U.S. Market Faring Better than Europe, But There Are Some Bright Spots In Both Markets
PORT WASHINGTON, N.Y., December 18, 2008 – Economic challenges are taking a toll on sales of athletic footwear and apparel, according to leading market research company The NPD Group, Inc. In the European Big Five market* during the quarter ending September 2008, value sales declined 8% on apparel and 5% on footwear, the firm reported. Downturns were softer in the U.S. where athletic footwear was down only 1.5%, and the active apparel market posted a modest 0.7% gain for the three months ending in September.
While the European market was down overall, there were bright spots, NPD reported. While sales of sports apparel and footwear intended for casual use were down, sales of apparel and footwear intended for sport use saw increases. For footwear bought mostly for sport use, the European market scored a 5% increase in units for the quarter compared to a year ago. In apparel, for Tops intended for sport use, unit sales were up a robust 12%.
The trend for purchases not primarily for sport use tells a different story. Sales of athletic footwear declared by the consumer as mostly not intended for sport use were down 7% for the quarter compared to a year ago. The same is true for apparel; when focusing on sport style tops not purchased for sport use, unit sales were down 10%.
“Businessmen will not give up their Sunday jogging when the going gets tough,” said NPD sport industry expert Renaud Vaschalde. “If you look at sales related to sport use, the dynamic of consumption is still there, at least in units. On the other hand, if you look at the market intended for casual use, the story is quite different. After years of development based on exploring extension of usage beyond sports, this side of the business is falling off as consumers cut their spending.”
According to Vaschalde, higher pricing may be behind the cutbacks. As the sport style garments are generally branded and more expensive than traditional casual wear, this part of the market is logically more impacted by the recession. This statement is true for the mass market but not valid for the luxury sport style niches explored by some brands in selective channels of distribution.
Projecting the current trend for the last quarter of 2008, Vaschalde believes the Big 5 European sport footwear market will end up the year 2008 down around 5% in value and sport apparel will be down around 8%, as no change is expected in the short term, with most of the downward trend generated by continued lower sales on sport style footwear and sport style apparel for casual use.
“For 2009, we expect the market to get better in Europe as a result of sales stabilizing in units and in prices as well. The year will not show any major change in the demographic structure of the market,” Vaschalde believes. “On the retail side, we will probably continue to observe a gain of share for the sport specialized distribution compared to unspecialized distribution, a move anticipated for instance by Carrefour which announced last week that they are putting an end to some of their Non Food selling activities in big French hypermarkets. Also we believe sales from own retail/manufacturer outlets and home shopping (through the Web) will continue to soar in the next 12 months.”
*NPD defines the Europe Big 5 Market as UK, France, Germany, Italy, and Spain.
Downturn trends have been much softer in the athletic footwear market and apparel markets than for the larger economy as athletic footwear was down only 1.5% and the active apparel market posted a modest 0.7% gain for the three months ending in September.
In the U.S. also, there have been bright spots as athletic footwear sales to men and active apparel sales to women have continued to post solid gains over the same 3 month period.
Sales of athletic footwear to men 13+ used for “Casual/Everyday Use” were up 8.1% over the same three month period last year driven by a 10% climb in average sale price (from $42.32 up to $46.56). “Sport Use” athletic footwear sales were up with men 7.2% driven by an 8.5% increase in average sale price (from $44.75 to $48.57). All other age and gender groups were down over the same period.
The surge in sales was driven primarily by “Casual/Everyday Use” Basketball (where ASP’s were up 20.2%) and “Sport Use” Running (where ASP’s spiked 15.2%). This is consistent with what NPD has observed with a surge in Basketball Sales from Brand Jordan “Fusion” models (AJF 3, 5, 12, and 20) and continued strong sales of Nike Air Force 1’s. Running has seen a similar rise as higher-priced models have surged especially the visible technology products (Shox, Gel, Max Air, etc.)
Active Apparel sales posted a slight gain as sales to Men were down -4.6% while sales to Women were up 2.0%. Driving sales for Women was clothing purchased for “Sport Use” which was up 5.9%, while Men’s “Sport Use” was down -7.5% driven by a -10.6% drop in average sale price. “Non-Sport Use” apparel saw similar softer trends as Women’s Sales were up 1.3%, while Men’s were down 3.3%.