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Sneaker, Activewear Production Might Overshoot Demand: NPD

The termination of stimulus money coupled with overproduction could challenge sports retail performance in the coming year.

Though they were a boon at the time, last year’s stimulus checks will be “a major headwind” for the sports industry this year, NPD vice president and senior industry advisor for sports Matt Powell said.

“Many consumers will have much less disposable income in 2022 than they did in 2021,” Powell wrote in an NPD blog post published Wednesday.

Though he anticipates supply chain issues will ease mid-year, Powell predicted that they will not disappear “completely.” At the same time, he said he expects the industry will still overshoot demand by mid-year, leading to more promotions and markdowns that “will erode the pandemic profit gains.”

Powell also predicted that brands’ direct-to-consumer initiatives will not let up, hurting wholesale partners. Nike, one of the largest examples of this trend in footwear, notified six retailers last March, including DSW and Urban Outfitters, that it would no longer sell them product. Months earlier, it had cut ties with another nine retailers. This trend will ultimately drive more business to e-commerce, Powell predicted.

“After a slow start in 2022,” Powell predicted full-year athletic footwear revenue growth will land in the low single-digits. In 2021, by comparison, NPD data showed annual revenues grew about 20 percent. Brands like Nike, Jordan and Adidas will underperform the market, while Puma and Reebok will be 2022’s “hot brands,” Powell said. The analyst placed Lululemon, APL and Nobull among the top emerging sneaker brands.

Powell predicted another strong year for running, walking and hiking. Performance running, specifically, will benefit as it returns as streetwear, with Puma and On leading the shift, he said.

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“This hasn’t been the case for nine years,” Powell said. “This trend will require brands and retailers to change the way they bring products to market. Those that don’t make this fashion-oriented shift will face potential sales challenges.”

Puma jumpstarted its running line last winter with a series of new silhouettes, all of them featuring the brand’s lightweight Nitro foam. The young running brand On, meanwhile, has flourished amid the pandemic. The Roger Federer-approved business released its first earnings report as a public company in November touting a 68 percent increase in net sales. According to NPD’s data, On grew by more than 165 percent in 2021. Powell wrote last week that he anticipates the company’s revenue will surpass that of Hoka One One this year.

Powell’s 2022 footwear forecast also noted the continued importance of the retro trend. The styles that drove sales throughout the pandemic, however, “appear to be played out,” he said. “It will need new styles and approaches to keep the momentum going.”

For both footwear and activewear, “the industry’s greatest failure and its greatest opportunity” remains the women’s market, Powell said. Retailers will lean on private-label brands to pick up the slack and Lululemon will surpass Nike to become the top women’s activewear brand in the U.S., he added.

As with athletic footwear, Powell anticipates a substantial slowdown in activewear sales growth from the highs reached when the industry lapped 2020 last year. In 2022, he predicted, revenue will increase in the mid-single digits. According to NPD, activewear sales grew about 30 percent last year.

“Riding the ‘performance-running as streetwear’ trend, we’ll see a shift in the ‘active apparel’ mentality; we’ll move away from pure athleisure to more ‘athletic’ looks,” Powell said. “Colors will shift from neutral to bright, to align with footwear. Activewear will emphasize performance attributes to support this trend further.”

Powell also predicted legalized gambling will drive increased interest in sports licensed apparel. “Fans will want to give their teams a little extra boost by wearing their jerseys and caps,” he explained. Since the Supreme Court struck down the federal ban on sports gambling in 2018, state after state has legalized the practice. According to Forbes, the sports betting market has grown from 19 states to 32 in the past year.

Powell said he expects Puma, Reebok and Champion to be the hot activewear brands of 2022 and Vuori, Beyond Yoga and Sweaty Betty to be the year’s top emerging brands.