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Does Active Pack the Punch to Save the Women’s Category?

Activewear is everywhere.

From the sidewalks to C-suites, sporty styling and performance fabrics have permeated every aspect of consumers’ lives. And with that popularity has also come the inevitable backlash in the form of headlines suggesting the category could be running out of steam. However recent earnings reports from some of the nation’s largest retailers suggest they’re not buy into that theory. Rather than clearing out the category, they’re adding more SKUs.

At J.C. Penney, activewear is seen as the antidote to anemic women’s apparel sales. The retailer, which has admittedly lagged behind when it comes to this category, hopes that additional Adidas, Nike and Puma gear will help boost sales overall.

At Kohl’s, active has been a focus for roughly three years, putting the company in step with current consumers, it said. The product continues to be a big seller—posting a 25-percent growth in comp sales in the fourth quarter—largely on the strength of Nike, Under Armour and Adidas.

Macy’s too said it plans to continue pursuing the category, while Gap Inc. is furiously chasing it across its nameplates.

So, while it might seem like the world is already awash in leggings, there’s more to come. But given that all good things—especially hot trends—must come to an end, is this rush to stock up wise or simply wishful thinking for a sector desperate for a win?

Measuring the trend

“I don’t think it’s a trend. I look at it as a lifestyle shift,” said Roseanne Morrison, fashion director of merchandising strategy firm The Doneger Group. “People are exercising and going to yoga classes. This is a big part of what they do, especially the young contingent. They love to work out and run.”

But she said it’s not just the gym set that’s driving the category. “Athleisure is a big component of the business, and it’s not just performance wear. It’s causal weekend wear that involves relaxed pants, sweatshirts and T-shirts.”

For more proof that active has legs, Morrison looks to the runways, which she said are filled with streetwear inspired labels like Balenciaga and Off White, which are all incorporating active-inspired styling.

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Elizabeth Shobert, director of marketing and digital strategy at data analytics firm StyleSage, said the shift in the job market is also behind consumers’ comfort-first leanings. “Look at what types of companies are hiring and the roles they’re looking for. That tells you the demands,” she said. “The types of jobs that require you to put on something more formal than sweatpants are usually client facing. It seems like those jobs are fewer and fewer.”

And young people aren’t burdened with this idea that office appropriate has to be more tailored or stuffy, she said. Instead, they’re mixing things up with cleaned up joggers or pants borrowing sporty ticking accents.

Morrison said this is what she calls hybrid dressing. Whether it’s track pants with a blazer or a sweatshirt paired with dress pants, consumers are mixing and matching. “They’re understanding the dynamics of using these pieces in their wardrobe and making them extend,” she said.

Savvy retailers are encouraging this aesthetic, including Saks Fifth Avenue, which featured high-end active pieces in its recent window displays in a way that made them cool and fresh, according to Morrison.

Making margins

Part of the retail’s thrall with active is in the margins, according to Shobert. “You can see why they’re doing it because the likelihood of something being on discount as well as the average discount amount, so what that percentage off is going to be, is actually lower for active lines versus non-active lines,” she said, crediting the sport companies with protecting their brands. “Because of some of the relationships that those department stores, for example, have with those active brands, there are some restrictions in play that they can’t necessarily discount those items as much as one of their private labels, for example.”

The StyleSage activewear report from October indicated that prices are trending up in the mass and mid tiers while prices are sliding downward in the premium sector. In the mid-tier, where Kohl’s and JCP play, the company noted average prices were up $4 to $45 and discounting, which had been the highest of all tiers, is relenting.

Though higher price points and less discounting is attractive, the StyleSage report said it will only last if brands innovate. “Brands and retailers in this space need to be smart about product differentiation and category cross-selling opportunities.”

Engineering demand

One way brands are standing out is through proprietary fabric technologies. Shobert points to Lululemon and Nike for having “branded materials that are important for maintaining their cachet.”

At Gap Inc., the retail group is seizing the opportunity differentiated fabric provides.

During the company’s fourth quarter earnings call last week, CEO Arthur Peck called Athleta’s performance in FY17 “extraordinary,” citing sales growth in the mid-teens during the first half of the year and mid-20s in the second.

Beyond Athleta, Gap Inc’s namesake banner and Old Navy both saw healthy sales in this category. Peck attributed at least some of that sales growth to fabric innovation, especially in bottoms.

To stoke this momentum, the retail group has established an innovation center “to build a competitive advantage through proprietary technical fabrication and sustainability innovation, not only for activewear, but also for our core ready-to-wear businesses,” according to Peck. “The success we’ve seen this year with innovation, such as Powervita and our Sculpt fabrication makes me very confident and very optimistic in the potential for industry-leading innovation across the portfolio.”

Pioneering new directions

Morrison agrees that given the amount of competition in this space from athletic brands, sportswear brands and everything in between, companies have to continue to provide newness to keep consumers engaged.

Fresh styling and fabrications are especially important for national brands sold at every tier and practically every door. “Everyone wants Adidas. Everybody wants Puma. Everybody wants Fila,” she said. “Going forward [stores] may buy key items but then personalize their selections for their individual stores and customers. There has to be something that’s unique to their consumer base.”

As Morrison looks ahead, she sees plenty of opportunity for brands to differentiate themselves. She said expect transparent fabrics, nylon and mesh, and as we move into the holidays, French terry and velour. It will all be offered in a range of colors, which she said will be the story going forward along with the emergence of silver thanks to a current preoccupation with the cosmos.

In terms of silhouettes, sweatshirts remain “pivotal,” she said, along with layering pieces. Interest will come from high/low hems and back interest.

“The critical detail is feminizing the masculine pieces—so if you have a sweatshirt, it could be in a pink, or feature lace ups, or have a ruffle. You have to engineer it to be feminine,” she said, crediting Lululemon with knowing how to design for its female customers. “That’s the secret sauce.”

So, whether it’s a fix or fuel it seems there’s plenty of opportunity for retailers and brands to capitalize on a market that shows no signs of slowing down.