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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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We combine NPD POS and consumer information, industry expertise, and custom survey research – then add state-of-the-discipline research techniques and methodologies to explain the "why behind the buy.” Through advanced modeling and analytic services, we offer insight into what will happen in the future, not just what has happened in the past, answering your most pressing business questions:
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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.
That’s where new product forecasting comes in.
By examining cultural context, looking at historical market trends by category and segment, and building a forecast model with survey research, we can assess the appeal and estimated sales potential of competing products.
Recently, we uncovered consumer opinions about four hot basketball shoes.
See how we did it, and what we found.
Craving pizza? Just Tweet a pizza emoji. Want that area rug? Just click the Buyable Pin for it to adorn your own home. Wish the watch in your Instagram feed were on your wrist? Just click on the brand’s profile link to buy it.
Since 2012, social media platforms have integrated click-to-buy features that allow retailers and manufacturers to sell directly to consumers within social platforms. Twitter, Facebook, Instagram, Pinterest, Tumblr, and Snapchat have all gotten in on the trend.
But even though online sales are growing and consumers are spending more time on social media, the jury’s still out: do these social buy buttons actually encourage people to buy, or have we seen the last of them?
Get our latest Insights – The Future of Social Commerce: How “Buy Buttons” Are Disrupting the Retail World
A major footwear brand increased their SKU listings over 50 percent at one large, national footwear specialty retailer. See how they did it.
10 Ways Younger and Older Millennials Shop Differently
The retail world is obsessed with Millennials.
It wouldn’t be a normal day if newsletters, tweets, and the media didn’t overflow with headlines on the latest Millennial trend, how to “harness” their alleged power, or how to reach this malleable and unpredictable segment.
Who are these Millennials? Do a quick Google search, and you’ll learn they’re foodies. Social media savants. Selfie experts. Experience seekers. Value hunters. Convenience junkies. Savvy shoppers. They’re “authentic.”
In demographic terms, they’re people between the ages of 18 and 34 who reached young adulthood around the year 2000.
But Millennials don’t like to be stereotyped as Millennials. We get it, Ryan Seacrest—they’re tired of being generalized into a broad demographic box and find the label patronizing. They just want to be treated as unique individuals.
When it comes to the wide-spanning age bracket, they do have a point—the difference between life in your late teens and life in your early 30s is pretty substantial. Do 18-year-old you and 34-year-old you want the same things, behave in the same way, or buy the same stuff?
With this in mind, we decided to divide the group into two smaller segments for study: younger and older Millennials. We set out to learn how these groups differ, both attitudinally and behaviorally, in their retail choices. We learned a lot, like the fact that older Millennials over-index in loyalty apps. And younger Millennials shop more at department stores.
If you’re a retailer or manufacturer looking to better understand the complexities of these highly-coveted sub-segments across the retail and foodservice spaces,
The Gen Y Gold Rush
Before we dive into retail specifics, let’s review an economic reality to set the context: U.S. Millennials haven’t had it so easy. Coming of age during the Great Recession, 13.8 percent of those 18-29 are unemployed or out of the workforce, far above the national jobless rate of 5.1 percent. And they’re a “boomerang” generation—33 percent stay at home with their families and fewer live independently. (Who can blame them? Seven out of 10 college grads from 2014 have a student loan, owing an average of $28,950 per borrower.)
But debt and other deterrents haven’t kept Millennials from buying things.
Any obsession with the Millennial demographic—also known as Gen Y—is with good reason. U.S. Millennials outnumber Baby Boomers by nearly 10 percent, surpassing them as the nation’s largest living generation in 2015, according to the U.S. Census Bureau. They’re estimated to reach $1.4 trillion in annual spending by 2020—roughly one-third of all retail spending. So retailers and manufacturers need Gen Y’s share of wallet to increase their market share. And this dependence will only intensify as Boomers continue to age and the Millennial segment gains purchasing power. Frankly, if you’re a retailer who’s not focused on this budding segment, we’re seriously concerned. (Please call us immediately and we’ll help.)
Given that Millennials are such an expansive, diverse group, our Chief Industry Analyst Marshal Cohen reminds us that there are many ways to divide up this set for study; segmentation by age is just one way to showcase their differentiated spending. But make no mistake about it: age really does matter. As consumers navigate through shifts in life stage, it reflects back in their purchasing behavior.
When we divide the group into two segments (ages 18-24 and 25-34), there are already some major demographic differences to note. For one, older Millennials are more educated and have a higher income, shown by data collected by our partner, CivicScience. But with more than one-third of 18- to 24-year-olds still in college, they can’t be expected to have the same level of education or earning power. Older Millennials are less racially diverse and are primarily white (74 percent compared to 68 percent of young Millennials). A greater percentage of young Gen Yers are single/never married (80 percent compared to 44 percent of older Millennials), fewer are married (only 10 percent compared to 40 percent of older Millennials), and fewer parent a child (10 percent compared to 40 percent of the old Gen Y segment).
The two groups think and behave differently, too. Younger Millennials are more optimistic about the state of our economy. They’re less likely than their older counterparts to think Donald Trump would make a good president, and more likely to see the new “Star Wars” movie. Younger Millennials are more likely to applaud Bernie Sanders’ performance in the first Democratic debate. And they eat granola with a higher frequency than their elder Millennial brethren.
So how do these differences play out on the retail floor? Here are 10 ways the groups differ in their shopping behavior:
1. Young Gen Y Specialize in Beauty
We studied the receipts of 8,766 Millennials through our Checkout TrackingSM service, following the purchases they made during the first half of 2015, both online and offline. This revealed younger Millennials devoted a greater share of spend to specialty beauty retailers compared to the total Gen Y population. The younger set significantly over-indexed at retailers like Lush, meaning they are more likely than the senior Gen Y group to visit a specialty beauty retailer when they need new concealer or mascara.
But there were also some “neutral” beauty brands that earned consistent share of wallet across the Millennial age bracket. Both Gen Y groups devoted about 20 percent share of beauty spend to Bath & Body Works and 22 percent share to Sephora. The only specialty beauty retailers where older Millennials significantly over-indexed compared to their younger comrades were The Body Shop and bareMinerals.
But it’s not all about specialty shops when it comes to cosmetics. In an online poll of 15,031 U.S. adults conducted from January 2014 through January 2015 through our partner CivicScience, we asked respondents where they buy most of their makeup and cosmetics. The result? Millennials do the majority of this shopping (49 percent) at superstores like Walmart, Target, and Costco—a greater share compared to that of the total U.S. adult population (45 percent). And younger Millennials demonstrate a slightly greater affinity for superstore makeup than older Millennials.
When it comes to how Millennials shop for beauty products, their purchasing behavior is pretty consistent throughout the segment, but there are also some differences. Our Shopper Engagement survey fielded in August 2015 showed Millennials old and young are equally likely to browse in store and buy in store (58 percent). Younger Millennials are more likely than older Millennials to browse and buy online (20 percent vs. 17 percent), less likely to browse online and buy in store (14 percent vs. 15 percent), and less likely to browse in store and buy online (8 percent vs. 10 percent).
"With so many retailers and brands trying to court this segment, it becomes very competitive and challenging to win share of younger Millennials’ discretionary, hard-to-come-by spending"
2. Young Millennials Shop More Specialty Apparel
The Millennial segments demonstrated the biggest discrepancy when we looked at share of wallet devoted to specialty apparel stores. Young Gen Yers like shopping in specialty stores for specific items, devoting 3.2 percent share of wallet to this retail channel, compared to older Millennials’ 2.1 percent share and the total adult population’s 1.9 percent share, shown by Checkout Tracking receipt data.
Marshal Cohen thinks reaching younger Millennials requires laser-like focus. “With so many retailers and brands trying to court this segment, it becomes very competitive and challenging to win share of younger Millennials’ discretionary, hard-to-come-by spending”, he explains. Millennials want to shop and play at places that market their products directly to them. If they feel you’re “for real,” or in other words, not only including them, but genuinely speaking directly to them—they will be more inclined to shop with you.
Specialty fashion retailers are the perfect example. We took a deep dive into data on some of these top retailers to see at which specific retailers younger Millennials over-indexed compared to more senior Millennials over a 12-month period. One look at the over-indexing stores on this list, and you’ll see just how these specialty stores fared with the younger Millennial.
Here we see very clearly how young Gen Yers spend a significantly lower share of their apparel spend at children’s retailers (Carter’s and The Children’s Place) compared to the older Millennial segment. The data reflects young Gen Yers’ preference for stores like Hollister and American Eagle over places like Ann Taylor and Banana Republic.
What we found particularly significant was the fact that two of the most neutral apparel retailers—Lululemon and The North Face—earned similar wallet share among Millennials of all ages, demonstrating activewear’s ability to transcend ages 18 to 34.
But Department Stores Aren’t Dead
Given younger Millennials’ affinity for specialty apparel retailers, perhaps we can understand Macy’s decision to mimic this specialty/boutique feel by opening a basement floor dedicated entirely to the younger consumer (Gen Z and young Millennials), only showcasing the brands most relevant to this age group.
But it is important to note that across the entire channel, Millennials of all ages devote a greater share of wallet to department store spend than the rest of the U.S. adult population. And younger Millennials are also more likely than older Millennials to have shopped at department stores. While the younger group is more likely to have shopped at Nordstrom, the older group is more likely to have shopped at Sears.
Interestingly, while younger and older Millennials differ in their likelihood to have shopped at Nordstrom (26 percent vs. 15 percent), the likelihood of the groups to have shopped at Nordstrom Rack, the fashion retailer’s off-price subsidiary, is not as polarizing (25 percent versus 22 percent respectively). Though less significant, younger Millennials are slightly more likely to have shopped at Marshall’s, while both age groups are equally likely to have shopped at TJMaxx.
3. Younger Millennials Are Sportier
Though activewear share of spend is consistent across the Millennial spectrum, budding Millennials are more likely than older ones to have shopped at sporting goods stores (29 percent vs. 20 percent reported to have shopped at one in the past year). The differences were significantly pronounced at REI (49 vs. 16 percent). There were also marked differences at footwear retailers Nike (40 vs. 19 percent) and Finish Line (32 vs. 19 percent).
So does this mean younger Millennials are more active than their older counterparts? Our Sports Industry Analyst Matt Powell shed light on this question. “I’ve been talking a lot about viewing the generational changes on a spectrum (from the oldest Boomer to the youngest Gen Zer), rather than as distinct and dramatic changes,” he explained. For example, Boomers are mostly white, conservative, less technically inclined, lavish, and not particularly focused on health or fitness. In contrast, Gen Z is less white, liberal, tech-reliant, frugal, and very health/fitness focused. And Millennials fit somewhere in between on this spectrum.
“So when we think of changes moving along a spectrum over time, it is logical that younger Millennials behave somewhat differently than older ones, and in this case—have a greater focus on fitness and health,” Matt explains.
That’s not to mention that as older Millennials buy homes and start families, they spend less money on themselves (and less on things like sports equipment), while the younger Gen Yers do not yet have those financial obligations.
4. Younger Millennials Eat Healthier, Cook Less, and Shop Wholesale
When it comes to the food and beverages they order, younger Millennials are more likely than older Millennials to look for benefits they can obtain by eating healthier, seeking items that provide energy, are filling, reduce stress, and build muscle. These are messaging opportunities for building a younger Millennial customer base.
In addition, young Gen Yers are more adventurous than older generations in their food choices, with 47 percent of younger versus 40 percent of older Millennials claiming to choose something new (compared to only 34 percent or less for older generations). And younger Millennials have other considerations when trying something new. For example, convenience is at the top of the list. Items that are quick to order, prepare, and consume with easy portability and little mess satisfy this need.
An analysis of data from CREST®, our flagship restaurant and foodservice information service, found the Millennial segment experienced the greatest decline in restaurant visits of any generation from 2007 to 2014. This decline was greatest among the older Millennial segment (the group more likely to have kids under age 13 in the household). And if you’ve ever been responsible for a child at a restaurant who is having a meltdown or making a concoction out the table condiments, you get it. Not to mention the impact of having more mouths to feed; the relatively cheaper expense of eating at home was the primary reason for the decline in visits among older Millennials. Healthy eating concerns also played an integral role in the decision to eat at home.
Older Millennials are also more into cooking than are younger Millennials, with just over half of the older segment saying they love or like to cook. It may be easier to attract younger Millennials back to restaurants because they are not as tied to cooking at home.
Last month Whole Foods revealed it will open a line of grocery stores specifically targeting the Millennial shopper. These smaller stores will offer curated, limited selections of products at value prices. While research indicates Millennials do like to specialize, our Checkout Tracking receipt data indicates an affinity for wholesale clubs across this segment. When it comes to at-home food purchasing, younger and older Millennials devoted the greatest share of wallet to wholesale clubs Costco and Sam’s Club, and were similarly likely to have shopped at each grocer. Younger Millennials over-indexed at BJ’s and Publix, but under-indexed at Safeway.
"When it comes to accessories, younger Millennials are not the robust market one would think they are..."
5. Young Gen Yers Devote Less Spend to Accessories
Accessories are growing fastest among the Millennial segment. These consumers are responsible for the greatest share of the category’s purchases, with spending up 15 percent from one year ago. Younger Millennials, however, under-index (compared to total Millennials) in the share of wallet they devote to this category. We found this stat surprising, so we asked our Chief Industry Analyst, Marshal Cohen for his thoughts on the trend.
“When it comes to accessories, younger Millennials are not the robust market one would think they are,” Marshal explains. “Traditional thinking has younger Millennials spending more on accessories, as they tend to be more affordably priced than apparel items. But with less discretionary funds, young Millennials need to be very picky about what and when they buy. Spending across a wider scope of ‘necessities’ like phones, data plans, and even food competes for young Millennial spending on experiences—and that means things like accessories will fall short on the priority list for spending.”
6. Older Millennials Use More Loyalty Apps
Older Millennials are more likely than younger Millennials to be a member of a retailer’s loyalty program. But one surprising trend is that older Millennials are more likely than tech-reliant younger Millennials to have at least one retailer’s app downloaded on their mobile device (48 percent vs. 33 percent). The older group is also more likely to frequently use the downloaded app (46 percent often use their app to browse, look for product information, or shop compared to 38 percent of young Millennials). Older Gen Yers substantially over-indexed for use of mobile apps from Target, Walmart, CVS, Dollar General, eBay, Rite-Aid, Best Buy, Gamestop, and Costco.
7. Millennial Youth Need Less Stuff and Shop Less in Store
Younger Millennials are more likely than older Millennials (28 percent vs. 23 percent) to say they have shopped at brick-and-mortar stores less often than last year, primarily because they don’t need to buy as much as they used to (41 percent). This is also a factor of Millennials’ attraction to experiences, and their desire to do more and buy less.
Older Millennials are more likely than younger Millennials to shop less at brick-and-mortars because they cannot afford to shop as much as they used to (32 percent vs. 25 percent)—perhaps a reflection of the financial demands of parenting.
Both groups are similarly likely to have shopped at Amazon and to be members of their loyalty program, though younger Millennials are more likely to be familiar with Amazon as a place to buy consumer electronics. Older Millennials are more likely to have shopped at direct mail/e-commerce sites like eBay.
When it comes to shopping for apparel, younger Millennials are more likely than older Millennials to browse in store and buy in store (62 percent vs. 51 percent), but less likely to browse online and then buy in store (10 percent vs. 16 percent). Younger Millennials are also less likely than older ones to browse in store and buy online (8 percent vs. 14 percent).
8. Younger Gen Yers Are More Adam Levine, Older Are More Metallica
Our BrandLink® solution reports that if you’re looking for a celebrity endorsement that would appeal to Millennials of all ages, B.o.B. and JT are your guys (that’s Bobby Ray Simmons, Jr. and Justin Timberlake to all you non-Millennials). Both would be good fits to target younger Millennials (index 225 and 132 respectively) and older Millennials (index 167 and 137 respectively).
If you want to home in on younger Millennials, Adam Levine and Daniel Radcliffe are good choices (index 138 and 134 respectively), but they could miss the mark for older Millennials.
Only trying to target older Gen Y consumers? Metallica and Guns N’ Roses would fit the bill (index 130 and 121 respectively), but might not have the same recognition, let alone impact, with young Gen Yers.
9. Older Millennials Buy More Kids’ Stuff
Younger Millennials under-indexed compared to the total Millennial segment in child-related categories: baby products and toys. Specifically, older Millennials are more likely to have shopped at Babies R Us, The Children’s Place, Toys R Us, and Party City. This isn’t surprising, since the 18-24 segment is less likely than the 25-34 segment to parent a child. And in today’s day and age, baby photos don’t really start to take over your Facebook or Instagram feeds until you hit your mid-to-late-20s.
The same trend applies to pet products: older gen Yers are more likely than Millennial youngsters to have shopped at pet stores like PetSmart and Petco.
10. Older Millennials Have More Home-Related Expenses
We know it might sound shocking, but younger Millennials also under-indexed in home improvement, appliances, tools, and home textile purchases. Older Millennials are more likely to have shopped at home hardware stores like Home Depot and Lowe’s in addition to home specialty stores like Bed Bath and Beyond, Crate and Barrel, West Elm, and Pottery Barn. But, really—no surprises here. What 20-year-old do you know who is remodeling her new home, buying a fancy KitchenAid, investing in a state-of-the-art power saw, or ordering a new line of linens? Let’s face it, whether you’re in school or starting your first job, it’s all about scrounging up repurposed furniture from older family and friends or simply sticking with mom and dad for a few more years until you get your feet on the ground. And when young Millennials finally do uproot themselves, typically this means moving to an urban environment where there are more jobs and inhabiting smaller, rented, and/or shared homes that require fewer furniture expenses.
Older and Younger Millennials: Two Distinct Segments
In the world of market research, people aged 18-34 are typically grouped into one giant segment for study. But they do not share the same experiences, think, or act the same. Half the group grew up on Britney Spears, the other on Justin Bieber. Some grew up with Facebook in middle school, while the rest didn’t create an account until after having their first child. Moreover, this 16-year span represents a pivotal coming-of-age period, and the differences between the oldest and youngest Millennial can be great, as evidenced by our top 10 list. It’s time to start treating these segments as two distinct groups, to better get to know them and to speak to them directly if we want to earn their precious spending power.
This year’s Back-to-School season
Ahh the Back-to-School shopping season! That make or break time of year for many of the manufacturers and retailers who toil in the world of academic supplies and related paraphernalia.
It can be a stressful time. And although the stress levels this year are likely no worse than usual, the stressful time is extending. The back-to-school season is now much longer than it used to be.
The reasons are numerous -- rapid delivery and the ease of shopping online let consumers procrastinate; retailers themselves have looked to drive BTS sales earlier in the year by promoting items at the start of the summer; and those early-summer promotions tend to lead to discounting as the start of school approaches, rewarding bargain-conscious consumers who wait until the last minute.
The result is that that the BTS season is stretching on both ends.
Research from Google shows that consumers are beginning their search for BTS purchases earlier and earlier. This year’s BTS-related searches began a week earlier than in 2014, and three weeks earlier than in 2013.
At the same time, research from The NPD Group shows that consumers are doing their BTS clothes shopping later than usual. The majority of consumers surveyed didn’t start shopping until early August, which is generally considered the end of the season. And many consumers aren’t expecting to finish shopping until after the school bell rings.
As The NPD Group’s Marshal Cohen put it: “When so many consumers are planning to do their back-to-school shopping in the months not traditionally considered part of the season by retailers, it’s time to break with tradition and change the way we market and measure this shopping season.”
So just when will the BTS season hit its peak? Below are the dates when BTS sales peaked last year in a number of retail categories. Assuming that the early indicators of a lengthening season hold true, then the next few weeks will prove to be the top of the slope.
Peak Week in Sales in 2014
Grocery Stores = August 30
Drug Stores = August 23
Brick & Mortar = August 23
Online = August 16
Average School Start = August 23
Making the (up)grade
Among the more interesting developments in this year’s BTS season is that one of the bigger items in the shopping cart -- the notebook PC -- is facing some unusual challenges.
Microsoft is in the process of rolling out its Windows 10 release. And the timing of that -- in the middle of what is traditionally the second-largest season for notebook sales -- presents challenges to both retailers and PC manufacturers.
“Traditionally an OS release has been a positive occurrence for hardware sales, but this year that typical cadence has been called into question,” according to Stephen Baker, vice president of industry analysis for consumer technology at The NPD Group. “Windows 10 has been positioned by Microsoft mostly as a software upgrade and with the short window of time between the release of the OS and its general availability the stock of Windows 10 PCs in retail stores, primed to take advantage of the season, is likely to be fairly limited until around Labor Day which is probably too late for an incremental burst of selling.”
In other markets, things look a bit better.
For example, early indicators suggest that sales of athletic footwear will be quite high. Dollar sales in the category grew 8 percent in the first half of the year, while the average selling price rose 7 percent.
“June is a prelude to back-to-school, making this mid-year performance a positive indicator for the back-to-school season,” according to Matt Powell, sports industry analyst, The NPD Group. “These sales results in the first half of 2015 bode well for a strong second half of the year.”
The big winners for BTS are likely to be retro running shoes, which saw sales soar in the first half.
Pencil it in
As you’re waiting to see what the final numbers are for BTS 2015, you may want to do some shopping for the teachers in your life. As it turns out, teachers spend a fair amount of their own money for classroom supplies. That hardly seems fair.
So if you’d like to help, check out our infographic on what teachers need for the classroom this year.
How Retail is Becoming Less Gendered, and Why You Should Care
It’s 2015 — and our nation is degenderizing.
Our futures are no longer dictated by the sex organs we’re born with. Girls can be anything they want to be, whether a professional rugby player, engineer, CEO of a startup, or President of the United States. Boys can be artists, dancers, full-time fathers, and nurses. A macho male Olympian can transition into a beautiful woman. A graceful female model can develop facial hair and big muscles. The boys-don’t-cry era is behind us, and gender and sexuality are no longer the black and white concepts they were years ago.
In American business, no area, with the exception of popular entertainment, is blurring the gender lines as quickly as retail. From clothing to footwear to technology, forward-thinking companies are enacting a less binary vision of how we shop, dress, and live — in response to an emerging consumer need. A genderless fashion market is developing. It’s far less saturated than its gendered counterpart, and it is rife with opportunity for new entrants.
This isn’t to say that all Americans everywhere are accepting of all sexual and gender choices. But as we’ve started to talk about it more, there has been an incredible shift in attitudes across the country. Americans, particularly the young adults known as Gen Y, are more accepting of the grey area in between.
In fact, Millennials are the most tolerant U.S. generation to date: half of the age group believes gender exists on a spectrum and shouldn’t be limited to male and female. So retailers and manufacturers with their eyes on this most valued of consumer demographics would be wise to start thinking of shoppers as more complex and varied. They’re more than just male or female.
Gender-neutral fashion: so hot right now
Time and again, women’s and men’s fashion have adopted elements from each other to rebel against gender norms and stereotypes. The result? Androgynous fashion trends that have waxed and waned over the past century.
In the 1920s, Coco Chanel borrowed the suited look from menswear and designed her iconic trousers and button-down suits for women, emblematic of the post-war woman trying to build a career in a male-dominated workplace.
In 1966, couturier Yves Saint Laurent designed “Le Smoking Jacket,” pioneering long, minimalist, and androgynous lines in women’s clothing. The design made any woman who wore it look unstoppable.
Though we might not see men and women wearing the same clothing on the street today, the high-fashion world has embraced this genderless trend with open arms. Countless haute couture fashion houses are blurring the lines between feminine and masculine and changing the conversation around gender. A handful of companies have created androgynous labels for women who wish to dress more masculine. Designers from Marc Jacobs, to Rag & Bone, to Giorgio Armani, and more have created clothing that straddles the gender gap. Some designers are even creating apparel intended for everyone, for wear by people identifying as any gender.
Here are some notable gender-neutral designers:
- Rad Hourani was the first fashion designer to market a unisex line in Paris in 2007. He aims to explore high fashion beyond gender with collections that nod at both masculinity and femininity by producing clothes that can be styled for both men and women.
- Led by Alessandro Michele, Gucci recently launched a menswear collection that challenged traditional gender lines with delicate lace and slouchy bows, exhibited by both men and women on the runway.
- Though Miuccia Prada didn’t use the word “unisex” when designing her Spring 2015 Menswear line, she said it felt “instinctively right to translate the same idea for both genders.” The collection’s contours seemed to work for all models regardless of gender at the recent spring fashion show.
Though high-fashion creatives seem to get this idea of fashion independent of gender, haute couture is restricted to the select few who can afford it; retailers for the masses must create lines that will sell to the majority of customers. So the question remains — does the public buy into this vision?
Are consumers across the board ready to accept this gender-neutral concept? If the public’s reaction to Jenner’s recent transition is any indication, then yes — but women (not surprisingly) are probably more game than men.
In an online survey conducted in May 2015, our partner CivicScience® asked 1,507 U.S. adults aged 18+ years if they considered it brave of Bruce Jenner to come out as a woman to Diane Sawyer.
Less than one-third of respondents answered yes to this question. But this stat reached 53 percent among the Millennial woman demographic. And Millennial women were 60 percent more likely than Millennial men to answer yes to this question.
So what does this mean for future generations?
Though older Boomers and Gen X consumers are less open-minded, younger, female Millennials are more accepting of a less-gendered world.
Do you think it was brave of Bruce Jenner to come out as a woman to Diane Sawyer?
% of people who said yes, by demographic segment
The high-fashion world is innovating around the gender dialogue. Research indicates Millennials are more progressive when it comes to concepts related to gender and sex. So which brands are taking risks and staying relevant in these changing times?
Keeping up with genderless wearables
We’re living in an age of personalization. While there is certainly a place for fashion brands that target particular genders, body type, and more, that market is already saturated. Rather than designing clothes for men or clothes for women, what if brands just kept things simple and created one line for everyone? Which brands are creating apparel, footwear, and accessory product models that work for all people?
NPD Account Manager Joe Hasek has been following this trend closely and doesn’t paint a very promising picture: “There’s been this phenomenon in high fashion for several years now — particularly on the runways. But we’ve yet to see a meaningful trickle-down into any of the typical apparel channels.” There are some exceptions, though. Joe points to the rise in athleisure and athletic-inspired apparel as pushing this universality trend forward.
The comparatively genderless nature of some types of athletic apparel gives brands like The North Face and Patagonia an advantage on this front. A hoodie is a hoodie, and a beanie is a beanie, and we often see men and women sporting the same classic fleeces from these brands.
American Apparel produces cotton basics that by nature are pretty gender neutral. The retailer recently marketed a unisex line with clothing items intended for wear by both men and women.
(The retailer’s marketing techniques toward men vs. women differed drastically and created consumer backlash.)
With the explosion of lululemon and the rise of activewear, many designers are tapping into the high-end activewear market. A new Canadian designer to the scene, Willis Chan, is approaching this gold mine with a genderless design sense. He’s producing unisex “High Athletic” fashion — high fashion with an athletic and techwear element.
NPD Sports Industry Analyst Matt Powell points to the footwear category as offering some options for everyone: “Though they’re not marketed as ‘asexual’, there are shoes that were once strictly men’s shoes that have become gender neutral.” Converse and Van are prime examples; it’s hard to walk down the street without seeing someone sporting a pair. Their websites have sections for men, women, and kids. They also allow visitors to click on any classic shoe model and view men’s and women’s sizing in one drop-down menu. Toms, Sperry, and Birkenstock also produce footwear that has gained popularly across genders. Though these brands do offer gender-specific sizes, colors and designs, their classic designs are marketed to everyone and have achieved a widespread appeal.
At the same time, there are new boutique brands specifically marketing asexual footwear. Sneaker brand Eytys co-founder explains that he never has a gender in mind during his design process. Footwear designer Nik Kacy launched her business on Kickstarter and now sells “luxury, gender-neutral footwear and accessories.”
There’s been a lot of talk in the press about the rise of the man bag, but there are also designers designing bags to appeal to all genders. At the recent Independent Handbag Designer Awards, there was an award category for The Stand Out & Look Great Work Bag (Unisex). British designer Jennifer Hamley won for her sleek and sexy bag design that appealed to both men and women.
Fashion products for either gender might have the greatest application in the wearable technology market of smartwatches and activity trackers. Aside from personalization of color bands, Fitbit markets the same tracker to both sexes. The Apple Watch focuses its marketing on its functional capabilities and is not offered in men’s or women’s versions, though it too allows for band/case personalization.
Gender usage research for activity trackers and smartwatches shows smartwatch users skew male, and fitness trackers users skew female. Though this affects how tech brands Apple and Fitbit target their marketing efforts, at the end of the day they’re marketing the same product to men and women.
What’s a girl to do when she physically looks “like a woman” and dresses “like a man?” If she shops on the men’s floor of a department store, does she change in the men’s room? Or does she carry her stacks of clothes up and down escalators to try on her items in the women’s section? There is a business opportunity for retailers who create a comfort zone for people who don’t want to subscribe to one category.
London-based concept shop Dover Street Market was one of the first to pass up traditional gender-segmented floors in favor of store organization by brand, allowing customers to shop men’s and women’s collections simultaneously.
Perhaps most notably, the London-based department store Selfridges took it one step further by transcending the notions of “his” or “hers.” After the retailer noticed many of its female customers shopping the menswear floor and male customers buying women’s ready-to-wear and accessories items, the retailer launched its Agender pop-up shop. The department store eliminated the divide between men’s and women’s clothing by displaying fives lines of non-gender clothing from more than 40 brands, across three floors, with both men’s and women’s bathrooms on each floor.
More than just a fashion
As the public discussion around gender becomes increasingly sensitive and complex, so does the need for a shopping experience independent of gender. Progressive designers like Rad Hourani, Coco Chanel, and Marc Jacobs have tapped into this niche market, along with a group of fashion-forward retailers.
With a growing Millennial segment that finds sex and gender less relevant to their shopping, it seems time for mainstream retailers and brands to participate in the dialogue by offering more options. Because this genderless approach toward fashion is proving to be more than just a passing fashion — it’s a trend.
Insights and Opinions from our Analysts and Experts
It was a rocky year for the outdoor industry. The void created by the bankruptcies of Sport Chalet and The Sports Authority had a huge impact on the industry, and the warm weather did not help. But an underlying cause was very much self-inflicted.
From my point of view, the industry needed to focus on newness and shifting to a more lifestyle approach, and less on continuing along the same path and expecting to reach a different destination.
Overall sales for the outdoor industry (including athletic specialty, sporting goods, outdoor specialty, and sport specialty e-commerce) were soft in the 12 months ending November 2016. Dollar sales declined in the low single-digits. The last three months were particularly difficult, with sales down in the low double-digits. The decline primarily stemmed from the athletic specialty/sporting goods channel, which saw sales fall in the mid-teens. This is no surprise as the Sport Chalet and The Sports Authority bankruptcies closed over 20 million square feet of sporting goods retail, or about 10 percent of the market.
Looking at specific categories, we see that the vast majority of the top-selling outdoor footwear styles sold from September through November were the same as in 2015. The lesson here is, if we don’t give the customer newness, we become a replacement business. Further, if you covered the logo on most of the shoes, you would be hard pressed to identify the correct brand. Too much sameness is the kiss of death in retail today.
Outerwear sales were up in the 12 months ending November 2016, yet flat in the latter three months compared to the prior year. While part of this was warm weather, a sea of sameness at retail had to have a negative impact. We are seeing major share shifts away from the traditional share leaders as consumers are on the hunt for fresh ideas.
Camping, which had been a driving force for outdoor, has also slowed and sales have now been down. Again a lack of newness has hurt this category.
Even hot categories like coolers, which had been experiencing exceptional growth, have now begun to cool off. Coolers and cookware saw sales slow dramatically over the last three months.
The outdoor industry has a great opportunity to capture the hearts and minds of Millennials and Gen Z. The values of the industry are well aligned with these cohorts. But these cohorts also demand new, fun, and “good enough” products. The industry is just not providing that right now.
The outdoor industry can rebound from this difficult time, but it will take changing the business model and altering the way we view the consumer to achieve it.
Source: The NPD Group, Inc. / Retail Tracking Service, Outdoor Industry View, 12 months ending November 2016
This year will be one full of change for fashion at retail – some is overdue, some is driven, but all of it is necessary. The days of the consumer following trends have faded. Consumers are now creating their own looks, seeking apparel, footwear, and accessories that fit into their lifestyle, not the other way around.
Active will enter its second generation in 2017. Active apparel companies will transform their product to be less focused on performance and more focused on lifestyle. At the same time, lifestyle brands will try to become more active-oriented.
Footwear fusion will be the key. The hybrid approach to activewear will carry over to footwear in 2017 as well. The focus for feet will be less about dress and more about innovation and comfort.
Casualization will give pajamas new function. The next generation of casualization will mainstream the use of pajamas as weekend wear. This is not a new concept – college students have been doing this for years – but now it will be embraced by those who didn’t just have an all-nighter cramming for a final.
The little things will matter. Consumers will continue to focus less on mid-range purchases, and more on big and small spends. It’s the latter that will benefit fashion accessories. The affordable splurge on a wristlet or keyfob will maintain its appeal from 2016.
Organic fibers will come to the rescue of activewear, and our noses. The apparel industry will begin to rebel against the negative properties of activewear, such as smell. Look for increased promotion of organic fibers calling synthetic fibers out on their challenges with odor and durability.
Struggle and success will weave together for denim this year. Denim has been on the rebound over the past year, and it will struggle to return to its true glory in 2017. But some brands will fill their pockets and find growth.
There will be an evolution in accessorizing. Technology and innovation have an important place in the world of accessories. The emphasis on carrying a cell phone or tablet in style will be more important than ever. But even the accessories will have to be functional and innovative in order to fit with the current consumer criteria of convenience, need, desire, and price.
Apparel will face a new kind of opponent. The apparel industry will struggle to remain a priority spend, competing for their share of wallet. But it’s not just technology, apparel will go up against intangible purchases too, as younger consumers seek and spend on services and experiences more than ever.
I mentioned in my 2017 predictions blog that stock market analysts have criticized major sneaker brands including Nike, by saying that the footwear market lacks innovation. Nothing could be further from the truth, although the innovation might not be in the usual places.
I have said repeatedly that we are in the golden age of innovation in the world of sports. We have two very strong technologies in Nike Flyknit and Adidas Boost that are a long way from maturity and continue to grow. Brands are introducing new ideas all the time. For example, the Nike Air VaporMax, a shoe without a conventional outsole, will debut in a few months. There is no lack of technological innovation in footwear today.
Perhaps what is fueling what I consider a misunderstanding is that we are currently in a fashion cycle where the consumer is not seeing technology as fashion. That trend of “technology-as-fashion” in running ended at the close of 2013 and in basketball a year ago. Retro is currently ruling the fashion cycle. The most important message here is that the consumer, not the brand or retailer, is dictating what fashion is today. Even if the brand has great technology, the consumer is voting against that right now.
In addition, I believe analysts have overlooked the fact that much of the innovation today is happening behind the scenes. We are making amazing leaps in innovation in manufacturing. For example, Reebok’s “Liquid Factory” promises a whole new way to make an upper. Most brands are using 3D printing in prototyping and we are beginning to see finished shoes partly made with this technology. Feetz is creating custom-made footwear entirely using 3D printing.
As another behind-the-scenes example, Nike’s Flyknit has virtually zero waste and has taken hundreds of manufacturing steps out of production. Nike has also partnered with Flex to bring innovation to their supply chain and manufacturing techniques.
Brands are bringing some manufacturing to U.S. soil in an effort to speed up the production cycle. Under Armour’s “Lighthouse” center and the Adidas “Speedfactory” are but two examples.
Robotics also has the potential to take costly labor steps out of the manufacturing process. Every day we are hearing of a new method or technique that is on the horizon or actually in use.
Brands are also creating connected products that give users feedback on their health and on how to play their sport better. I’ll cover this in greater depth after CES 2017 .
There is also a ton of innovation going on at retail as well, as physical stores fight for a share of the market. Nike’s new store in Soho is filled with ways to bring the internet into the store to enhance the customer experience. Adidas’s new Fifth Avenue store represents the next level of concept retail. Footlocker is making great strides on curated assortments, and its new store on 42 nd street will take interactivity to whole new level.
We are seeing plenty of innovation in e-commerce as well, as brands and retailers begin to deliver on the promise of seamless, frictionless, transparent commerce that carries across multiple devices and into physical stores.
From where I sit, I see a continued commitment to innovation in the world of sports.
It’s the end of another fascinating year for the U.S. sports business, so that means predictions time! But before we get into that, let’s set the stage by recapping how we did on our 2016 predictions. Most of the predictions I made a year ago came to be true, but there were some surprises along the way.
Overall, the positive sales trend in athletic footwear and activewear did continue, but not quite as strong as I anticipated. Looking at brand performance, Nike and Skechers did not have as great of a year as predicted, but things seem to be turning for both late in 2016. Adidas remained on fire and earned the title, “Brand of the Year.” In terms of equipment, this business was indeed challenged; however, the minimum wage increase did help propel sales growth. Social trends including social fitness were huge influencers over the last couple years, and this remains a critical concept in sports.
Now let’s turn to 2017.
First, get ready for possible price increases in sneakers and other products manufactured overseas. The promises that the President-elect made on the campaign trail can potentially lead to strained relations with China, which may cause prices on foreign-made products to increase. I talked more about the election’s potential impact on footwear sales in my post-election blog.
Given the highly charged political atmosphere, we can expect consumers to focus on ‘ethical shopping,’ giving their business to brands and retailers that share their values and shunning those who do not. Consumers will demand to know where brands and retailers stand on issues and will shop accordingly.
Based on the current retail landscape, the void created by The Sports Authority bankruptcy will have a lingering but diminishing negative effect on the industry. I expect that most of the impact will be over by the end of Q2 and trend should improve for the industry. In the meantime, this vacuum will force brands to be more promotional. The 24/7 Minimum Advertised Price (MAP) policy at Nike will add fuel to an already overheated promotional market.
Looking at the major players, Nike’s trend continues to recover, but it will be slower than it needs to be. While Nike will be a share donor, sales will return to growth. Nike’s direct-to-consumer business will remain robust. Adidas and Puma should stay hot in 2017. Both brands are working hard on diversifying from their narrow base of hot styles. This should keep the trends in a positive direction. Under Armour (UA) will likely hit a soft patch, particularly in footwear, as the fashion headwinds around marquee and performance basketball hit. Footwear brands of UA’s size often seem to stumble on their path to growth. While I agree with the strategy, UA’s expansion in the mid-market will be tricky, especially for the big box partners. I’m confident in the long term trajectory for UA, but 2017 could be a rocky year.
Given the rush to try and capture some of the athleisure business by non-performance brands, we can expect the athleisure category to grow but to be very noisy. The bubble created by all these new, opportunistic brands will burst and the market will return to the core brands and retailers.
Retro will remain the dominant fashion trend, but styles must constantly be updated. Brands that try to drive on style for too long will face markdowns and margin pressure. Casual athletic footwear and sport slides will reap the benefits of the retro trend. Retro in apparel will become even more important.
On the other hand, the performance categories will remain challenged in 2017. One possible bright spot will be the mash-up of retro uppers on performance outsoles. We’ll see the first of these products hit store shelves this spring.
Some have tried to scold certain big brands for a lack of innovation, but this is misguided. We have been on a sturdy trajectory for technical innovation in footwear for the last few years, so it makes sense to now take a pause and let current technologies seek their own level. But, more importantly, much of the technical advances are happening behind the scenes. Advances in manufacturing techniques will make it possible to get shoes to market more quickly and more sustainably. The ability to truly make customized shoes is not that far in the future. Advances in manufacturing will have a far greater and longer lasting impact on the industry than a new cushioning system for shoes.
Brands are also making huge innovation gains in “connectedness” and the “quantified self.” Helping athletes be better athletes and to share their experiences will continue to be a source of growth for the sports industry.
Finally, innovations to the in-store experience will prop up the sinking brick-and-mortar side of retail. Smart stores, contextual marketing, and augmented/virtual reality all have a role to play in slowing the decline of physical retail.
E-commerce, which is already a force in the industry, will continue to rise. According to NPD research, one-in-four athletic shoes were sold online last year. Over time I expect that contribution to rise to two-in-five. The physical limitations of brick-and-mortar stores will continue to drive this growth.
Retailers will quickly figure out that ‘buy online, pick up in store’ will be another way to leverage e-commerce to help save physical stores. Retailers will use this additional store visit to create add-on sales.
We can expect retail rationalization to continue. We still have far too many stores than we need in the U.S. Much of the rationalization will be silent as small chains, specialty, and “mom and pop” shops shut down without much fanfare. This rationalization is both needed and inevitable.
Demographically, I hope 2017 is the year the sports industry finally figures out the women’s business. Women’s sports retail remains woefully underserved, and this has allowed brands from outside our industry to capture significant sales and share. (Hint to sports brands and retailers: “win the bra; win the woman”). Another demographic trend the sports industry must embrace is plus sizes in women’s apparel. Research by The NPD Group says the most common size in women’s apparel is 16. Brands that focus on the S-M-L-XL consumers will never win the women’s business.
Finally, Hispanics remain a great untapped audience for the sports industry. Hispanics are projected to represent a quarter of the U.S. population in a few years. They have a great affinity for all things sports and spend their money on sports products. Brands that embrace this change will win.
In my opinion, 2017 presents many opportunities and challenges for the sports industry. I expect it will be another good though not great year, with trends improving as we move into the second half of 2017.
Why should ugly sweaters and pajamas get all the attention? Holiday is a great opportunity to promote footwear as well. Almost one-quarter of annual, total footwear dollar sales are generated in November and December*, and for certain categories that percentage is steadily increasing. In addition, last month almost half of consumers reported that they planned to purchase footwear as a gift this holiday season**.
It makes sense that the last two months of the year are crucial to the footwear business, because in many parts of the country that’s when cold weather boot sales have historically kicked in, with higher-than-average price points driving more dollars. However, in recent years, as seasons have blurred together and winter weather has held off (with some exceptions, of course), seasonal product sales have held off as well. For example, holiday*** accounted for 43 percent of annual cold/all-weather boot dollar sales in 2015, down from 50 percent in 2013. Slippers, a key holiday category, saw a similar drop: 47 percent of sales were done during holiday in 2015 versus 53 percent in 2013.
On the other end of the spectrum, holiday is gaining significance for some non-seasonal footwear categories. Athletic categories - both performance and sport leisure - saw over 40 percent of sales generated during holiday 2015 compared to just over 30 percent in 2013.
As sneakers have become more important to the footwear market overall, holiday has become more important to sneakers. In fact, 20 percent of consumers who planned to purchase footwear as a gift this holiday season said they planned to purchase sneakers/athletic shoes, compared to 15 percent who said they planned to purchase slippers, and just 11 percent who said they planned to purchase cold weather or snow boots**. In addition, although just 5 percent of consumers mentioned their intent to purchase work/occupational/safety footwear as a gift, the holiday’s percentage of this category’s annual sales has increased during the last two years, perhaps as necessities end up on gift lists, and those replenishing for themselves take advantage of widespread promotions.
As we head into the final weeks of holiday 2016, I expect that we will see a continuation of the above shifts. As the last two months of the year become more important selling periods for non-winter footwear categories, the industry has an opportunity to further increase their holiday appeal through innovative packaging and marketing programs – tactics that have typically been reserved for winter boots and slippers. And remember: self-gifting (something I’m very familiar with) is just as important as gifting to others, so driving both can make for a very successful season.
*Source: The NPD Group, Inc. / Consumer Tracking Service, Annual 2015
**Source: The NPD Group, Inc. / November 2016 Omnibus
***November and December
When The Sports Authority (TSA) filed for bankruptcy last spring, it was the largest failure we had ever seen in the sports industry. The overleveraged TSA represented about 20 million square feet of sporting goods retail – nearly 10 percent of the industry's square footage. Proportionally, TSA represented more than 10 percent of the industry’s apparel and equipment sales while it under-indexed in footwear.
NPD’s Checkout Tracking correctly identified the primary recipients of TSA’s business: e-commerce (brand, retail, and pure play), adjacent big box sporting goods, and national discounters. But what was not anticipated was that some of its business would simply evaporate.
It is now clear that some of TSA’s business came from its Sunday flyer marketing strategy. Even if the customer did not need what was advertised, some came out and bought goods simply for the discount. Now that those flyers are no longer running and with no traffic going through their stores, a portion of TSA’s business has vanished into thin air.
It is easy to see this in the outdoor industry numbers, where TSA was a major player. Outdoor sales through the athletic specialty/sporting goods channel decelerated from down in the low single-digits in the first half, to down in the high single-digits in the third quarter. Sales in the outdoor specialty channel actually improved in the third quarter from the first half, as it picked up some sales given up by TSA.
In activewear, we see a similar trend. Nike and Under Armour are the largest brands in activewear. Their sales for Q3 were up sharply in department stores and national chains, but were down sharply in athletic specialty/sporting goods. Adidas, who did not have a big presence at TSA, saw sales rise sharply.
In footwear, where TSA was not as significant a player, the shift is less visible, but still exists nonetheless. Changing fashion categories also mask the shift in the business. Running shoes was a category where TSA had a strong position. Sales there decelerated sharply after TSA stores closed. Categories including classic footwear, where TSA was not an influential factor, were not impacted at all.
It is clear that the closing of The Sports Authority stores last summer has left a vacuum in the market. The greatest impact on the business will come in the fourth quarter, as this was when TSA was fighting for its life. After that we should see this void created by TSA’s closings begin to abate.
Adidas has opened its largest store in the world on Fifth Avenue in New York City and it is amazing.
On the morning of the grand opening, my phone started to light up with messages saying there were hundreds of people in line to get into the new store. I rushed over and found a huge but orderly crowd of Adidas fans waiting in line.
When I returned that afternoon for my tour with Adidas executives, the lines still had not gone down.
The design of the store is meant to emulate a football stadium, complete with chain link fencing, ramps, rough concrete floors, and exposed beams. Adidas made an effort to retain and expose the building’s original raw design, creating authenticity as well as maintaining a commitment to sustainably.
While there are elevators in the back of the store, the primary means of moving between floors are metal stairs, just like at your local field. Even the fitting rooms were designed to look like a locker room.
At 45,000 square feet and four floors, the Adidas branding is overwhelming. The 350+ employees were well-trained and extremely enthusiastic.
On the lower level, customers can find the Turf, where they can test and experience Adidas cleated footwear. There is also a custom print shop to create your own jerseys. The men’s assortment was featured on this level.
The first floor highlighted a launch zone showcasing the new Harden V.1, which released there ahead of the rest of the country by two days. The first floor also had a juice bar and personal trainers.
Women’s is the focus of the second floor, with a track to test running shoes and a bra and pant bar. The assortment in women’s was well thought out and curated.
The top floor is home to Young Athletes and Originals and had the greatest crowd during my visit. This floor also had a “miadidas studio” where customers can customize more than a dozen styles of top-selling adidas shoes. At the grand opening, fans, for the first time, could customize the highly sought after UltraBoost shoe.
Adidas executives told me the hottest-selling products in the store were the Parley products, which are made of the recycled plastic ocean waste.
All in all, the new Adidas store in mid-town represents a clear brand message and a focused assortment of fashion right products. It was a complete Adidas experience.
Job well done!
The hottest trend in the U.S. athletic shoe market right now is classic, or retro, footwear. The overall classics category is growing at a +29 percent pace for 2016 so far through October, according to retail sales data from The NPD Group – five percentage points greater than this time in 2015 and currently the strongest player in the athletic footwear market. While retro basketball shoes have been hot for more than a decade, retro running and retro tennis are now growing quickly as well.
To further illustrate the power of this trend, classic footwear was among the top-five performing categories, in terms of dollar sales, the week before Thanksgiving, according to NPD’s Holiday Shopping Bag 2016 Weekly Report. Retro styles are sure to drive sales for the athletic footwear industry this holiday season, just as they did for back-to-school. If back-to-school is any indication, the #1 selling shoe was a retro model and, in fact, six of the top-selling models were retro styles.
One of the most interesting aspects of the retro trend is how broad-based it is by brand. Virtually every major brand with older styles in their vault is participating. Typically, when a new trend emerges, it is based only on a few brands.
In order to capture the customer, however, brands cannot simply resurrect shoes from the archives; today’s consumers demand that the products they wear be modern.
Manufacturing techniques have changed over the years, allowing “new” retro styles to be made in a modern way. This means the old methods cannot be used anymore. We have also seen many advances in materials since the original shoes were first introduced. The consumer has become accustomed to lighter and more breathable materials, so brands have had to update their materials as well. In addition, fits have changed in the years since the shoes were first introduced. As one example, kids are a lot bigger than they were decades ago. Brands have had to modernize the original fit as well.
Exploiting this trend was not an easy task. Brands had to essentially rebuild the styles while making them true to their original concept.
While the epicenter of the retro trend remains the athletic specialists, there is an opportunity for every channel to participate. Brands will want to segment products, but all channels can share in this success.
There is also an apparel opportunity here. Brands should develop “retro” apparel products to match their footwear offerings. Track pants, wind suits, and crewneck sweatshirts are just some examples of potential retro apparel.
As with any trend, I often get asked, “How long can this last?” While I think the fashion cycles are becoming shorter and shorter, given how many footwear products are available to re-release, this trend can hold on for a while. Combined with the public’s lack of interest in performance footwear, I think we will be in this cycle for some time to come.
Last holiday season was a particularly strong one for many major aspects of the sports business. There are several factors making this year’s challenging for the industry, but while this year won’t top last, I still expect a fair holiday performance for the world of sports retail.
Sports Authority’s fate puts pressure on the industry: The biggest factor for this year’s holiday selling season in sports is the loss of The Sports Authority. Where there were adjacent big box competitors to TSA we have seen transference, and surely some of the TSA business has gone to the internet; however, much of the TSA business has simply evaporated. This has had a deep impact on the sports industry as a whole. The vacuum created by the TSA closing has had a profound impact on Nike, Under Armour, and Champion, but virtually every brand that did business with TSA is affected.
Chilly sales for cold weather categories: Another variable that’s proving to be unfavorable to the industry thus far is the weather. While it has turned somewhat colder in many parts of the country, we have not seen true winter weather seize the attention of the nation. This will throw shade across the entire industry.
The cold weather categories have been hurt the most. Data from NPD’s Retail Tracking Service show considerable weakness in weather-related categories for October. Outerwear sales declined in the low teens, cold weather undergarments were down double-digits, and the cold weather boot business declined over 20 percent. Retailers have already been much more promotional around the boot categories.
Early sales for the snow sports category have started off much softer than in seasons past. This, along with a delayed winter, poses a challenge. While some of these sales could be made up late, the sales will likely come at the expense of profit.
Ups and downs in the outdoors: The outdoor industry has seen a slow-down this year as well. After very nice growth, outdoor sports categories combined are just flat for 2016. Even the hot premium cooler business has started to plateau. While Millennials drove this trend for the last few years, the “herd, binge, abandon” phenomenon appears to be in effect. Right now, the climbing business is a bright spot for the industry, but overall I expect a mediocre season for the overall outdoor industry.
A slowdown for cycling: The cycling business has continued to be soft for some time and this holiday season is no exception. Sales have been boosted somewhat by a promotional environment as retailers try to clear old stock, but overall I don’t expect it will be as great of a year as last for the cycling categories.
Rise in retro and casual running styles: The run specialty categories have struggled for some time and I expect this to continue through the holidays, as retro and casual running reigns supreme. Recently, sales have improved slightly as the shops have added accessory categories and worked hard on the add-on sales. However, the core shoe business remains in decline as the rise of casual running continues to hurt the technical business.
A mixed bag for athletic apparel and footwear: The activewear category was having a decent year until we came against the TSA closings. Since then, sales have been soft. Layer on the lack of cold weather and prospects are not bright for a great holiday season. Also, as I identified in early fall, another interesting and important story in activewear is the number of new brands and retailers who are trying to crash the party. More brands and retailers are competing for a place in what has become an oversaturated space, and this influx has created a lot of noise and confusion. I predict that it will be a messy holiday for the activewear business. Beyond activewear, an emerging athletic apparel trend to watch is sports licensed apparel as street wear. There is something bubbling under the surface here, and it’s quite possible that it will arise as the next big fashion trend.
The athletic footwear business was decent up until the TSA closure, which caused sales to soften dramatically. One positive is that the Black Friday Jordan release is far better than last year’s, which should generate store traffic and boost sales. Another positive is that inventories are very clean at retail, which means the danger to margins should be mitigated. Adidas and Puma will remain the hot brands as Under Armour slows up and Nike stays soft. With that said, I foresee a decent holiday for athletic footwear.
It’s all about the click: Looking at shopping outlets, e-commerce and mobile will be big drivers for whatever gains we get in the sports world this holiday. Retailers both large and small that do not have an e-commerce platform will woefully under perform. Those with a great mobile interface will outperform those that do not.
Black Friday’s not a deal-breaker: In many instances, Black Friday started on Tuesday. The day itself has never been that meaningful for sports and this year it will be less so. The same goes for Cyber Monday. These artificial holiday constructs are largely based on price – a tactic that the sports industry has for the most part been able to avoid. What promotions we have seen have been broader in scope, not in depth of discount.
While the sports business is not off to as great of a start this holiday season as others, it doesn’t mean there’s no chance for it to catch up. Various circumstances are leading it to be a challenging holiday for the industry, but overall I still expect the industry to pull through and see some decent gains to close out 2016.
According to NPD, which represents the most comprehensive roster of reporting retailers, comprising more than 50 percent of the U.S. retail athletic shoe market, sales of athletic footwear in the U.S. for the first third of the year (January-April 2016) were solid. Both dollar and unit sales grew in the low single-digits with average selling price up slightly, mostly on mix.
So far, the bankruptcies in the industry have had little impact on sales, but that could change over the next 90 days. I expect these “going out of business” sales to have a minimal impact on the industry. The greatest impact will likely come early, when the assortments are best. Channel checks revealed obsolete and broken inventories in the stores slated to close.
The big driver of growth for the year so far remained the classics category, with sales growing more than 25 percent. The largest branch of the classics is retro basketball, driven by Brand Jordan. Retro tennis has had the greatest percentage growth, paced by the Adidas Stan Smith franchise. Retro running has also had a healthy increase. Virtually every major brand in retro running is showing strong increases. I expect the retro trend to last for some time to come.
Weakness in performance basketball has been cited by several retailers over the last few quarters. Performance basketball was one of the few categories that saw a decline in average selling price for the year so far (declines in average selling price often accompany a soft business). Of the major brands, only Under Armour has shown growth here. I expect the declines to moderate as we come against easier comparisons in the second half, but I do expect basketball will remain challenged.
Running is the largest of the athletic footwear categories, but remains bifurcated. Total running sales are up in the low-singles; however, performance running (80 percent of the category) is down in the high-singles, while lifestyle running grew more than 40 percent for the year so far. Most of the major brands in performance running have struggled, with Adidas being a standout exception. We can expect lifestyle running to continue to expand.
Casual athletic grew in the mid-single digits, mostly on robust growth from the Adidas Neo collection. Converse Casual has also been strong. We clearly are in a major non-performance cycle right now. I expect the short term will remain challenging for the performance-focused brands. Brands that have a diverse portfolio of products should be thriving.
Sport slides are back in fashion, no doubt driven by the retro trend. Sales for the year grew about 10 percent. Nike is a big winner here. We can expect this trend to continue and should be on the lookout for new emerging brands in this space.
Outdoor sandals did not fare as well, likely due to the wet spring. Chaco, Skechers, and Teva all had nice increases, counter to the overall market trend.
Walking continued to decline after several years of good growth. Skechers struggled here. Hiking had a low single-digit increase. This category was hot in 2015, but again was suppressed by the wet spring. Columbia and Nike outperformed in hiking.
Men’s and women’s both had low single-digit increases for the year so far. Men’s was hurt by poor basketball results. Women’s was weakest in walking. Kids grew in the high single-digits for the year so far. It is important to remember that a significant driver of the kids business is teen girls buying “boys’” shoes.
By channel for the year so far in athletic footwear, shoe chains led the pack with sales up in the mid-single digits. Athletic specialty/sporting goods rode out the negative basketball trend with a low single-digit increase, and average selling prices increased overall. Department stores and national chains both had low single-digit declines. Running specialty stores declined in the mid-single digits.
Looking at positive brand growth year to date, Nike/Brand Jordan and Converse performed well, but it’s Adidas and Under Armour, with sales up more than 40 percent and 70 percent, respectively, that stand out. Adidas is having a fabulous year, now reclaiming #2 share in the U.S. sneaker market. Asics and Brooks sales declined in the low teens, as robust retro growth could not offset weakness in performance. Saucony sales grew in the mid-single digits. Puma is clearly riding the retro trend with sales up about a third. Vans sales grew in the low teens.
The second quarter has typically never been that important for the sneaker business. I expect sales to be a little choppy early on, as the bankruptcies will be most disruptive then. By the time back-to-school arrives, the bankrupt stores will be out of good shoes. The negative basketball trend will have abated and the Olympics will give a lift to the business. I expect sneaker sales in the second half to bounce back to previous levels. With 10 percent of the sporting goods retail space closing by Labor Day, the remaining market will be stronger and healthier.
Source: The NPD Group, Inc. / Monthly Retail Tracking Service, January-April 2016
Data is collected from the athletic specialty, sporting goods, chain store, department store, and other channels. Athletic footwear includes the following categories: Sport Leisure, Outdoor, Performance, and Work/Occupational/Safety.
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