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Sales of Performance Footwear Slump but New Blood Could Revive the Category

Performance footwear sales are in a downturn.

According to NPD’s senior industry advisor, Matt Powell, analysts began to notice this trend in 2015—right at the beginning of athleisure’s rise, which is no coincidence. Since then, no single performance footwear category has shown anything resembling marked improvement, and brands have struggled to adapt.

According to the latest data available from NPD, overall performance footwear sales were down in the mid-single digits in the first quarter of 2019. Although most footwear categories suffered under industry headwinds in the quarter, including the later release of tax refunds, performance footwear was hit especially hard. Baseball shoes were the only category that didn’t experience a loss in the first quarter, staying flat from a year ago.

Running shoe sales were down 6 percent, year-over-year, (possibly due to a long winter) and golf shoes were down 5 percent under similar circumstances. However, it was the fall of basketball shoes that proved to be the most shocking outcome in the first quarter. Despite iconic basketball events like March Madness and the NBA regular season both occurring during the quarter, basketball shoe sales were down 21 percent in Q1.

Powell told Sourcing Journal this was all part of a larger trend that has caused a major blurring of footwear categories, lessening the importance of performance factors.

“Since the middle of 2015, we haven’t had a single major performance category that is trending positively. We are very much in an athleisure phase in footwear and apparel and people want to wear athletically-inspired shoes and clothes but they really don’t intend to use them for sports,” Powell said. “We asked our consumer panel last year, you bought a pair of sports shoes—now what do you intend to do with them?’ Only 16 percent who responded said that they were going to use it for sport. That’s down from 25 percent five years ago.”

According to Powell, this likely has more to do with the influence of fashion in performance footwear rather than lower activity rates. Looking at youth sports, participation has actually risen thanks to more girls participating in competitive activities. According to the most recent data available from the National Federation of State High School Associations (NFHS), 15,009 more girls enrolled in competitive athletics in 2017-2018 than those who did the previous year, and competitive athletics participation for both genders increased.

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However, the answer to performance footwear’s ills becomes more clear when looking at participation in specific sports. Soccer, for instance, is fast becoming one of the nation’s most popular competitive sports. In fact, it received the largest individual gain in participation, year-over-year, among males in 2018 and was almost as popular with females. Yet, footwear sales for the category still fell by 2 percentage points in a year where more young athletes should have been buying soccer cleats.

Something missing

There is something missing from these sports, according to Powell, that led the market in years past.

“For the first 50 years or so in the sport shoes business, we always had at least one performance category that was in fashion,” Powell explained. “In the early ‘70s, tennis was the sexy sport. People wore tennis shoes and tennis apparel on the street as sportswear. Then jogging shoes came along and running became a thing. Then it was basketball shoes and then training. Then, over the last 20 years or so it’s just cycled through all of those categories.”

However, NPD’s data now shows that those cycles have lost their power, the forces that once drove the market are no longer in the driver’s seat. Instead, performance footwear is stagnating, waiting for consumers to give the industry an answer.

Coresight, a market research firm, told Sourcing Journal their data shows the performance footwear industry is excessively top-heavy, with the top 20 companies accounting for 29.4 percent of global footwear sales. Nike and Adidas, alone, make up 15.3 percent. In comparison, the apparel industry’s top-20 rake in a combined 15.3 percent. A top-heavy industry can result in less innovation, Coresight suggested, referencing data from a Feb. 2019 report—even without headwinds.

“Footwear, especially brands tied to sports activities and outdoor experiences, have fared better than apparel brands, but they too have been vulnerable to the vicissitudes of retail channels with bankruptcies and store closures,” Coresight noted. “Footwear brands have enjoyed strong brand equity (Nike, Adidas, Vans) and the right sneaker is social currency for many youths around the world.”

However, the reality has been different for smaller brands, with larger market issues presenting challenges that few can overcome—and low-margins won’t help.

“Digital disruption is bifurcating the traditional wholesale apparel and footwear market into those companies and brands with adequate brand power to go direct to the consumer and those that don’t have the brand relevancy to make it on their own,” Coresight wrote. “The alternative for those brands which lack the power to go it alone can use Amazon, Zappos, Alibaba and Tmall as well as other online marketplaces. But, customer data is king, and direct to consumer brands must also have retail, fulfillment and return expertise on top of a desirable brand at an attractive price. Industry margins have been impacted by growing consumer expectations and are likely to remain under pressure for all but the most sought-after apparel and footwear brands for the next few years.”

Success stories

NPD’s data does suggest there are some brands that have been able to make moves in this crowded market, with gains seen at Brooks, Fila, Puma and Vans in Q1. Powell told Sourcing Journal that, absent any positive trends, the industry can look to those brands (and others like Hoka and ON) for clues on how to move forward.

Most of all, he said, they need to be looking at a traditionally underserved demographic.

“When we look at the total footwear market, the women’s portion of the marketplace is much larger than the men’s piece,” Powell said. “Only when we look at athletic sales do men have a larger portion of the spend. It really says to me that brands have not focused enough on their women and women’s assortments. They tend to be takedowns, reinterpretations of men’s shoes. They aren’t really developing women-specific product. That’s really the reason we see predominant women’s brands like Lululemon and Athleta taking share.”