The NPD Group is the industry authority for the footwear market. Leading brands, specialty retailers, Wall Street analysts, and the media rely on our data of record and unique perspective.
Our comprehensive information and analysis about consumer spending and shopping behavior, analytics and modeling capabilities, Checkout Tracking℠ receipt-harvesting, and other solutions drive better business decisions.
From opportunity identification to program evaluation, uncovering competitive threats to boosting market share, The NPD Group knows the “steps” you need to take to succeed.
The NPD Group has the largest POS footprint in the industry. We collect weekly and monthly sales data from over 30,000 doors globally, spanning all industry channels of distribution, including independent specialty stores, sport specialty stores, sporting goods, department stores, mass merchants, and e-commerce. This allows you to continuously monitor sales of men’s, women’s, and children’s sports apparel, footwear, equipment, and accessories.
The Retail Tracking Service delivers the most detailed point-of-sale information available to guide your critical business decisions. Standard measures available at the category, brand, and item levels include unit sales/share, dollar sales/share, and average selling price. Advanced measures available for specialty channels include inventory, margins, and GMROI.
Stay on top of shifting preferences and trends with insights from consumer panelists who have agreed to provide information about their purchasing habits, usage, and attitudes. You can use this information to analyze consumer behavior, preferences, and purchase drivers as input for product development, brand management, and marketing strategies.
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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Assess regional strengths and opportunities, monitor competitive performance by region, and plan and evaluate effectiveness of targeted activities. Call on our insight into retail sales in specific regions or store groupings using Geo Level information from our Retail Tracking Service.
You have opportunities. You face threats. What you need are smart, quantifiable methods of distinguishing one from the other and maximizing your chances of success. NPD’s Analytic Solutions Group includes a team of senior leaders with extensive experience developing and delivering analytic solutions that address strategic marketing, sales, and planning issues.
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:
- What consumer segments should we target and why? How do we know if we’re successful over time?
- What is the optimal feature combination for my product?
- How do I monitor my performance in my sales territories, distribution areas, etc.?
- Is your promotion strategy attracting new buyers or just moving forward sales you would have gotten anyway?
- How will a competitor’s price drop impact your sales next quarter, and how should you respond?
- Will my product category grow or decline? Why? What does this mean for my market share?
- What’s the competitive landscape and where are my best opportunities (Food)?
- Which products are hot? How should we respond?
- What’s the sales potential and ROI for my new / revamped product idea?
- Is our online advertising set up for off-line sales success?
- How effectively will a new in-store display we’re developing boost point-of-sale transactions?
- Which of the new communications we’ve worked so hard on communicates the product’s value proposition most effectively?
See how clients have used our analytic solutions to solve their business challenges in our Analytic Solutions Case Study Library.
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. athletic footwear industry grew by 8 percent in 2015*, generating $17.2 billion and marking one of the best performances the industry has had in a number of years, according to global information company The NPD Group. Unit sales grew by 3 percent and average selling price by 5 percent, to $61.15.
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.
See how data and insights helped one footwear brand understand a sales decline and refine its marketing strategy to win back customers.
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?
Just last year, a leading footwear manufacturer client sought help understanding the reasons for a cornerstone shoe’s year-over-year sales decline. The dip came as a big surprise, because the company had invested heavily in a new marketing campaign. The first natural assumption—the message did not resonate—wasn’t necessarily true. It turns out our client, through its media planner, had also changed the mix of media placements. It was entirely possible the new mix was not as effective as previous placements had been.
A major footwear brand increased their SKU listings over 50 percent at one large, national footwear specialty retailer. See how they did it
The retail world is obsessed with Millennials.
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.
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.
E-commerce is growing in the fashion and beauty world. Last year, 23 percent of footwear sales, 20 percent of accessory sales, 16 percent of apparel sales, and 11 percent of U.S. beauty sales took place online. And these rates have continued on an upward trajectory.
Insights and Opinions from our Analysts and Experts
How can brands and retailers better resonate with Millennials, who hold tremendous influence now and in the future? It starts not with knowing, but understanding them.
Millennials are focused on societal needs. They feel a great sense of community with their generation, including those around the world. Millennials tend to support progressive causes including a higher minimum wage, and are willing to pay higher prices to pay for these causes. Their beliefs are integrated into their choices as consumers.
Tying into that, Millennials feel compelled to make the world a better place. They have been described as “conscious capitalists,” and expect corporations to be “good citizens.” They believe brands should participate in causes and be a force for good.
Millennials’ shopping behavior is not passive, but it’s a social experience to be shared with friends. Millennials want to interact with brands, to co-create products and to participate in the brand experience. They want to discover new and dynamic products from a proven name, approved by their peer group. Millennials today are looking for relevance and authenticity. They want to develop relationships with brands that deliver a personalized, customized experience. Brands that don’t understand and respond to these needs will fail.
Millennials seek brands that feel unique to them, and make them feel unique. These brands have been vetted and approved by their peer set. Taught to be curious their entire lives, they are incredibly smart, savvy, and know how to research a brand. Millennials don’t see a boundary between consumers and brands.
Consequently, Millennials are more engaged with products. They want to interact with brands and want to share feedback. They want to collaborate with brands. Brands must create a feedback loop that allows Millennials to share their thoughts.
Because Millennials are internet trained, there is an expectation for instant gratification. Email is too slow and cumbersome, while text messaging is more immediate and can be used when a phone call is inconvenient. Twitter, Instagram, and Pinterest share thoughts in real time.
Seeing as Millennials are so digitally engaged, and have shared so much knowledge with their peers, they are early adopters of new ideas, concepts, and products. This will drive the speed of change even faster than we’ve known. Leveraging early adopters will build brand equity.
The concept of branding has changed in that Millennials are so much more aware of a product’s attributes and issues, and therefore consumers are much less brand loyal. If a competitor’s product is perceived to be better or to perform more in line with their needs, they will change in a heartbeat. Consequently, brands must keep their consumers well-informed and up-to-date, not just on what’s in the market now, but what’s coming next.
Millennials have been hit hard by the Great Recession. Good paying jobs have been hard to find. Many are saddled with massive college debt. This has created a frugal generation, and Millennials are always looking for value; however, don’t read frugal as cheap. Millennials may be cautious with their purchases, and research them extensively, but if they decide a more expensive option is the best solution, that’s the decision they will make. Millennials want value for their hard-earned money.
In the words of Simon Sinek, “People don’t buy what you do; they buy why you do it.” This line captures the essence of the Millennial generation’s core values. Though diverse and complex, Millennials as a whole are connected, digitally engaged, and value conscious. Brands and retailers must market their products today in a way like never before.
Brands used to market to Boomers; successful brands today market with Millennials.
Millennials, or the generation born between 1981 and 1996, are now a larger group than the Boomers, who were born between 1946 and 1964. They account for one-third of all retail spending, and soon they will represent 50 percent of the workforce. In the sports industry, 90 percent of athletic footwear gains in 2016 were driven by Millennials or the proceeding generation, Gen Z. These two cohorts accounted for 70 percent of sneaker sales in 2016.
The Millennial generation is much more diverse than previous cohorts, being 38 percent non-white compared to the Boomers, who are 22 percent non-white. In addition, with more than one-third of Millennials having a college degree, this generation is also the most educated in history.
Millennials are constantly interviewing brands, meaning that a brand has to prove itself, every day. For Boomers, there were fewer shopping choices, shopping outlets, and sources of product information. For Millennials, those elements are infinite. On top of that, these elements are always in their pockets, on their mobile devices.
Many Millennials have never known a world without the internet. Because of that, Millennials are more connected to each other than any previous generation. This means they share everything. When they want to know something or get an opinion, they consult their peer group. As a result, Millennials’ groups are much, much larger than those of the boomers.
Boomer generation marketing was reactive. Brands ran an ad campaign and measured how many consumers responded. Millennials don’t react, but interact. They are part of the branding process, from sharing a great YouTube ad, to advising friends on purchase experiences, to giving positive and negative feedback directly to a brand. Remember, just because it’s easy to hit the “Like” or “Favorite” button, does not mean those recommendations are given out lightly (and a “Like” is just as easily reversed).
Contrary to the shopping experience Boomers are most familiar with, physical stores are no longer the place where consumers learn about products; they are the places to try out products, not research. Millennials go to physical stores to see if products fit or if the color is right. Physical stores must adapt to this fundamental shift.
Malls are no longer where young people hang out; now they hang out on their phones. Next time you are in a mall (and I’ll bet it will be a while), go to the food court. Most of the people there are retirees, nursing a cup of coffee. The top-end malls will survive, but the rest are doomed.
“Omni” or “all” channel is old-school thinking. Millennials don’t care about your businesses logistics or Chinese walls. They want what they want, whenever, wherever, and however they want it. If your brand can’t offer it to them that way, they will move on. Your brand experience must be completely transparent and seamless, with no hidden quirks. There is only one channel: all of it.
The lesson here is, engage rather than market; listen well and respond; and provide value. Find out where your customers are living—digitally—and involve them there. Seek interaction, not reaction. Market with Millennials.
2016 was not kind to the golf industry. Nike announced it was exiting the equipment business, Golfsmith went bankrupt and shuttered, hundreds of golf courses closed, and Ben Hogan filed for bankruptcy (again). The largest brand, Taylor Made, with the greatest share and best roster of players, is for sale and seemingly cannot find a buyer. What’s going on?
Golf rounds fell sharply at the beginning of the Great Recession, but as the economy has improved and the recession officially ended, rounds have not bounced back. Some elders lost too much of their retirement savings in the recession to spend on golf, but the real issue is much deeper than that.
In order to offset the decline in rounds, golf manufacturers released too many new and competing technologies. New releases were coming out so frequently that the consuming public could not keep up. This created a glut of deeply discounted products that were not moving off the shelves.
Big-box golf retailers showed nice growth in the early days of the recession, but that growth largely came from industry consolidation. As courses closed, so did the pro shops. The failing golf business forced mom-and-pop golf shops to shutter. Market share flowed to big-box, masking the underlying trend.
What happened to create this reversal of fortune? The golf Industry failed to attract Millennials to the game. The National Golf Foundation reported that there were 400,000 fewer golfers in 2013, with 200,000 of the decline coming from Millennials. Since Millennials represent 25 percent of the nation’s population, this decline is devastating to the sport.
So, why don’t Millennials play golf?
Millennials value ease, speed, and efficiency in their endeavors. Raised on the internet, “instant gratification” is the expectation. Over four hours of essentially doing the same thing over and over is against the idea of speed and efficiency.
They are also the most inclusive generation. Millennials want to share their experiences with as many friends as possible. Golf says, “all of you can play, as long as it no more than four. Boomers, on the other hand, value exclusiveness. The idea of paying to have the privilege of exclusive membership to play golf is counter to Millennial values.
Millennials are the most diverse generation ever, and they have embraced diversity like no other generation. The lack of diversity at Augusta National, the crown jewel of the sport, is just one example of how golf does not qualify as diverse. Mark King, former President of Taylor Made/Adidas Golf cited the lack of “minorities playing, women coming into the game” as reasons for golf’s decline.
Millennials’ most important crusade is the environment. Golf is not green. Many courses smell like a chemical factory. Courses require tremendous amounts of water to stay in shape.
Millennials were hit hard by the recession. This caused them to seek value in every purchase. They are willing to spend on things they think are important, but always look at purchases with a value lens. Spending big money on rounds and equipment apparently does not connote value to Millennials.
Golf rules are Byzantine. Compare the USGA regulations to the “Spirit of the Game” in a favorite sport among Millennials, Ultimate Frisbee: “Spirit of the Game. Ultimate relies upon a spirit of sportsmanship that places the responsibility for fair play on the player.” This is essentially the only rule in Ultimate.
At least for the time being, the values of golf do not match up with the values of Millennials. Golf has lost the Millennials.
In 2015 Congress passed the Protecting Americans from Tax Hikes (PATH) Act. One of the main provisions of PATH was to slow down taxpayer refunds for the Earned Income Tax Credit (EITC) and/or the Additional Child Tax Credit. The slowdown was intended to give the IRS more time to investigate for fraudulent claims. It is estimated that about 28 million taxpayers filed for EITC in recent years.
The effect of this slowdown in payments means that the IRS will not be issuing EITC refunds until February 15, 2017. Taking weekends, processing time, and the Presidents’ Day holiday into account, estimates are that refunds will not begin to be received until February 27, and many may extend into March.
EITC benefits low to middle income households with children. It allows parents to claim up to $3,300 for one child and more than $6,250 for three children. The magnitude of the credits is in the tens of billions of dollars.
Since most low to middle income families are living paycheck to paycheck, this tax credit is a financial windfall. Many low to middle income families spend their tax refunds as soon as they receive it.
The timing of the refund has a profound impact on sports retail, particularly sneaker sales. In years past, processing glitches have delayed refunds and the industry suffered until the refunds hit.
We can expect a soft February for sales of athletic footwear and apparel due to this new law. While the industry will make up these sales in March, it will make trending difficult and retailers and brands anxious. Coupled with a late Easter this year, Q1 will be a challenging one for the sports industry.
My colleague Marshal Cohen recently wrote a blog, “An
Urgent Message for Retail,” and in it he states that during the holiday season, “…consumers appeared to have grown numb to the early and constant promotions” and “[w]e have witnessed the demise of promotion’s reign as king of shopping influencers.”
The sports industry has been relatively immune to the cancer of relentless promotions – at least until Holiday 2016.
Sure, there has been discounting in the sports categories that are in systemic decline. Golf and fitness equipment like treadmills are two that come to mind. For the most part, though, the sports industry has been able to avoid counting on deep discounts to drive sales. Until now.
Holiday 2016 will go down as one of the most aggressively promoted years in sports retail. Here are some examples as to why, and what it means for this year.
While the massive sweatshirt category has been in decline for more than a year, brands and retailers seemed to think that it would magically bounce back. Instead, it took “40% off” pricing to produce a meager sales result and clear distressed inventory. With such deep discounting this leads me to think, what will it take to grow the business in 2017? Also, mid-market footwear retailers began boot promotions with “Buy One, Get One Free” starting on Black Friday. No one makes money with deals like that. Some brands also began to weaken or ignore their own “Minimum Advertised Price” policies in an effort to spark sales and clear stocks. This led to a free-for-all discount environment, which will continue into 2017.
On another note, NPD has found on several occasions that consumers are not purchasing products, including clothing and accessories, adorned with giant logos the way they used to do. Yet, sports brands and retailers trotted more of the same, in the hopes of achieving a different result. This caused markdowns to ensue.
In addition, an athleisure “bubble” was created as more fashion brands and retailers tried to grab a piece of the still strong category. Hundreds of new brands tried to jump in on the performance apparel boom. As they fail in 2017, the market will be flooded with deep discounts on poor imitations of activewear.
Of course, the ongoing retail rationalization has yet to improve this toxic situation. We won’t see any relief for this in 2017 either. More sports stores will likely close in 2017.
The sports industry is headed down the path of the teen retailers, where steeper discounts are no longer effective in clearing stockrooms, let alone driving sales and profits.
So how does the sports industry avoid this slide? We must get back to the core principles that built this business.
The sports industry is an inspirational and aspirational business. We inspire others to get fit and to improve their sports. Participants aspire to make themselves better. A race to bottom on price does neither.
Unrequited demand is another fundamental strategy in the sports business. If demand is not met, there is no need to promote.
Innovation has always been a cornerstone of the sports industry. Even in the distressed sweatshirt category, innovative and more technical products sold well this holiday and posted big increases. We must find ways to keep innovation strong. This will help fend off the athleisure bubble as well.
The sports industry has always been about premium and exclusive products. We must emphasize the premium nature of our business and avoid trying to grow by the lowest prices.
Segmentation has also been a core principle in sports. We must double down on having clear and distinct lines for different categories of retailers. Brands must also intentionally rationalize the number of retailers in the space, buy elevating the winners and letting the others improve or fall by the wayside.
Finally, the sports industry must stop chasing artificial targets set by Wall Street. Driving to an arbitrary growth target is a recipe for disaster. Brands and retailers must do what is right for the long term health of their businesses, rather than a short term and inconsequential goal set by the stock market.
If the sports industry can return to its core values, it has a much greater chance of being healthy once again.
About every month or so, someone in the mainstream media will “discover” that sneakerheads exist. They often seek me out to ask what drives this phenomenon and what their value is to the market.
A formal definition of a sneakerhead is a person who collects, trades, and/or admires sneakers as a form of hobby. Sneakerheads, like most collectors, are passionate and dedicated to their subject. Many are very knowledgeable about the origins and history of sneakers. Many spend a great deal of time and money studying the category and its past, while building their collections.
I have a deep respect for the passion, commitment, and knowledge that sneakerheads possess.
Sneakerheads have been around since brands began to associate athletes with particular shoe styles. In the 1970’s, the best New York City street ballers had the coolest and rarest shoes, which were supplied by the brands. When Nike reintroduced the Air Force 1 at the behest of East Coast urban retailers, the fervor ratcheted up a notch. Serious collecting started with the first Jordan shoe, banned by the NBA. Other brands entered the act by signing players and creating special shoes just for them. Later, when Nike began re-issuing “retro” Jordan’s, new and old collectors sought to start or fill in collections. Then sneaker collecting was off to the races.
With the advent of the internet, we reached a whole new dimension in the world of sneakerheads. Isolated collectors could now connect with each other. Rumors about releases and special products bounced all over the web. Opinions about favorite shoes could be shouted (and shouted down) across time zones and continents. All of this helped heat up the sneakerhead world even further.
And then came ways to buy and sell your favorite sneakers through peer-to-peer websites like eBay. This changed the game dramatically. Soon, rare styles were selling for multiple-times their original retail value. Prices escalated, which brought on opportunists.
Finally, brands began to do collaborations with artists, musicians, and celebrities, creating specially designed, extremely limited edition styles. The brands intended for such shoes to give them further hype and credibility within the sneakerhead community. Because collaborations were very limited in quantity, they became highly desirable. Collaborations created yet another market for collectors.
Very quickly the sneakerhead world went from collecting for fun to profiteering. As resale prices escalated on limited edition shoes, a new type of “sneakerhead” came into being: the speculator. Looking merely to make a quick buck (or hundreds of quick bucks), many more buyers got into the game with the sole intent of flipping limited edition shoes, sometimes on the same day they bought them.
Sneakerheads have always sold and traded their shoes, but never to this degree and intensity. The introduction of a large number of resellers has raised the resale prices of shoes and kept traditional collectors from acquiring the shoes they coveted.
Sneakerhead sales information has always been a little tough to pin down, but one angle is to look at the sales of the kinds of shoes that sneakerheads are interested in and make an estimate. These shoes are generally Brand Jordan retro or marquee basketball shoes (endorsed by big-name players), or shoes tied to collaborations (though these are very limited in terms of the number of pairs available and don’t amount to much in sales). Of course, we cannot assume that every one of these shoes went to a sneakerhead; however, even if we take all of these shoes into account, the portion is still less than 3 percent of the total U.S. athletic footwear business, which is hardly a substantial number.
Since sneakerheads have a rather minor impact on overall retail sales, how else can we assess their impact on the business?
The sneakerhead “press” has little influence outside the sneakerhead community. The sneakerhead media is comprised of everything from very large and sophisticated publishing organizations, to guys doing YouTube videos in their mom’s basement. All live in fear of offending the brands that they depend on to keep them fed with pictures and information about upcoming releases. In the sneakerhead press, there is very little original content and frequent cut-and-pasting of content from other sources. Because the sneakerhead media is unwilling or unable to speak the truth to power, their influence is very limited, except inside the echo chamber that is sneaker culture.
Individually and for the most part, sneakerheads lack a voice outside the echo chamber. Nevertheless, astute brands and retailers are listening to their collective voice. If the overall sentiment is very good or very bad about a particular product, color, or material, brands and retailers should adjust their plans accordingly. As I have often said, the most important thing to remember in using social media is not to talk, but to listen.
Sneakerheads are a deeply committed community of collectors and aficionados. They do not represent a major portion of sneaker sales, and while they do create a lot of hype and buzz that can be good for brand equity, this brand equity is difficult to measure. Within the echo chamber, the voices of sneakerheads are loud, but those voices do not carry.
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.