Last year, the sporting goods industry experienced a series of changes that altered the realities of many manufacturers, wholesalers and retailers. Stores like The Sports Authority, Sport Chalet, and Eastern Mountain Sports filed for bankruptcy.
Yet, health-conscious consumers are purchasing sporting goods and focusing on healthy lifestyles; the sporting goods market saw current value retail growth of 40% from 2011 to 2016. So what gives for these bankruptcies? Well, online sales of sportswear recorded much faster growth of 159%. If brands and retailers are unable to compete online, they can’t thrive, much less survive.
The new sporting goods consumer is digitally savvy and expects more than ever when it comes to their shopping experiences.
Here are 4 Elements Shifting the Sporting Goods Industry
1. Decreased foot traffic + increased online shopping.
Across industries, less people are visiting stores. They are instead turning to online shopping, mobile sites and apps to make purchases.
To respond, some big retailers have turned to in-store experiences to draw customers back in. Think Lululemon’s yoga classes or American Eagle Outfitter’s concert series. A new wave of experience-based retail is being implemented in an attempt to increase foot traffic. Brands are looking to establish themselves as lifestyle brands, meaning that they want to be relevant in multiple arenas of their consumers lives.
2. The saturation of the activewear market.
Traditional clothing brands continue to launch workout clothes and accompanying products. You can now buy yoga pants and even yoga mats at clothing stores like H&M, Gap, and Aritzia. To remain competitive, stores like Dick’s have launched their own branded lines, like a Carrie Underwood’s CALIA line, only available at Dick’s.
3. Pricing free-fall.
Regardless of their location, the new digital consumer can compare brands and check prices before buying. Pricing strategies therefore have to be transparent and nimble. Dick’s Sporting Goods, for instance, has followed the path of Best Buy by guaranteeing the lowest price for any of their products. Check out their ad spot on the guarantee:
This is a dangerous reality for smaller retailers who might not have the ability to change their profit margins so easily.
4. Increasing preference for direct-to-consumer.
With a streamlined online presence, brands can interact directly with their consumers. In fact, 35% of millennials say they are more likely to shop for sporting goods on a brand manufacturer’s website. Compare this to 25% of non-millennials who say they prefer shop with the manufacturer. One in four is not negligible.
From Nike and Under Armour to Michael Kors and Ralph Lauren, brands are therefore increasing their direct-to-consumer business in order to cut their reliance on retailers like department stores.
So what is a retailer/distributor/manufacturer in sporting goods to do?
It’s not all doom and gloom. To stay competitive, sporting goods merchants need a smart and adaptive digital strategy. In our publication “The End of Sporting Goods Retail As We Know It”, we have outlined some of these challenges and their eCommerce responses. Download it today.
Absolunet is an eCommerce agency and integrator with 200+ people obsessed with delivering results, creating ROI-producing (and award-winning) eCommerce experiences since 1999.