September 17, 2007
Sports Apparel and Footwear Seeking Status
By Tom Ryan
With the emergence of video games and, more recently, mobile gadgets such as iPods and cell phones, traditional sporting goods gear has lost some of its buzz.
The industry has been experiencing low single-digit revenue gains for several years, primarily a result of sluggish sports participation rates. A large part of that blame has come down to the arrival of computers and especially video games, which have particularly attracted the younger male.
But a newer trend comes down to “status purchases.” While in the past, marquee sneakers, baseball caps, or football jerseys marked a “status buy” for kids, now tech gadgets such as iPods, cell phones and related accessories are the “must haves.”
Some retail observers believe the popularity of these tech items are partly underlying recent sales weakness at urban footwear chains, such as Foot Locker and The Finish Line.
“That urban consumer is all over electronics,” said Mickey Newsome, chairman and CEO of Hibbett Sporting Goods, a southeastern sporting goods chain, on a recent investor conference call.
But others just worry about the amount of disposable income shifting to electronics from core teen categories such as apparel and footwear.
“Our concern is not so much gas prices or mortgages, it’s the other categories vying for the kid dollar,” said Kathy Bradley-Riley, senior vice president of merchandising at The Doneger Group, recently at a back-to-school roundtable sponsored by Women’s Wear Daily. “The right electronics equipment, the right cell phone, the iPod; there’s only a certain amount of dollars to spend, and those categories are getting first preference as opposed to, “Do I have the right shorts?’”
According to Piper Jaffray & Co.’s bi-annual Taking Stock With Teens survey, 79 percent of teens own at least one video game platform and 58 percent answered that they are occasional game players, playing at least monthly. The same survey showed that approximately 82 percent of teens own some form of iPod and 89 percent of students use iTunes.
According to U.S. Cellular statistics, roughly 60 percent of American teenagers own a cell phone and spend an average of an hour a day talking on them. According to market research firm the Yankee Group, 54 percent of eight- to 12-year-olds will have cell phones within the next three years.
Not that the sporting goods industry doesn’t occasionally have “must have” product. Under Armour and Volcom are two brands that have clearly captured the younger consumer. But most seem to be missing the “buzz” of these tech gadgets.
Discussion Questions: How can traditional teen categories – such apparel/footwear/sports equipment – recapture some of the “buzz” with younger consumers that tech items appear to be getting? What can they learn from successful tech leaders, such as Apple, in how to reach today’s younger consumers?
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I would offer a couple of other points to consider vis a vis market conditions for sports apparel and accessories sales.
1) Youth participation trends;
2) Relative strength of alternatives.
There were some interesting trends to be found in a recent report issued by the National Sporting Goods Association (NSGA):
Between 1996 and 2006 overall participation in organized youth sports (ages 1-17) increased overall by 9.5%. Singling out individual sports the trends were as follows;
Softball – 23.9%
Basketball – 12.8%
Baseball + 3.5%
Football + 44.6%
Skateboarding + 53.6%
Snowboarding + 84.8%
Are retailers and licensors paying attention to the trends and adjusting their offerings and space allocations accordingly? Are retailers taking advantage of licensing opportunities in the growing X-factor sports such as skate and snowboarding; are their apparel and accessories assortments meeting these needs or do they overemphasize “traditional” sports like baseball, basketball and football?
The second area to consider ties closely to the first and that is the sea change in this nation as it relates to what youths value and how they allocate their time to extra curricular activities.
Electronics (sports games, virtual communities like Face Book, instant messaging for example) take up a considerable amount of today’s youths’ available time. These interests, combined with an increasingly decentralized family, may have some profound impact on youth participation in sports going forward. This may in turn have an impact on the sports’ popularity themselves, further pressuring sales of product in the future.
Those stats above tell a lot of the tale: for years sports “fashion” was driven by basketball. Basketball fit with the growing urban cultural trend, and had stars like Michael Jordan. Now the NBA is perhaps the weakest of the major pro sports leagues, and the trend numbers above show the effects. Skateboarding and snowboarding have, in fact, driven major fashion trends. My boys will only buy skateboard style shoes, for example. Football is a tough sport for fashion, but has driven a lot of the Under Armour demand (see their TV commercials).
Sports retail got away from its traditional performance-driven marketing (does anyone else now in their 40s still secretly long for a pair of PF Flyers?), and, IMHO, put too much emphasis on celebrity fashion. Celebrities used to endorse products with performance claims, instead it just became about the right “look.”
You live by the sword, you die by the sword, and fashion is fickle. Technology and performance are more predictable.
Teens are spending an hour a day on the cell phone and cherish their iPods. They communicate and network using text messaging and swap photos constantly. They are active on social networks.
Hello, you sporting goods retailers out there. Why not tap into the teens’ impressive list of gadgets? Use their tools to deliver your message?
In addition to their technology obsession, these kids are actively engaged in sports. Whether it is rock climbing or skateboard, basketball, X Games, lacrosse or soccer, sporting goods retailers have the goods they want. Teens want to have access to similarly minded kids in their town. They are all buying from your stores.
If you want buzz, take advantage of your situation and create buzz. Build a social network for teens with similar sporting pursuits. Their shopping behavior will define their hobby or sport. Once you have them in your network, give them text messages that are relevant to the pursuit. Help them learn more, become more engaged and you’ll build loyalty. And they’ll love you more because you communicate the way they do.
To grow quickly, sports apparel needs at least one of these three levers: technology change, fashion change, or a new breakout celebrity license. Under Armour grew quickly because of its emphasis on unique technology. Nike uses all 3 levers. Most of the other sports apparel brands are followers, not leaders. In fashion, it pays to be a leader. Otherwise, you’re selling a me-too copycat commodity.
Mark makes an important point about a breakout celebrity in the world of sports. Until somebody with the star power of Michael Jordan emerges in either basketball or football, it’s hard to see a massive spike in sales of sport apparel or especially shoes on the horizon. Long-term, teen spending on electronics vs. apparel really mirrors the overall trend of the past few years: Technology-related retailing has been gaining share of dollar for the past few holiday seasons vs. more traditional categories, and this trend doesn’t seem to be slowing down.
It all boils down to the marketing process. Makers of these items need to send a clear message to teens that these are the must have items. Electronics actually do cool things whereas shoes or shorts don’t. How could they possibly compete with an iPod that plays videos and music and fits in your pocket or a Playstation3 that will blow your mind with its graphics and speed? The only way they can enhance the buzz of apparel is to increase marketing and literally saturate the market so that teens and tweens are more aware of what is available.
Rather than fight it, other categories need to embrace the spending shift–design clothing and accessories that incorporate and support the use of all those gadgets kids are spending their money on.
But if sporting goods retailers do try to take a page from the likes of Apple, then hopefully they will take the design page–what makes Apple hot is their focus on design–design of the product, design of the experience. For a category that sells products that people are already so passionate about–like their sports teams–it has always amazed me how poor of a job sporting goods retailers do of tapping into that enthusiasm as part of the retail experience.
There has been a ‘buzz’ and drive created by the video game companies, Apple, and the like. Even though it appears teens are spending more on such items, the sporting goods companies–Nike, Adidas, Puma, Armour, etc–are doing well.
It’s the ‘age’ cycle that may be limiting the teens in buying more sports wear and goods. However, integrating fashions in the sports wear and goods are a draw with the teens. Wait until basketball season starts, then bring this question up again! It is just a matter of time…until the teens penetrate the sporting wear and goods arena. Hmmmmmmmmmmm
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I would offer a couple of other points to consider vis a vis market conditions for sports apparel and accessories sales.
1) Youth participation trends;
2) Relative strength of alternatives.
There were some interesting trends to be found in a recent report issued by the National Sporting Goods Association (NSGA):
Between 1996 and 2006 overall participation in organized youth sports (ages 1-17) increased overall by 9.5%. Singling out individual sports the trends were as follows;
Softball – 23.9%
Basketball – 12.8%
Baseball + 3.5%
Football + 44.6%
Skateboarding + 53.6%
Snowboarding + 84.8%
Are retailers and licensors paying attention to the trends and adjusting their offerings and space allocations accordingly? Are retailers taking advantage of licensing opportunities in the growing X-factor sports such as skate and snowboarding; are their apparel and accessories assortments meeting these needs or do they overemphasize “traditional” sports like baseball, basketball and football?
The second area to consider ties closely to the first and that is the sea change in this nation as it relates to what youths value and how they allocate their time to extra curricular activities.
Electronics (sports games, virtual communities like Face Book, instant messaging for example) take up a considerable amount of today’s youths’ available time. These interests, combined with an increasingly decentralized family, may have some profound impact on youth participation in sports going forward. This may in turn have an impact on the sports’ popularity themselves, further pressuring sales of product in the future.
Those stats above tell a lot of the tale: for years sports “fashion” was driven by basketball. Basketball fit with the growing urban cultural trend, and had stars like Michael Jordan. Now the NBA is perhaps the weakest of the major pro sports leagues, and the trend numbers above show the effects. Skateboarding and snowboarding have, in fact, driven major fashion trends. My boys will only buy skateboard style shoes, for example. Football is a tough sport for fashion, but has driven a lot of the Under Armour demand (see their TV commercials).
Sports retail got away from its traditional performance-driven marketing (does anyone else now in their 40s still secretly long for a pair of PF Flyers?), and, IMHO, put too much emphasis on celebrity fashion. Celebrities used to endorse products with performance claims, instead it just became about the right “look.”
You live by the sword, you die by the sword, and fashion is fickle. Technology and performance are more predictable.
Teens are spending an hour a day on the cell phone and cherish their iPods. They communicate and network using text messaging and swap photos constantly. They are active on social networks.
Hello, you sporting goods retailers out there. Why not tap into the teens’ impressive list of gadgets? Use their tools to deliver your message?
In addition to their technology obsession, these kids are actively engaged in sports. Whether it is rock climbing or skateboard, basketball, X Games, lacrosse or soccer, sporting goods retailers have the goods they want. Teens want to have access to similarly minded kids in their town. They are all buying from your stores.
If you want buzz, take advantage of your situation and create buzz. Build a social network for teens with similar sporting pursuits. Their shopping behavior will define their hobby or sport. Once you have them in your network, give them text messages that are relevant to the pursuit. Help them learn more, become more engaged and you’ll build loyalty. And they’ll love you more because you communicate the way they do.
To grow quickly, sports apparel needs at least one of these three levers: technology change, fashion change, or a new breakout celebrity license. Under Armour grew quickly because of its emphasis on unique technology. Nike uses all 3 levers. Most of the other sports apparel brands are followers, not leaders. In fashion, it pays to be a leader. Otherwise, you’re selling a me-too copycat commodity.
Mark makes an important point about a breakout celebrity in the world of sports. Until somebody with the star power of Michael Jordan emerges in either basketball or football, it’s hard to see a massive spike in sales of sport apparel or especially shoes on the horizon. Long-term, teen spending on electronics vs. apparel really mirrors the overall trend of the past few years: Technology-related retailing has been gaining share of dollar for the past few holiday seasons vs. more traditional categories, and this trend doesn’t seem to be slowing down.
It all boils down to the marketing process. Makers of these items need to send a clear message to teens that these are the must have items. Electronics actually do cool things whereas shoes or shorts don’t. How could they possibly compete with an iPod that plays videos and music and fits in your pocket or a Playstation3 that will blow your mind with its graphics and speed? The only way they can enhance the buzz of apparel is to increase marketing and literally saturate the market so that teens and tweens are more aware of what is available.
Rather than fight it, other categories need to embrace the spending shift–design clothing and accessories that incorporate and support the use of all those gadgets kids are spending their money on.
But if sporting goods retailers do try to take a page from the likes of Apple, then hopefully they will take the design page–what makes Apple hot is their focus on design–design of the product, design of the experience. For a category that sells products that people are already so passionate about–like their sports teams–it has always amazed me how poor of a job sporting goods retailers do of tapping into that enthusiasm as part of the retail experience.
There has been a ‘buzz’ and drive created by the video game companies, Apple, and the like. Even though it appears teens are spending more on such items, the sporting goods companies–Nike, Adidas, Puma, Armour, etc–are doing well.
It’s the ‘age’ cycle that may be limiting the teens in buying more sports wear and goods. However, integrating fashions in the sports wear and goods are a draw with the teens. Wait until basketball season starts, then bring this question up again! It is just a matter of time…until the teens penetrate the sporting wear and goods arena. Hmmmmmmmmmmm