In 2017, the total estimated value of the global athletic apparel industry was $168 billion where US stays at the top around the world.
The trend suggests that the product life cycle of this industry is about to reach maturity phase but despite of that what retains number one position of U.S in sportswear is the fact that growth of this industry has averaged around 4% even when sales were all time low.
- Definition / Scope
- Market Overview
- Top Market Opportunities
- Market Trends
- Industry Challenges
- Technology Trends
- Other Key Market Trends
- Market Size and Forecast
- Market Outlook
- Technology Roadmap
- Distribution Chain Analysis
- Competitive Factors
- Key Market Players
- Strategic Conclusion
Definition / Scope
Sportswear is a type of clothing which is worn for the purpose of physical exercise or for particular sports training or performance.
Generally, these are used for comfort, safety or practical use such as while playing sports or working out on different kinds of exercises.
For instance, the sportswear include segments such as shorts, T-shirts, polo shirts, tights, tracksuit, runner’s suit, gym suit etc. In other words, it is also known as active wear or athletic wear.
In 2017, the total estimated value of the global athletic apparel industry was $168 billion where US stays at the top around the world. The trend suggests that the product life cycle of this industry is about to reach maturity phase but despite of that what retains number one position of U.S in sportswear is the fact that growth of this industry has averaged around 4% even when sales were all time low.
In the year 2016, the Sports Authority in USA was faced with bankruptcy which decreased the normal sports apparel sales by 50% but the athletic segment saw an overall rise in 2% and fitness &performance sportswear saw an overall increase of 2.9% respectively.
Some other segments were identified with fall and these were particularly belonging to a specific sports. For instance, football footwear shrunk by 2% whereas the golf apparel was faced with a 2.4% decline.
In USA, within the sportswear market, the bottoms are more popular with an estimated revenue of $242 million and tops sales accumulated to $200 in revenues in 2016. The growth rate of the overall sportswear up till 2020 is expected to increase by 30%.
Top Market Opportunities
In a survey, the older segment customers asserted that they were likely to visit the store after watching video about the brand or product. The figures revealed that 32% 55 above shoppers and 38% millennial’s had the same perception.
Thus, this suggests that the video ads are more appealing to the customers and it drives their purchase decision of athletic and sportswear. This can be the marketing tool that the companies can use to increase their brand popularity.
In USA, 52% of the customer base is occupied by men in the athletic apparel industry but the recent rends reveal that in high schools, the participation rates for women in athletic activities have almost doubled since the past 35 years.
As women in the United States hold up to $15 trillion of purchasing power annually which is substantial. Thus, companies must focus and keep introducing new and improved apparel catering to women so that revenues can be generated from the women’s segment too.
The present day China is the dream of all the athletic and sportswear retailers because there are a mix of factors such as the population of China currently consists of 415 million millennial’s and increasing middle class households driven towards health and fitness.
The enthusiasm for sportswear is also increasing at a considerable rate and especially foreign brands. Although USA has a high market value than any other country, the competitiveness in the domestic market has risen tremendously which has encouraged companies to look for opportunities in overseas market.
At present, the Chinese government is planning to establish 60% more sports facilities up till 2025. The vision behind this is to have more than 500 million people exercise regularly and participate in sports events. For instance, Nike is already the most preferred sportswear brand in China.
Similarly, others in APAC region are embracing the sportswear trends which could be one of the major drivers for companies in USA to grab some market shares and become a global brand in terms of value and brand image.
At present the women in U.S make up about 57% of runners in races. Also, the high school sports participation by women have increased over the period of time. Similarly, the contribution to the sportswear apparel by women is estimated to grow at 5.7% up till 2019.
For instance, the women’s segment of NIKE grew by 12%. The average retail prices are being maintained by these brands and their focus on the female segment is fuelling their growth and paying them off with increasing revenues. As millennial’s are the group of population who can best connect with stories, these companies are creating such stories to connect with the right audience.
Thus, the women’s growing interest in fitness and athletics is currently driving the growth of entire industry and is expected to do the same in future too.
The growth pace of the industry has declined, the sales have also decreased by 6% in 2017 and the lessening demand has also dampened the price of the products sold in the market.
Similarly, the companies such as NIKE and ADIDAS which are competing on a global level are facing with issues such as currency exchange fluctuations and cost of making the product which is high. In both cases, the high selling prices are offset due to rising costs and the gross margins are declining than before.
Similarly, the bankruptcy of the Sports Authority in 2016 also reflected a strong negative effect on many sportswear brands because the promotional and marketing activities that the companies had proposed had to be approved by the authority however its failure led those plans to stay on hold for a while. Specially, the leading brands like Under Armour’s sales growth went down by 1.3% in the same year due to this incident.
The average salary which is offered to the employees working at sportswear industry is relatively high in some positions For instance, sales and marketing position is offered with an average of $85,000 whereas for the entry level staffs it ranges from $26,000.
The salary offered are considerable because sportswear particularly the athletic segment requires innovative ideas of promotion and the entire industry stands on the ability of its marketing and sales staffs to execute promotional activities and generate sales effectively.
Without league sponsorship’s and athletic endorsements it is very difficult to establish a proper brand recognition. However, these costs are tremendous and is affecting the margins of the companies specially at current times when sales volumes are also decreasing.
The manufacturing of the products of leading sports brands along with others in USA is undertaken in the Asian region. As the labor costs in Asia is rising, the profit margin is getting lesser.
Within the fragmented sportswear industry, the leading brands have a low market share. As of 2017, the Nike which is among the top three brand in USA accounts only 9.5% of market share in sportswear industry. Further, the deflationary pressure has led these brands to place a lower mark price on their product which has further impacted the margins negatively.
Another major challenge faced by the companies are to cater to the tastes of the consumers. Consumers not only want functional but fashionable apparel.
A trend within the sportswear industry cannot be missed by the companies as it is the most important thing and desired the most by consumers. Thus, leading brands are always updated with leading trends and missing a trend might actually lead to excess of inventory, profit draining marketing activities and long term hamper of brand identity.
The three of the sportswear brands-North face, Nike and Under Armour innovate and include technology in apparel every time they come up with any new product in the market.
The ‘cool switch’ technology in the apparel produced by the brand Under armour is such that the athletes will have the ability to keep their body cool despite of the burning heat produced during training and performance. Similarly, another technology called ‘Streaker’ contains low water absorption, dry faster and material used is polyester but provides comfort of cotton.
Another technology brought by North face called ‘Flashdry’ is where the fabric consists of a double layer which doesn’t wash out easily and transfers the moisture to the surface level keeping the athlete dry and comfortable during their performance.
It is available in apparel of different outdoor sports such as Ski, snowboard etc. Another technology the brand has introduced is the ‘Fuseform’ where the apparel is made with the fusion of nylon and polyester material to provide extra protection and comfort. It is also waterproof.
Similarly, Nike introduced tights for running and training which has compression adjustments where the tights move along the direction where the muscle flexes and it covers the entire area from hips to ankle. It manages body heat, improves blood circulation and prevents legs to go numb.
Another technology oriented product by Nike is Men’s pro hypercool max tight. A thin polymer film that is used to block the UV light is being used in the shin and knee areas as they are mostly affected by the sunrays and air circulation is provided in high sweating places.
Other Key Market Trends
There is a drastic shift on how Americans perceive clothes and mostly athletic apparel. The ‘Athleisure’ is the new trend in USA which is driving the growth of Sportswear market and is here to stay for long time. Athleisure is a strange blend of casual smart and athletic wear and is becoming a new category of clothing.
The apparel that people consider when going to work would include materials that are incorporated in sportswear such as Lycra and spandex and other synthetic fibers. The combined trend is generating bulk of demand as it brings comfort, flexibility and is multipurpose in nature. In 2015 alone 12% of increase in sales of Athleisure segment was recognized.
This segment within the sportswear is also regarded as an evolution in apparel and is expected to stay up till 10 years ahead. The clothes in this category can be worn in social situations because they have properties such as wrinkle free, odor resistance and is infused with tech inspired fibers.
As a part of culture in America where work and fitness are both major needs, the Athleisure becomes the cloth that is perfectly fit in this situation. It is functional and fashionable which is perfectly matches the need of American consumers.
Market Size and Forecast
As of 2017, the cumulative revenue of the sportswear market in USA is $108.14 billion. The revenue had increased at a CAGR of 2.9% from 2013 to 2017. At present the sportswear market employs about 75,827 people within the industry and there are a total of 15,506 businesses involved in this sector.
By 2020, the sportswear market in USA is expected to reach $129.49 billion. Whereas, by 2023, the industry will be in its maturity phase of its life cycle. The annualized rate at which the industry will increase after 2023 will be limited to 1% only.
The overall global sportswear industry is dominated currently by USA by grabbing over 30% market share. The global brands such as Adidas and Nike are the main reasons, US as a country is leading in the sportswear products. However, soon North America along with European regions will face a decline in market share especially because the demand is more likely to be present in the APAC region.
Even though research reveal that the sportswear market in USA is expected to grow at a CAGR of 3.1%, which is a high rate but this will be limited only up till 2020. Despite of the well-known fact that previously the men’s segment was leading the market but future growth largely depends upon the focus of companies on women’s and children segment.
Similarly, the online channel such as Amazon and EBay has been the major means of distribution of sportswear in addition to the traditional apparel retailers. Thus the leading brands are embracing e-commerce as a channel of distribution of their products.
Technology and sports fit in great together and the relationship is perceived to be successful. Without the contribution of technology the sports would remain out of the scope of innovation.
At present, there are particularly three innovations regarding the sportswear technology which the market players can tap into for future success. Generally, technology in clothing is used to help athletes improve their performances and receive an edge during the competition.
These innovations can change the game of entire sportswear industry which are both functional and carry a touch of fashion along with them.
Reactive fabrics – It is also known as thermal technology which reacts according to body’s temperature levels and perspiration. Normal fabrics may absorb sweat but this will transfer the sweat to the surface and let it evaporate.
This will assist in keeping the athletes of exercising people sweat free. Even at colder climates, the same material will keep the wearer warm and vice versa. Another type of fabric that is on the way is known as the ‘compression’ fabric which is designed for people who go to gym.
As it tightens around the muscles, this will ensure maximum muscular output. Also, the reactive material is such that it has the ability to get hardened in the surface which will save the athletes from getting any severe injuries.
Wearables – These are the new trending devices at present in the sportswear industry and they include mostly accessories such as watch, pedometer which can track the performance in normal workout or that of training of an athlete.
Similarly, these wearable may also consider necklace and these are extremely trendy device to have for a fitness enthusiast or an athlete. Thus, wearable could be the next big potential for the sportswear industry to grow faster.
Smart Apparel – This is the third category that is on the rise within the sportswear technology. Two companies namely AiQ and Fraunhofer are working on to develop this technology which will be incorporated within clothing and it will aid in monitoring heart rate, respiratory activity and posture of the person who is wearing the apparel.
Other products that are under development within the cloth category is the sock. The sock with similar technology will be able to pass on the information about body mass and speed by tracking the movement activities.
Distribution Chain Analysis
The distribution network of the sports and athletic wear in USA is shared by multiple channels. There are more than 10 channels through which the sales of sports apparel is made with specialty stores being the number one choice and online channel being the second.
Despite the sales of sportswear were plummeting during the 3 year period between 2010 to 2013. A brand named Nike was able to produce 12.3% increase in its sales of apparel achieving 4% growth even at times of economic uncertainty.
Nike is also number one sportswear apparel supplier in the world and is considered popular among the consumers in USA and its current net worth is around $30 billion whereas the competitor brand Under Armor is just $5.86 billion.
As of 2016, Nike announced to spend $804 million, a 10% rise in expenditure than that of the previous year. For marketing of the athletic apparel category and mostly focusing on the women’s product. The decision was mainly because the women’s apparel category was identified with a sales of $6.6 billion which even exceeded the sales of men’s category.
The consumers in China are willing to associate themselves with a high quality brand image which can be provided by foreign companies like Nike and Adidas due to which these companies have a competitive edge over the domestic companies in China like ‘ANTA’. As of 2016, the Nike Sales in China jumped up by 9.5% whereas that of Adidas jumped by 22% respectively.
There are examples of effective marketing activities employed by sportswear brands such as Under armor came up with a campaign called ‘I will what I want’ campaign which is considered as one of the most exclusive women’s marketing campaign till now.
It featured female athletes who openly shared about the negativity and demotivation they received in their career. Similarly, NIKE also responded with another campaign called ‘Better for it’ which showcased the inner conversations of women.
Women who were not sure of what to do, those that belong to different worlds and are yet connected due to the common feeling and it was a huge success as the video compilation of the campaign ad received positive responses from the audience.
The top sportswear brands in USA such as Nike and Adidas both have simple but impactful logos such as Adidas with three stripes and Nike’s tick mark. They both also have powerful taglines such as Nike’s ‘Just do it” is a very powerful quote that not only recognized by customers but also motivate them and help them to connect with their passion in real life.
Key Market Players
The top 10 sportswear brands in USA ranked according to the brand preference of consumers are:
- Under Armour
- New Balance
- The north Face
The athletic and sportswear industry has faced many changes and these are mostly affected by the consumer preferences. Consumers have become technology savvy and require most convenient, flexible and fashionable items.
The sportswear market of USA is mature but it needs to cater its brand and products in international market specially APAC region because the actual potential to grow lies in this region from here to future.
The third countries are also embracing the rise in economy and as the growing middle class have raised up their standards, the importance to upgrade apparel is one of the necessities which is retaining the growth of the industry. Although, few brands and companies may fail but the trend of growth is continued and there are few to no obstacles that could actually hold the industry to thrive.