As consumers grow more conscious about their health and wellness needs, they create demand for the sporting goods industry. This has allowed the industry as a whole to fare well thanks to strong levels of demand in the last 5 years. Athletic apparel, footwear, and other fitness products all fit into this category.
The sporting goods industry experiences $48 billion in revenues annually, which has seen 2.3% annualized growth from 2011-2016.
The sporting goods industry supports over 300,000 jobs in the United States. Strong sectors include camping equipment, bicycles, and wearable fitness technologies such as those made by Fitbit. What are the trends for 2016 and beyond to expect from the sporting goods industry?
Top Retailers Dominate The Sporting Goods Industry
- The top 50 companies in the sporting goods industry generate about 55% of industry revenues.
- Significant companies include Bass Pro, Big 5, Cabela’s, Dick’s Sporting Goods, Hibbett Sports, REI, and The Sports Authority.
- US consumer spending has been seeing a 4% increase in year-to-year comparisons, which is supporting spending within this industry.
- National chain stores within the sporting goods industry are able to achieve net recoveries on cost of 65-90%. This is compared to category specialists recovering at a 55-85% rate and local operators recovering at 50-75%.
- The performance of national sports teams can also have a significant effect on retail sales in localized geographies Double digit regional sales increases can be seen following national championship games, such as the Super Bowl or The World Series.
- The participation of women in sports is driving much of the growth in popular sports within the sporting goods industry.
- As consumers’ tastes for sporting activities change, expect a corresponding change within the national retailers to accommodate the demand for the associated equipment and gear.
- In contrast to overall total product Consumer Price Index [CPI], sporting goods CPI has experienced two years of consecutive declines.
- 63% of men and 51% of women say that their favorite brand of athletic apparel is Nike.
- 1 in 4 men, however, say that they have no favorite brand of retailer.
In the sporting goods industry, consumers have two ways to shop the brands that they prefer. They can either go to a national retailer or their website, such as REI, to purchase the products that they want. An emerging trend, especially amongst Millennials, is to shop at an online e-commerce site like Amazon for the specific products they want. This allows consumers to be able to quickly purchase the items they want, receive them within 2 days without a shipping charge [on programs like Amazon Prime], and then they can work out on their own. Top retailers still dominate this industry, but that trend may change in the years to come.
Fighting Trends With Innovative Products
- According to Yahoo! Finance, the slowdown experienced by the sporting goods industry has come from a decline in sports participation by children.
- This, in turn, has shifted the industry to focus more on adult needs than the needs of children who are participating in sports programs.
- US companies, such as Galyan’s Trading Company and Dick’s Sporting Goods, are emphasizing higher-end products in addition to their traditional athletic equipment offerings.
- Retailers are looking to simplify and concentrate on core areas by consolidating overgrown store bases.
- Manufacturers strive to produce products that initiate a fad, much as in-line skates did in the 1990s.
- Some retailers in the sporting goods industry, such as Foot Locker, are making the competitive decision to downsize their presence in order to stay competitive.
- E-commerce is rather difficult for industry retailers, as several retailers have simply outsourced their online sales to operator Global Sports.
- This means the trend for the sporting goods industry in 2016 is to create a grassroots effort to encourage health. From the formation of lobbying groups to specific consumer campaigns, the goal is to encourage kids and adults to stop playing video games and start playing baseball, soccer, and other sports once again.
Although the value of the global sporting goods industry is estimated to be $150 billion per year, it has been sputtering as of late. Sales are softening and there hasn’t been a new product to hit the market in a viral way in more than a decade. The closest thing to a viral product might be the fitness wristbands. This has caused the industry to start throwing out ideas to see if they will stick, but unfortunately many of those ideas have not. Everyone along the manufacturing chain is feeling the pinch from this lack of innovation. Even so, all it will take is one innovative product to potentially change everything.
Guns and The Sporting Goods Industry
- In 2012, there were over 8.5 million firearms manufactured in the United States. 3.5 million of those firearms were pistols.
- Out of the total number of firearms manufactured in the US, only 287,000 were exported. Since 1986, there has never been more than 440,000 firearms exported.
- In 2013, however, the US imported 5.5 million firearms, with 60% of those being handguns.
- More than 23 million Federal firearm background checks were conducted for gun sales in 2015 in the US, a jump of 10%.
- In 2013, the average gun owning household owned 8 firearms. This is double the number owned by the same households in 1994.
If the sporting goods industry is looking for innovation, then the next viral firearm might just be a firearm. With political turmoil, especially in the US, regarding Second Amendment rights, sales to existing owners and first-time owners are both surging. Any talk of gun restrictions also create sales surges for the industry. Whether you’re for guns, against them, or have a more complicated position, there’s no denying this trend for the sporting goods industry.
Changing An Industry to Include Lifestyles
- In 2014, the sales of yoga pants and leggings to women went up, while the sale of denim products went down.
- Athletic lines are being produced by retailers who do not generally produce sporting goods, including H&M and Topshot.
- In the United States, workout apparel has been trending up in the past 3 years, and sales jumped 7% between July 2013 and June 2014.
- Activewear accounted for $33.7 billion in sales and made up 16 percent of the apparel market.
- Expectations have changed, which means a person who exercises may be perceived as attractive, so wearing clothing meant for working out makes people feel healthy and fit, even if they aren’t.
- Over the last 5 years, more than 21.8 million hunters took to the wild to hunt game including Whitetail deer, elk, rabbits and more and spending over $1,000 per excursion.
- 4.8 million hunters spent about $500 each in pursuit of small game like the eastern cottontail rabbit, red fox, and beaver, totally $2.4 billion in sales for the sporting goods industry.
- In the US, 9% of hunters are women.
Some trends are here to stay, which includes the multifunction apparel options that are being found in more stores and on more websites today. Women especially are looking for clothing that allows them to go throughout their day without needing to change their clothes multiple times. Sportswear also allows the human body to perform better and helps to prevent bacteria or sweat buildup, which is also advantageous to the busy lifestyles that so many have today. Many want to feel fit and healthy, so they purchase clothing that satisfies this psychological need, even if they aren’t living a lifestyle that will keep them fit and healthy.
The More Things Change, The More They Stay The Same
- Nike continues to lead the sporting goods industry with over $27 billion in sales annually.
- Consumer purchases of sporting goods in the United States continues to be above the $60 billion mark annually.
- Despite this level of sales, US e-commerce sales of sporting goods has still failed to reach $10 million in total annually.
- Athletic apparel wholesale sales in the US account for about 50% of the total amount of revenues produced by the industry.
- Even with the big retail brand names operating throughout the US, Walmart is actually the leading sporting goods retailer with $9.3 billion in annual sales. Dick’s Sporting Goods pulls in $6 billion per year.
- The average retail price of jogging or running shoes in the US: $68.
- Sports footwear outsells sports clothing in the US at a 3:2 ratio.
This is the issue with the sporting goods industry. As products change, they really don’t change. There has been a concerted effort to move away from branded clothing to a more casual approach in the industry, but that is the only shift in products that has been seen over the past 5 years. This means you’re essentially purchasing the same apparel, footwear, and products, but the branding on that product has been minimized. With many consumers having static or dropping income levels, they are making do with the products that they have to avoid the purchase of something new. This is why things are staying the same, even though products are changing.