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‘Bumpy’ 2021 Outlook Leaves Room for Sports Retail Growth: NPD

After a tough past year, the first week of 2021 has offered little improvement from 2020. But with the Covid-19 vaccines rolling out, albeit slower than officials predicted, hope remains for the future.

Though he predicted a “very bumpy” trend line in 2021, Matt Powell, vice president and senior industry advisor, sports at NPD Group, said he expects the athletic footwear and activewear markets to grow sales in the low single-digits in 2021, surpassing 2020 levels but remaining below 2019.

“We must be prepared for the fact that sales trends will be lumpy,” Powell wrote in a blog post NPD published Thursday. “The peaks of 2020 will be difficult to offset, while the lows will create a false sense of well-being. Without an additional unemployment supplement, the summer months, in particular, will be challenging. Brands that benefited from increasing their limited releases will find year-over-year growth difficult.”

Powell further affirmed what he predicted last month: performance running and hiking will lead in footwear, while sweatshirts and active bottoms will fuel movement in activewear. With an elevated level of concern regarding healthy living, he said, consumers will try to stay fit, “or at least dress and purchase like they are.” NPD expects many new brands to enter the activewear space, and with them, further “competition and noise,” he said.

Members of  Gen Z, with their demands for transparency and activism on social issues likely to remain unabated, “will become an even greater force in sports retail,” Powell predicted. The emphasis on sustainability, specifically, “will be stronger than ever,” he said, meaning brands and retailers will need to work harder and be more open. The generation’s “less is more” approach will also prioritize versatile and practical products over single-use goods, he added.

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In the near term, the recently passed Covid-19 relief bill’s $600 stimulus checks have provided a potential source of hope. In the January issue of the National Retail Federation’s (NRF) Monthly Economic Review, chief economist Jack Kleinhenz said the organization expected the new round of stimulus will boost retail sales spending. “Consumers responded quickly to last spring’s stimulus checks, and distribution of the new checks will come at a critical time that will help carry 2020’s momentum into 2021,” he said.

Powell, however, predicted the $600 will have little impact on sports retail. “Based on my observations with the earlier checks, many recipients put that money towards paying down previous debt or adding to their savings,” he wrote. And though he described the vaccine news as “certainly encouraging,” Powell said, “it is clear that it will take months before a level will be reached to allow for sports retail to return to normalcy.”

Although NRF calculated that retail sales for the first 11 months of 2020 rose 6.6 percent compared to the prior-year period, brick-and-mortar apparel retailers lagged far behind, dropping 19.2 percent year over year.

The consequences of this trend have manifested for months now in the form of permanent store closures. Caleres announced in late November it would be closing 133 stores under its women’s footwear brand Naturalizer. In December, women’s budget fashion chain Francesca’s marked another 97 stores for closure after previously shuttering 137. And last week, Macy’s confirmed its plan to close 45 brick-and-mortar locations.

Given last year’s “soft” holiday results, Powell said to expect a new round of store and mall closures. “There will likely be fewer sports retail stores at the end of 2021 than there were closing out 2020, and mergers and acquisitions will accelerate,” he added.

E-commerce, instead, will remain the primary driver in sales, Powell predicted. Brands’ investments into direct-to-consumer businesses will continue, he said, with those lacking a robust e-commerce platform likely to be challenged. “And as more stores close, e-commerce will gain,” he added.