
Sales of activewear bottoms, the largest category, were flat, as weakness in women’s offset gains in men’s. Sweatshirts improved in the low teens while outerwear tops grew in the mid-singles.
Knit shirts and socks declined in the low singles, as did bras. Swimwear got off to a slow start with a low single-digit decline.
The aggregation of all retailers’ private brands was again the largest “brand” and grew a whopping 20 percent during these three months. Retailers will continue to seek refuge here from the highly promotional environment.
Nike brand had a mid-single digit increase, while Under Armour posted a low teens decline. adidas activewear sales grew more than 40 percent.
Hanes grew while Fruit of the Loom declined. Champion had a 40 percent sales increase.
Columbia saw a decline while The North face improved in the low singles. Patagonia had an outstanding performance, with sales up about half.
Source: The NPD Group/ Retail Tracking Service, February-April 2018
The sports retail environment continues to be challenged in the U.S., as sales have essentially flatlined since the banner year of 2015.
Athletic footwear dollar sales from February through April 2018 grew in the low single-digits, with unit sales also up in the low singles and average selling price flat. Two factors drove the increase; first, February had a very easy comparison as February 2017 had the worst performance in all the years I’ve been doing research on the industry. Second, the 53rd week fiscal shift replaced a small week in 2017 with a larger one. My expectations remain muted for the rest of the year.
Women’s athletic footwear led the wearer segments, with sales up in the high single-digits. adidas, Brooks, and Vans had strong increases in the women’s market, while Nike and Under Armour both posted declines. I expect that women’s athletic footwear will continue to outpace men’s and kids (both these segments grew in the low singles).
The premium department store channel grew its sales in the mid-teens, while shoe chains improved in the high singles. Mid-tier department stores increased in the mid-singles while athletic specialty/sporting goods had a decline. All of the energy is happening in the department stores today as the athleisure trend remains in full force.
Sport lifestyle, the largest athletic footwear category, grew in the high single digits. Nike and adidas grew in the mid-teens while Brand Jordan and Converse posted declines. Skate improved by more than 40 percent, as Vans grew by half. Sport slides grew more than 20 percent. Again, the athleisure trend is driving these categories.
We are soon to begin the fourth year of soft sales for performance footwear. Performance basketball declined in the mid-singles, even as Nike basketball grew. Considering how much marketing dollars brands devoted to the performance category beginning this year, this result is disappointing. Performance running declined in the mid-singles as new initiatives from many brands did not move the needle, but Brooks continues to stand out as a top performer in running. Training and hiking footwear sales also declined, as the trend away from “performance as fashion” continued.
Nike brand sales grew in the low singles thanks to solid growth in the sport lifestyle category, though performance running struggled. Converse sales were down in the mid-teens. adidas had a mid-teens sales gain. Its trend has definitely cooled from the torrid pace of the last two years. Skechers athletic grew in the mid-singles. Under Armour and Asics both posted declines, while Brooks and Vans had strong increases. Non-core sneaker brands like Steve Madden, Ecco, Roxy, and UGG all had nice increases. Again, the athleisure trend is carrying these brands.
Looking at the top-selling items based on dollar sales, none of these shoes are true performance products, again illustrating the fashion shift away from performance. For the first time in many months, no adidas shoes made the top ten list, as adidas continues to diversify its portfolio. The top sellers were: Nike Tanjun, Jordan XI Low, Jordan 1 High OG, Nike Air Max 270, Nike Air Huarache, Converse All Star Low, Nike Revolution 4, Jordan IX Mid, Nike Air Force 1 Low, and Nike Flex Contact.
Source: The NPD Group/ Retail Tracking Service, February-April 2018
The recent decision by the Supreme Court of the United States which allows states to regulate gambling on sports will have an impact on the sports retail business.
The leagues in the U.S. are constantly searching for new revenue streams. The big cash cow, TV rights, has likely reached its peak as some leagues have seen viewership fall in favor of much less lucrative social media platforms.
The last two major unrealized revenue streams for the leagues are legalized gambling and ads on jerseys. We have seen the NBA successfully introduce ads on jerseys. No one was smote from above. Over time, I expect ads on jerseys will be an even greater thing, as the ads take over a larger amount of the jersey. Sleeves will return as that will allow more space for ads. The big money has yet to flow, but it will. Global soccer shows potential here.
My belief is that leagues will support gambling on games as long as they get a cut. I expect several states will quickly enact gambling statutes in time for the NFL season this fall. Look for one of the states that has already voted for gambling to take the lead here and create a template for others.
There will likely be great hue and cry over the morality of gambling, but states are as strapped for new sources of revenue just as leagues are. Gambling will come with fancy trappings, but it will come. (As a local wag once told me while standing in front of a New Orleans casino: “We don’t have gambling here; we have gaming.”)
Las Vegas takes a hit here as bettors will no longer have to travel there to wager. We can expect the sin in “Sin City” to expand to offset these losses.
It will be fun to watch the fantasy leagues (who have long claimed fantasy was not gambling) try to get a piece of this business.
The NBA will take the lead here as the NFL dithers about “integrity” issues. Maybe the NFL can use these proceeds to pay off the CTE claims. I love the idea that the leagues will support “integrity fees” and get their cut of the bets. Leagues will likely charge for “league sanctioned data and content” as another way to grab some revenue.
Mark Cuban, owner of the Dallas Mavericks, said “everybody who owns a top-four professional sports team just basically saw the value of their team double, at least.”
Legalized gambling may be the final lever to get the NCAA to pay its indentured servants who bring in vast amounts of income to the coaches, athletic directors, and schools.
I’m also looking forward to the time when Paddy Power Betfair is a household name.
Marginal teams and marginal players will get a lift here as they make great betting targets, much like we have seen in fantasy sports. It remains to be seen if legalized betting creates an increase in fan wear worn as streetwear.
In addition to the sports retail environment, it will be interesting to observe how this decision will impact sports ratings, which I expect will go up.
For some time now, there has been an investment approach around environmental, social and governance (ESG) standards. Studies have shown investing in companies that score highly on these characteristics outperform the market. The indexes used measure environmental uses and policies, corporate diversity, racial and gender diversification among executives and governing bodies, as well as human rights policies. Companies with a high score on sustainability and ethical performance tend to outperform those with low scores.
This concept of ESG is spilling over into consumer behavior, driven by Gen Z. Sports retailers and brands must pay attention to this critical change.
Gen Z is the most connected generation. They have never known a world without a smartphone. Consequently, they rely on social media for connection, communication, and commerce. They are likely to use social media to seek the opinions of their peers, not just on what is in fashion but to learn about the ethics of the brands and retailers they are considering.
They are also the most diverse generation, meaning it’s likely that as Gen Z consumers get older, they will gravitate towards brands and retailers that are more diverse, and will be more likely to withhold their business from those that are not.
Gen Z is progressive and political. They will not sit idly and hope that circumstances change. This generation is one that will likely push for change and respond more positively to those brands and retailers that follow suit.
As a generation that is out to change the world, Gen Z demands that brands take visible stands on social issues like diversity. According to a recent Forbes article, human rights is the primary cause for Gen Z, and equality is non-negotiable. Brands can no longer claim to be apolitical, and what they stand for must be transparent. If Gen Z disagrees with a company’s values, they will take their business elsewhere.
Gen Z also seeks meaning in their work, products, and brands. They value relationships above all else. This makes them both tolerant and respectful. Gen Z will demand that same tolerance and respect from their brands and retailers.
Gen Z understands that companies have a role in improving the world. They will demand that the brands and retailers invoke that role. Those that do not will lose their attention.
One of the most difficult tasks in sports retail is managing the marketplace, especially with hot items. Brands that do this effectively have a steadier growth pattern and higher profits.
A retailer’s job is to buy what’s hot and trending in the market. Retailers want to buy as much of what’s hot as they can. If they buy too much, the retailer typically leans back on the brand for help.
Today’s retail metrics are driven as much by liquidation rates as by growth. As long as an item maintains an acceptable sell through rate, the retailer is happy. A low liquidation rate will trigger markdown optimization programs which will suggest price action. Sometimes an item is a slow seller simply because the retailer has stocked too great a quantity.
With the advent of these markdown optimization tools, too often retailers grow impatient around introducing new products and brands. Often if a new product does not immediately meet the accepted sell through, retailers abandon the new initiative. It is incumbent on the brand to manage the retailers’ expectations. Retailers need patience when evaluating the success of new items and brands.
Brands see the entire marketplace. They know how much of an item is sold in it and therefore must control the marketplace. Brands must use sales and velocity data to make sure an item does not get either overheated or oversaturated. NPD can help frame the market for new or emerging items, and help the brand to understand the market potential.
The fastest way to kill a hot item is to allow too much of it to be sold into the market. Retailers will lose their interest and push for price action. The sports industry is littered with items that died due to oversupply. Once an item is killed off due to oversaturation, it can take years to build back the credibility and demand.
It is an important lesson that the last sale is often the least profitable. Brands that try to squeeze every last sale out of an item will often be disappointed in the profitability of the late sales.
Scarcity remains an effective tool in building consumer interest and retail confidence. No one ever went broke from selling an item out too fast.
Brands that effectively manage the marketplace will attain steady growth and healthy profit.
It’s been quite some time since Nordstrom announced that they were going to be opening their first Nordstrom Rack store in Canada; and since then, there has been significant buzz around when this was going to happen. Well a few weeks ago the doors to the first location at Vaughan Mills Mall finally opened and with all the anticipation and buzz, I decided to go check it out for myself.
The first question I keep getting asked is why did it take so long and why do you think there was such a delay. As we have seen with most successful retail imports, slow and steady seems to win the race. However, it was interesting to me that Nordstrom went ahead and expanded their regular banner stores before opening their off-price banner - kind of the opposite strategy that we had seen with Saks Fifth Avenue. This is made even more interesting by the fact that the off-price channel in Canada was the fastest growing channel in 2017 and continued to outperform the market growing +12 per cent from last year.
After visiting the first Nordstrom Rack store it became obvious that this was done with a very strategic approach and every detail of the opening was thought out in an effort to ensure that the Rack would be successful and the buzz would not fade. Here are a few insights I took away from my visit:
- There was clearly a strategic decision here to use the regular Nordstrom stores as the branding vehicle. Essentially keeping the essence of the Nordstrom brand intact while offering discounted options. Nordstrom had brought a certain “cool” factor and younger energy to the Canadian landscape that had been missing and using that voice in the off-price space would fill that void that the channel has been lacking. This would also help acquire a stronger presence with the Millennial consumer as off-price is under indexed in the only generation cohort that posted In-store growth from a year ago.
- The level of transparency in labeling was fascinating but also so needed in the off-price space. At Nordstrom Rack everything was clearly labeled without any hidden agendas, such as “Designer Shoes” and “From Our Nordstrom Stores”. To me this removed the disarray out of the hunt and created a guided shopping experience.
- A major difference between Canada and the US is that Canada is specialty focused with over 50 per cent of apparel dollar sales traced to specialty stores vs. only 25 per cent in the US. Nordstrom Rack really played into this by merchandising by commodity not department as each key commodity was labeled and merchandised so it was very easy to shop. This really engages the way Canadians shops.
The second question I get asked is there room for another off-price player in the Canadian landscape, isn’t this space already crowded?
If we look at the US, 12 per cent of the apparel dollar sales are traced to off-price where in Canada only it’s only 7 per cent - that’s a 3pt. gap of opportunity. And to take that further in Canada 93 per cent of the off-price channel sales are traced to 2 major players where in the US 95 per cent of the off-price channel sales are traced to 7 retailers.
So whether this increases competition, thereby driving market growth, or opens the door for the channel expansion, one thing is for certain – the Canadian market does in fact have room for more off price players.
So welcome to the Great White North, Nordstrom Rack!
A lot has been written about improving the customer “experience” in sports retail. No one would argue the importance of great customer experience. But experience can mean different things to different people, and even different things to the same person depending on circumstances. Let’s explore the different kinds of customer experience and how sports retailers can respond.
Retail must be easy. The transaction experience must be as stress-free and frictionless as possible. Once a purchase decision is made, get the product and customer out of the store as quickly and simply as possible. Lines at the register or multi-step checkouts are not conducive to a great experience.
Retail must be personal. “Brand Me” is your customer’s favorite brand. Well curated assortments are critical to serving “Brand Me.” Personalization through special offers and loyalty programs leverage the retailer’s best customers. Elevated and knowledgeable service adds to the personalization.
Retail must surprise and delight. Part of a memorable experience is discovering the unexpected. Retailers must feature newness, and the newest products must tell great stories. Today’s consumer wants unique products, made by unique brands, and sold in unique retailers. Private label, if well executed, can be a component here.
Retail must offer value. Like it or not, the price equation is firmly part of the retail experience today. Price has never been more important to the consumer. At the same time, value also means getting the most for your money. Understanding this balance is key.
Retail must be flexible. Not all of the same characteristics apply to every encounter. Sometimes consumers just want to get in and out of the store as quickly as possible, while sometimes they want to be pampered. Not every new initiative works. Astute retailers will test and respond.
The retail experience has never been more complicated, or more important. The successful retailers will be those who offer the greatest experience.
Overall for 2017, U.S. team sports equipment sales declined in the single digits, but below the surface it was a mixed bag, with notable pockets of growth.
Baseball equipment sales for the full 12 months were down in the low singles; however, a solid increase in sales during Q4, as new regulation compliant bats hit the market, was a bright spot for the category. The strength in bats carried the other baseball categories with it. This baseball boost helped the team sports equipment market as a whole for the quarter, with Q4 sales up in the low-single digits and closing the year on an optimistic note. I expect the positive baseball trend to continue through springtime, and provide a nice lift for the market as we move through 2018.
Basketball sales fared well, growing in the low single digits for the year, as participation continued to improve. Racquet sports also grew in the low singles, as Baby Boomers are looking for an easy entry and inexpensive fitness activity.
Soccer had a challenging year, with sales down in the low teens. With 2018 being a World Cup year, I expect sales to bounce back.
Sales of American football equipment were down in the low singles, as parental concerns about injury weighed on the sport.
On the other hand, heightened safety concerns have been a boon for protective gear sales, which grew in the mid-teens for 2017. Parents are spending more on ways to keep their kids safe from injuries and concussions while playing sports, and this will continue to be a growth opportunity for the equipment market. Protective gear should be a major thrust for every sports retailer. There are three protective gear makers in the winners column for 2017: Shock Doctor, McDavid, and Battle.
In terms of brand highlights, Rawlings had a good year, even in the face of the changeover due to the baseball bat regulation. Easton could not quite overcome the switch in bat regulations, but I expect it will have a better 2018. Everlast grew on interest in mixed martial arts.
Overall, I expect the team sports equipment business will remain challenged for 2018 as participation continues to slide in a number of sports, but leveraging the growth areas and unlocking new opportunities in the activities that can use fresh attention, will likely boost sales in the months ahead.