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The State of Performance Footwear Heading Into 2020

The latest data for the performance footwear industry isn’t great.

According to NPD’s retail tracking service, the category declined in the mid-single digits during the third quarter of 2019—the latest in a long line of disappointing quarters. In the United States, in particular, performance footwear sales fell 4 percent to $2 billion in Q3.

Many have bemoaned the lack of an “it” product to drive sales, but athletic-inspired footwear remains a popular choice for today’s consumer. It may be more that shoppers are looking for footwear that reflects their style and personality while merely suggesting the presence of athletic features.

When broken down by brand, the performance footwear category becomes much more competitive. At the top, Nike and Adidas continue their ongoing battle for market share while Under Armour and Puma jostle for third place. However, it may be the moves made by up-and-coming brands like Hoka One One and On that provide the closest look at where performance footwear is headed.

Nike vs. Adidas

In recapping Nike’s 2019,  the controversies that popped up around the brand throughout the year, might rise to the top. First, Nike drew ire from the sports world when one of its sneakers fell apart under future NBA superstar Zion Williamson during one of the biggest games of the regular college basketball season.

Then, the Colin Kaepernick saga entered into a new chapter when a report surfaced that the former-NFL-star-turned-social-activist was behind the pulling of a pre-emancipation American flag sneaker scheduled to be released on Independence Day. This time, the controversy lead to consequences as Arizona ended up rescinding an offer of $1 million in subsidies for a new Nike Air factory.

As it turned out, Nike went ahead with building the factory anyway.

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Other headwinds were harder to dodge. Nike CEO Mark Parker stepped down, trade war uncertainty added ongoing pressure, Nike let go of its surfwear brand, Hurley, and pulled all first-party products from Amazon in a quest to keep the brand’s value high by dealing only with premium partners.

According to Edited, Nike currently stocks more basketball sneakers than any other brand, and its premier marathon athlete, Eliud Kipchoge, wore the Nike Zoom Vaporfly 4% Flyknit to break the all-time world record for the event. By all accounts, Nike’s power in the performance space did not wane in 2019.

What Adidas couldn’t make up in market share and cultural importance in 2019, it made up in leadership in sustainable and ethical production. In April, the brand released a sneaker made from 100 percent recyclable components, making it among the first fully-circular sneakers. Adidas also launched Infinite Play, a service that encourages its consumers to turn in their old apparel for credit to incentivize apparel recycling.

Launchmetrics said Adidas garnered the most “media impact value,”of any of the brands it studied—including Reformation, H&M and Stella McCartney—a monetization of the goodwill Adidas earned as a result of its sustainability efforts. The estimated media impact value of Adidas’ sustainability initiatives was $13 million, nearly double Nike’s $7.3 million.

Adidas also notched one of the most unique and attention-grabbing collaborations of the year when it partnered with Arizona Iced Tea for a surprise drop in New York City in July. The limited drop was so well-received police were called in to shut down the event due to unsafe conditions concerning the crowd that had formed outside. Later, Adidas re-released the collaboration under less-hyped conditions.

The brand did, however, experience its fair share of troubles in 2019, most notably the supply chain issues it faced as a result of high demand for its mid-priced apparel. Nike certainly benefitted from this slowdown, although Adidas confidently informed investors it had conquered those issues by its third-quarter financial report.

Nevertheless, its abandonment of its two existing Speedfactories—one in Germany, the other in the U.S.—in favor of similar operations in Asia left many with questions about Adidas’ long-term sourcing strategy. Even Kanye West, the mastermind behind the athletic brand’s Yeezy sneaker franchise, suggested he would go the opposite route and bring production of the line to the United States.

Under Armour vs. Puma

Sourcing Journal dives into how performance brands fared thorughout 2019, pitting Nike, Adidas, Under Armour, Puma, Hoka One One and On
Under Armour has consistently leveraged its relationship with superstar NBA guard Stephen Curry despite overarching issues with the brand. Shutterstock

While the battle between Nike and Adidas didn’t have a clear winner, the second tier of American athletic brands played out poorly for the perennial third-place finisher, Under Armour.

On the same day Nike and Mark Parker parted ways, Under Armour CEO Kevin Plank stepped down from his position at the helm of the company after founding the company in 1996 in his grandmother’s basement (he is remaining on executive chairman and brand chief). Then, civil investigators working for the U.S. Securities and Exchange Commission (SEC) and criminal investigators working for the Department of Justice continued an investigation of the brand over allegations of revenue fraud.

Though those investigations have been ongoing since 2017, investors saw it as a sign of continued weakness for Under Armour, which had been attracting questions about its North American sales for several quarters. In fact, a survey released in April found the brand’s reputation for full-priced, premium apparel had significantly waned over recent months.

Puma, on the other hand, has recorded quarter-after-quarter of improving sales. Double-digit growth in each of the three quarters so far in 2019 has improved Puma’s stock position by more than 28 percent, year-to-date.

Swift action and reasonable expectations for impacts related to tariffs on Chinese goods left Puma well positioned to succeed relative to its peers, and much of that additional revenue came from Asian sources in 2019, which continue to grow.

Puma also opened its own, high-tech flagship location on 5th Avenue in New York City in August, representing its commitment to cutting-edge retail and omnichannel strategies. The new flagship is located just south of Nike’s own, nearly-new innovative NYC flagship.

Hoka One One vs. On

Sourcing Journal dives into how performance brands fared thorughout 2019, pitting Nike, Adidas, Under Armour, Puma, Hoka One One and On
Analysts have praised Hoka One One’s ability to create product that appeals to modern performance footwear consumers. Shutterstock

While life at the top hasn’t been easy, some up-and-coming brands were able to make significant waves in the world of performance footwear throughout 2019.

Deckers Brands’ Hoka One One has seen consistent growth for the last couple of years. In the second quarter, Hoka One One powered Deckers to 8 percent sales growth—thanks to the brand’s own sales growth of nearly 50 percent.

That kind of “explosive” growth led Deckers to say in July that Hoka One One has the potential to become a $500 million brand if it can maintain its position as a hot performance footwear brand.

Another up-and-coming footwear brand, On, launched a new product line in 2019, which garnered a generous amount of consumer interest. Based in Switzerland, On uses a unique footwear technology called “Cloudflow” that relies on a series of hollow pods. According to On, Cloudflow pods contract to assist with a running get-off and then expand to provide a softer landing once in use.