Footwear Market Research & Business Solutions

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.

The overall state of the U.S. outdoor business has not been very good. According to data from NPD’s Retail Tracking Service, dollar sales are down year-to-date through May 2017 compared to the same period one year ago, across the men’s, women’s, and kids’ markets.

Some of the reasons are well-known. The closing of The Sports Authority and Sport Chalet created a void that has not been filled. Outdoor products sold through the athletic specialty/sporting goods channel have declined in the high single-digits. At the same time, little of these lost sales have been picked up in the outdoor specialty channel, where sale are down in the low single-digits for the year so far. Even sales in outdoor e-commerce have declined.

The ongoing retail rationalization has had an impact on the entire retail business. Retail sales in general are slowing. Consumers are spending more money on travel and experiences, and less on things like shoes and shirts. The cold and wet spring in much of the nation did not help. All these are part of the problems in outdoor retail.

The sports specialty business remains under siege as well. As we look across that landscape, sales are tough for specialty categories like cycling and running. Outdoor specialty is not immune to these forces. There is likely a “silent” rationalization happening in the specialty businesses where small stores and chains are shuttering as well.

Looking at specific categories, the outdoor accessories business declined in the high single-digits for the year so far. The luggage business did trend positively, a reflection of the robust travel business. Travel remains a great opportunity for the outdoor industry to exploit. The bag business is down in the mid-singles, with only sports equipment bags trending up. Sunglass sales are down in the mid-teens.

Outdoor apparel declined in the mid-singles. The cool spring no doubt helped certain categories as headwear, handwear, cold weather undergarments, and outerwear all posted gains. This, however, was offset by declines in sportswear and sweats/active bottoms.

Outdoor equipment sales were down in the low-teens. Equipment accessories also declined in the low-teens as a sharp drop in cookware and instruments business offset growth in coolers, where the soft-sided business is surging.

The camping business, a bright spot a few years ago, posted a high single-digit decline year-to-date. The hot climbing business was also down, dropping in the low single-digits.

Footwear sales were also soft, down in the high single-digits, as very weak running shoe sales tempered low single-digit growth in outdoor footwear.

When we look at the outdoor business by brands, we see that those including Patagonia, Marmot, SmartWool, Arc’teryx, Osprey, Kuhl, and Keen all had increases. The North Face, Columbia, Merrell, and YETI all experienced declines for the year so far. 

All in all, it has been a tough year for the outdoor industry. While there are opportunities like travel to exploit, the industry must respond to the ever-changing retail business.

There has certainly been a lot of bad news for the U.S. sports industry recently. We cited the dramatic slowdown in the sneaker purchases by Hispanics, as well as a pessimistic prediction for back-to-school.  The short term prospects for the industry are not very bright.

Nevertheless, there are some bright spots for the industry which may help reverse its fortunes. I describe those opportunities as PUNY: Premium, Unique, New, and Young. Let’s explore these ideas.

The athletic shoe business in the U.S. has always been built on aspiration and inspiration, with emphasis on better price points. Conspicuous consumption has been a hallmark of the industry. While today’s highly charged promotional environment would seem to argue against this trend, we are still seeing strength at the top price points.

In every channel, much of the growth is coming from the high end of each channel’s pricing. The top seller list is dominated by higher priced items.

There is bifurcation in pricing where the growth is split between better prices and opening prices. Premium products can serve as an effective strategy to build the business.

When asked to describe themselves in one word, Gen Z most frequently called out “unique.” Gen Z has indicated a willingness to spend more for unique products that help this generation define themselves. This cohort wants to buy unique products from unique brands, sold through unique retailers.

However, this uniqueness must not stray too far from the core. I describe this attitude as, “I want to be different, just like my friends.” This opportunity should bolster smaller brands and retailers. Exclusive styles and colors are one way for brands and retailers to leverage this trend. Personalization and customization are also effective strategies.

Millennials and Gen Z are both attracted to the new. They are early adopters of everything from tech to fashion. Technology and innovation are driving their attraction to the new. New products are often unique as well as premium.

Combined, Millennials and Gen Z now represent more than half of the U.S. population. The share of each cohort to the total grows every day. On top of that, Gen Z is now old enough to enter the workforce and become an even stronger economic force.

On the other hand, the Boomer rank has declined by about one million per year – a rate that will only accelerate. Chasing a declining Boomer population is not a recipe for success in this industry.

The one issue with these PUNY opportunities is that not all of them are at scale to offset the weaknesses elsewhere. Brands and retailers must seize these opportunities to reverse the declines the industry faces.

I am more pessimistic today than I was in December about the short-term prospects for the U.S. athletic footwear and apparel markets.

Late last year, my expectation was that 2017 would be an average year, with a weak first half offsetting a strong second half. The anticipated soft sales in February occurred, but the rebound has not materialized.

Then I discovered the Hispanic spending slowdown, as I wrote about recently. Athletic footwear sales to Hispanics have been quite soft, after several years of good growth. As Hispanics represent more than 20 percent of the U.S. athletic footwear market, this slowdown has had a significant impact on the business, and I expect that it will contribute to a soft back-to-school performance for athletic footwear. All brands and channels are affected by this Hispanic slowdown, but Nike, Brand Jordan, Vans, and Skechers are hurt the most.

Classics, lifestyle running, and casual athletic will remain the strongest growth categories. Performance footwear will remain soft for back-to-school, although the declines in basketball will moderate with easier comparisons. In line with this, technical running brands will continue to struggle.  Nike has had soft sales results in the U.S. and there is nothing to suggest that this trend will get better for the back-to-school season. Representing about half of the total athletic footwear market share in the U.S., Nike sales impact the entire industry. My expectation is that Under Armour footwear sales will struggle for back-to-school, even with the expanded distribution. 

All in all, I expect that athletic footwear will post a low to mid-single digit decline for the back-to-school season. Given the changes to advertised pricing policies, we can expect this to be the most promotional back-to-school in the 17 years I’ve been doing research.

I also expect that the U.S. activewear market will be challenged, but for different reasons. Since the beginning of the activewear movement, hundreds of fashion brands have rushed into the category to try and grab some of the gold. Retailers are now filled to the rafters with sweatshirts and yoga pants, most of which are made by brands that don’t know how to make performance apparel, and sold to retailers who don’t know how to sell performance apparel.

This push has caused a glut in the market that will take time to flush out. The core activewear brands and retailers are getting crushed under the increased and inferior competition.

Both Nike and Under Armour apparel will most likely struggle for back-to-school, while Adidas will thrive. The more mass brands should also fare well this season.

I expect that activewear sales during back-to-school 2017 will decline in the low single-digits.

As in athletic footwear, this will be one of the most heavily promotional environments seen in decades.

U.S. athletic footwear sales have been a puzzle this spring. While I accurately predicted the weakness due to the late income tax refunds and late Easter, the expected bounce-back simply did not happen. The sales trend was below expectations in March, April, and now May.

Looking for explanations, I went back to investigate a trend that I began to see late last year, and made a startling discovery. Sales of sneakers to Hispanics in the U.S. have slowed dramatically from the previous trend. Data from The NPD Group’s Consumer Tracking Service shows that sales of athletic and outdoor footwear to Hispanics grew in 2016 in the mid-teens, and accounted for nearly all the growth we saw last year. Hispanics represented about 23 percent of sneaker sales in 2016. Since the beginning of 2017, however, sales of sneakers to Hispanics slowed to a high-teens decline. No other cohort saw this kind of slowdown.

This slowdown accounts for a change in trend that can be measured in the hundreds of basis points. The change in shopping behavior has been significant in the disappointing results so far this year.

The channel hardest hit by this change in behavior has been shoe chains, followed by sporting goods and national chains; however, no channel was immune to the slowdown.

Looking at the results by category, work/occupational footwear sales to Hispanics improved and outdoor footwear sales stayed about the same. Performance footwear took the hardest hit, especially in the already weak basketball, skate, and running categories. Sport leisure was also markedly weaker this spring than last year.

From a brand point of view, the slowdown in purchases by Hispanics greatly impacted Vans, Nike, Skechers, and Brand Jordan. Adidas and Puma (two hot brands right now) actually strengthened.

Why has this change in behavior occurred? A recent comment from Robert Kaplan, the president of the Federal Reserve Bank of Dallas, to USA Today, may offer a clue. He said that millions of immigrants have become “more likely to save than to spend,” and this will “have some muting effect on consumer spending and therefore GDP growth.”

Whatever the reason, this change is important. My expectations for the back-to-school season and beyond are now much lower due to this Hispanic slowdown.

In the mid-‘90s, as a junior in college, I asked my boyfriend, Ross, (now husband) to buy me shoes for our one-year anniversary, rather than roses. This may have seemed a bit offbeat and forward to some, but it was logical to me. I figured that he might as well put the money towards a gift that would last more than five days. The pair in question: Steve Madden chunky black loafers. Oh, and shout-out to Fontana’s, the over 100-year old independent shoe store that still resides on Eddy Street in Ithaca, NY. 

The nostalgia set in recently, after I read the news about Steve Madden re-releasing one of their other iconic ‘90s styles, the Slinky Sandal.  If I close my eyes and think of my group of friends wearing those sandals, I can hear the sound of the footbeds slapping against our heels as we walked around the streets of New York City, not long after graduation. And Steve Madden isn’t the only one going deep into the closet - Rocket Dog updated their popular ‘90s platform flip-flops in collaboration with celebrity stylist Elizabeth Saltzman. Gal Gadot recently wore these on the red carpet for the Wonder Woman premiere!

Of course the retro trend is bigger than these two individual items. Athletic classics have been a key growth area in the footwear industry for a number of years now – dollar sales of this segment grew 21 percent in the last 12 months ending May 2017, and over 50 percent in the last 24 months.* Other industries are tapping into consumers’ sweet spot for history with their product launches and reinterpretations. Think Polaroid’s Socialmatic camera, Nintendo’s limited release of the NES Classic Edition, reboots (pun intended) of old TV shows like Full House and Will & Grace. And, who would have expected that dollar sales of paper appointment book/planners would be up 16 percent during the past two years?*

I think it is definitely about time that we start recognizing the icons of dress and casual footwear as well. Of course each organization will act according to their own brand, product, and merchandising strategy, but why not think about keeping some of the classics (or future classics) around for a while if they are selling well? If the same sneakers can be available on the market for 20, 30, or even 40+ years in some cases, why can’t select shoes, sandals, and boots enjoy longevity as well? With so many influences on fashion today, and consumers looking to define their own style, old and new can co-exist better than ever.   

Therefore, I am very happy to see that this retro trend is hitting the fashion footwear market, and I hope to see more iconic styles make a comeback. In the meantime, if you need me, I’ll be at home bingeing on the Twin Peaks revival.

*Source: The NPD Group, Inc. / Retail Tracking Service

Earlier this month, I wrote about the slow start to the spring sports season. Looking at the traditional fall season sports, including soccer, American football and basketball, I am expecting sales to move in a similar direction.  

Soccer sales overall have been as soft in the U.S. as they have been in Europe. Soccer equipment was a $700 million business in the U.S last year; and sales were down in the low single digits in 2016. Soccer balls, the largest category, declined in the low single digits, and soccer protective gear declined by a similar amount, while soccer training aids had a nice increase. Sales of soccer boots were down in the high single digits.

Both Adidas and Nike, the two largest soccer equipment brands in the U.S, had soft sales in 2016.

American football equipment sales in the U.S. grew in the low single digits, driven by a high single-digit increase in footballs, the largest category. Most other football equipment categories declined for the year, including football cleats which declined in the low teens.

Wilson held the largest share of the football equipment market, with its sales growing in the low teens. Nike and Under Armour football equipment both posted declines.

Basketball was one of the best-performing categories for 2016, with sales up in the high single digits. Hoop systems (a high ticket item) had great sales, which increased in the high single digits. Basketballs grew in the mid-singles, and accessories and training aids also grew. Basketball footwear declined in the high teens in 2016; however, we know from NPD’s Consumer Tracking Service that the majority of basketball shoes are not purchased with the intention of wearing them for sport.

The four largest basketball equipment brands—Spaulding, Lifetime, Wilson, and Nike—all grew in 2016.

Given the overall soft start to 2017 in sports equipment, I do not expect significant growth in the fall sports market.

Source: The NPD Group, Inc. / Retail Tracking Service, Annual 2016

Unconventional springtime weather that’s more akin to the late fall season is having a dampening effect on U.S. team sports equipment sales. With the recent expansion of The NPD Group’s Retail Tracking Service, we now have a more complete picture of the nature of team sports in the U.S. This blog will focus on spring sports including baseball, softball, racquet sports, lacrosse, and volleyball. In some states soccer is played in the spring, but the bulk of sales come in the fall, so soccer is not included here. I will talk about soccer and basketball as fall sports in a later blog.

Baseball/softball is the largest spring sport in terms of U.S. merchandise sales, at about $1 billion. Sales for full-year 2016 declined in the low single digits. The largest category is baseball/softball bats, with sales being flat for the year. Gloves and mitts, the second largest category, experienced a low single-digit decline. Batting gloves dropped in the mid-singles, while balls saw low single-digit growth. Trends have not yet improved in 2017; year to date through April, baseball/softball equipment sales were down in the high single digits. The cold and wet spring has been a factor in keeping kids off the field. Also, as a result of new bat regulations going into effect next spring, retailers and brands are destocking ahead of the change. Most major brands in baseball/softball are in decline for the year so far, with Franklin as an exception.

Similarly, racquet sport sales for 2016 declined in the mid-single digits. Racquet sales were down in the mid-single digits, and continue to be down, in the low single digits, thus far in 2017.

Lacrosse equipment sales grew in 2016, as the sport continues to spread across the country. More and more schools are adding lacrosse to their sports programs. But year-to-date sales are down in the mid-single digits, again being impacted by the wet weather.

Volleyball sales also grew in 2016, and are up nearly 10 percent for 2017 to date. Since this sport is often played indoors, the weather has had little influence.

The spring sports business remains at the mercy of weather, and a lack of growth in terms of sports participation is not helping the situation. Though we cannot control the weather, it is important for industry players to garner greater interest and involvement in sports participation, for the health of our youth, and of our industry.

Source: The NPD Group, Inc. / Retail Tracking Service

As I wrote about here, the macro environment for golf is pretty unpleasant. Courses are closing, brands are shuttering, retailers are going out of business, and young people are not adopting the game. These are all indications of a sport in decline.

With the recent release of The NPD Group’s tracking service for team sports equipment, we can see further evidence of this deterioration. Golf equipment sales for the full year of 2016 were down in the low single-digits. Club sales, an indicator of new players adopting the game, were down in the high single-digits. Golf balls, an indicator of rounds played, declined in the low single-digits. One bright spot was growth in the accessories and grips category.

It has been a mixed bag for the major equipment brands. Callaway equipment sales for 2016 grew in the mid-teens, while Taylor Made experienced a decline, as did Nike, which previously announced its intention to exit the golf equipment business. Cobra Puma Golf experienced a low-teens increase for the year. Wilson and Titleist sales declined, while FootJoy had a low single-digit increase. Nike Golf shoe sales grew in the low single-digits for the year, with Skechers sales tripling. Nike and Adidas golf shoes both grew as well, while FootJoy had a decline.

Golf apparel saw a low-teens increase for the year, driven by knit shirts. Knit shirts were paced by big increases from Greg Norman and Under Armour.

For 2017 to date, sales of golf equipment are down more than 20 percent, with club sales particularly soft. Golf shoe sales grew in the high teens, while apparel declined about 25 percent.

With sales struggling, the golf business is now a market share game. Brands and retailers can win, but they will do so only by taking share from others.

Source: The NPD Group, Inc. / Retail Tracking Service

This week, NPD reached another important milestone with the launch of its team sports equipment tracking service: we now provide the most comprehensive reporting available on the entire universe of team sports equipment sales in the U.S. With this dataset, retailers and brands will be able to track and monitor overall trends; identify areas that  are over-performing or underperforming in the market; measure lift from promotions; and use historical and current volumes to enable informed decision-making.

At a high level, the $6.5 billion U.S. team sports equipment market grew by 1 percent in 2016*. This soft overall growth comes as no surprise given the negative trend we’ve seen in terms of sports participation in the U.S. More specifically, there were healthy gains in equipment categories including basketball, lacrosse, sport bags, and protective gear, which were offset by losses in golf, baseball/softball, soccer, and hockey.

Team sports equipment is a very brand diverse market, with many small brands making only a handful of items. The top ten brands make up only about half of the market. Of the top ten equipment brands, the growth drivers in 2016 were Wilson, Callaway, and Spalding.

Given the cool, wet weather and delayed tax refunds, dollar sales were down in the first quarter of 2017. I expect sales to improve in the months ahead, as warm weather unfolds and parents equip their sports-playing children with their gear heading into the back-to-school season.

*Source: The NPD Group, Inc. / Retail Tracking Service

Data is representative of retailers that participate in The NPD Group's Retail Tracking Service. NPD’s current estimate is that the Retail Tracking Service represents approximately 70 percent of the U.S. retail market for team sports equipment.

In a recent blog I highlighted some of the major differences between Millennials and Generation Z. I get a lot of questions on how to understand the profile and values of Gen Z, and for brands and retailers it’s certainly necessary to understand this important next generation.

When asked to describe themselves, the most used word by Gen Z is “unique.” Gen Z wants to buy unique products, from unique brands, that are sold at unique retailers. They have also expressed that they’re willing to pay more for such unique products. Taking it a step further, they also want products that are tailored “just for me.”

Gen Z also seeks meaning in their work, relationships, products, and brands. They value relationships above all else. This makes them both tolerant and respectful. Gen Z also appears to have more “old school” work ethics, and I expect they will be hardworking, determined, dependable, and independent.

Gen Z believes that the community, if it comes together, can solve all problems. “Life hacks” (meaning a trick, skill, or shortcut that increases efficiency and productivity or solves problems) are revered. This makes Gen Z intensely collaborative.

As a generation that is out to change the world, Gen Z also wants brands to take visible stands on social issues. Human rights are the primary cause for Gen Z, and equality is non-negotiable. We can also expect more social change as this cohort gains the right to vote. With that, brands can no longer claim to be apolitical. If Gen Z does not agree with a brand’s values, they will take their business elsewhere.

For Gen Z, education is on-demand. They will learn things when they need to know them. We must learn new ways to teach them. In the Gen Z world, everything is “smart,” and all objects have behaviors.

Gen Z has moved from self to selfies. They have given up virtually all concerns for privacy, and they share everything. This makes them ripe for contextual marketing.

Brands and retailers must adapt to this new generation. In order to successfully serve Gen Z, brands and retailers must again adjust the way they market.

Because Gen Z wants a relationship with brands, they will seek out brands that share their values. Brands must earn their influence with Gen Z, and earn it every day.