Sporting Goods Industry Expects More Green Shoots in 2022
The pandemic was a boon to the sporting goods and outdoors businesses and that popularity is expected to continue into 2022 — and beyond. But the production and shipping delays that continue to wreak havoc on the supply chain may take a bite out of sales this holiday season.
That was the projection from Matt Powell, vice president and senior industry adviser of The NPD Group who presented his outlook at the Sports & Fitness Industry Association’s Trends & Insights 2021 conference on Wednesday.
“Black Friday and Cyber Monday will disappoint,” Powell said, pointing to the “lean inventories” that will “dampen the promotional plans of most retailers.” So consumers who didn’t heed the warnings and are waiting to make their holiday purchases or looking for bargains may find themselves left with few choices.
For the fourth quarter, Powell expects athletic footwear to increase in the midsingle-digit range and active apparel to rise in the high-single digits with strength in categories such as trail- and hiking-specific product. Even so, he is predicting only that it will be “a good holiday, not a great holiday, for the sports industry.”
Even though holiday sales may be impacted, Powell expects the benefits consumers have realized from exercising and paying more attention to their health these past months will become permanent habits. And socially distanced activities such as running, hiking, golf, tennis and cycling will continue to be “the stars of the industry,” Powell said, as some consumers are still showing reluctance about being inside and in crowds.
He also cautioned brands and retailers not to overextend themselves next year. “I’m pessimistic about the 2022 outlook,” he said. “Everyone is making pots of money,” but stocking up now could prove to be disastrous later. “Chasing the last sale is always the least profitable,” Powell said.
Earlier in the SFIA event, Alexander Thiel, partner in McKinsey & Co., presented an overview of the sporting goods industry and the key trends expected to impact business in the future — and he was more bullish than Powell.
He said the global sports market is expected to grow to $395 billion by 2025, with annual growth of 9 percent. Driving those gains will be China, with 13.7 percent annual growth and the U.S. with 9 percent annual growth.
He said sporting apparel has been the highest growth category this year as people continue to embrace being active. As a result, brands and retailers that are well-funded, niche brands with a distinct point of view and fashion brands who have jumped into the market are expected to be the winners. Those that are too slow to change, rely on offline sales and have limited capital will not fare as well.
For all companies, Thiel said they need to be cognizant of changing consumer behavior. Less than 30 percent say they have gone back to the exercise routines they had before the pandemic and while that may change next year, many are still choosing working out at home or outdoors instead and are using digital options rather than physical gyms to lead them in their workouts.
Another consumer trend that will impact business is the growing popularity of livestreaming, which has shown to increase digital sales. The trend started in China and is quickly expanding across the globe, he said. “It will come to the U.S. in no time, so get ready for it.”
Sustainability will also continue to gain in importance, he predicted, with 65 percent of consumers reporting they are planning to buy high-quality durable items, 57 percent saying they’re open to repairing fashion items and 71 percent expecting to extend the lifetime of the items.
Turning to retail, Thiel said direct-to-consumer sales represented 65 percent of the total sports apparel business last spring, but that number dropped to 44 percent this year as stores reopened. He expects that figure to stabilize at around that percentage. “Brick-and-mortar has an important role to play, it’s here to stay,” he said, predicting about a 5 percent growth rate for physical stores.
He also took on the supply chain issues, which include a production slowdown, particularly in China because of a shortage of electricity and lockdowns in Vietnam. While those issues are not expected to be resolved quickly, he did say the “transportation bottleneck” and surge in shipping prices should improve by the first quarter of next year.
Other high-profile executives who participated at the SFIA event included New Balance president and chief executive officer Joe Preston, who said he remains “bullish on long-term trends for footwear and apparel” as consumers continue to embrace their newfound sports of running and walking for fitness. “It’s a very positive trend for the industry in general,” he said.
But in addition to offering product for these activities, Preston said New Balance is also addressing the larger issue of mental health, pointing to the company’s new content series, Beyond the Run, that is intended to communicate the wellness benefits of staying active.
In another session, Joe Dudy, president of Wilson Sporting Goods and Jim Gerson, president of Speedo USA, were also upbeat about the future as participation in golf, tennis and swimming, among other sports, continues to rise.
Dudy said in addition to the core customer, consumers who are less concerned with their scores and more focused on having fun should also present an opportunity for brands and retailers. “That should lift the total market,” he said.
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