Sportswear industry is a highly fragmented market, with loads of different brands competing. Every company have to work hard to maintain their position in the market, even big brands such as Nike or Adidas. Consumers are requesting more and more every day, so retailers are in the obligation to innovate their products continuously and produce new styles.
As mentioned in the previous paragraph, the global sportswear industry is highly competitive. Key players in this industry are, among others, Reebok, Adidas, Puma and Nike. These key players are forced to apply growth strategies to cover a larger market; such as partnerships, launch of products… For instance, Adidas has signed a partnership agreement with Manchester United Football Club to promote their products globally, which was a big help to strength the company position in various countries.
Over the last few years, people in developing countries is getting more health conscious, they go the gym, practice sport often… all that is translated in an increased of their physical activity what produces a growth in the sports apparel industry. In this context, companies are innovating their products (such as including lightweight products, breathable ones…) in order to satisfy the increasing needs in the consumers.
Women, in particular, are becoming a strong consumer in the sportswear industry. For that reason, companies are producing specific lines of products for women. Now, sport industry is encouraging collaborations between sport brands and fashion industry in order to produce new styles to cover the needs of the young and woman segment that are significantly growing over the past years.
The Global Sportswear Industry
The global sportswear market is predicted to produce revenue of 184.6 billion dollars by the year 2020. This leisure trend has become a leading enterprise in sales from 2015. This has been additionally supplemented by the ever-increasing involvement of women in the sporting and fitness activities. The participation of women in health and fitness activities has seen high street vendors including Next to introduce sportswear apparel sections that cater exclusively to women. Other brands such as Nike and JD Sports have opened up stores that are all-woman because of the trending market size of women
The demand for sportswear has significantly risen in the last few years. This demand is increased during the “sport season” (i.e. Champions League or Olympic games), due to the people supporting their teams and different sports.
The market is predicted to tremendously rise in the next five years. According to the Transparency Market Research, the global sportswear market is worth 74.7 billion dollars and is anticipated to rise up to 84.4 billion dollars by 2018, at a growth rate of 1.8 per cent of the Compound Average Growth Rate (CAGR). In Europe, Adidas has upheld the predominant position among other sportswear brands such as Nike, Puma and JD Sports. The sportswear brands have adapted a range of growth strategies that will help them acquire a large consumer market and market share. The introduction of online stores has drastically boosted the sportswear market because of the popularity, advanced internet access, availability of numerous products as well as discounted prices.
In 2014, North America was the region with a higher revenue in the sports apparel industry. However, the situation is changing and is expected that, by 2020, the main market will be Asia due to the improvements in the life standard in the emerging countries like China or India.
Entry barriers into the sportswear global market include economies of scale, capital requirements (cost of manufacturing, workforce, installations…), high competition, product differentiation, government policies, switching costs and accessibility to distribution channels.
The presence of fake products and low price ones are restricting the growth or the sports apparel industry. Sports and fitness products from the “well-known” brands are high-priced; therefore, the lower income groups cannot afford them. This has promoted the manufacture of low quality products by local suppliers at a reduced price, obstructing the sales of original products. This leads in a threat on the growth of the sportswear market.
Profit of the Sportswear Industry
The sportswear market is currently very successful; therefore, profitability is assured. This is due to the increasing awareness on health and fitness, high demand of comfortable sportswear, growing population, increasing levels of disposable income and innovative sportswear designs and technologies. These factors are significantly leading to the profitability of the sportswear industry.
On the other hand, there are some factors that are stopping the growth in the sector, like the availability of low quality products.
Sportswear Industry: Growth in Europe
Health and fitness have become a common phenomenon all over the world. Europe has not been left out in this observable fact as more and more people are getting into the athletic world- workout sessions or sporting activities. Awareness about fitness and sports has grown over time in Europe influencing people to buy sports attire to engage in exercise and support their teams as well. Sportswear is at tires that are designed to help in providing consumers with comfort and swiftness during their physical activities. This has led to a massive growth in the athletic market because of the high demand of sportswear. Europeans are becoming more aware of their health and fitness and take part in activities such as yoga, cycling, kayaking, swimming, aerobics and running.
In 1993, Jim Fitzpatrick & Associates & Economist Intelligence Unit predicted that the growth of sportswear in Europe would rise by 5 per cent in the annual average sales in the next 5 years. This is because consumers utilize sportswear every day, therefore creating a ‘leisure’ trend. This happened and has been improving since then. This has also become a fashion trend, as celebrities are used to campaign for the powerful leading sportswear brands. This fashion trend appeals especially to women and the youth, thereby growing the market of sportswear.
In the last years we’ve seen an increase in the disposable income, what has encouraged people to buy better quality products, investing more in sports apparel than years ago.
Favourable trends are helping the substantial growth in the global sportswear market.
Exercise and fitness in the open air popularity is growing. Some examples are trail running, outdoor gyms, climbing, walking, skiing… This trend is helping to build a future of growth in the sportswear industry.
Similar to the previous one, although it covers more niche areas like trail and off-road running.
The close relation between running and “health” is also likely to ensure that the running boom seen across Europe will continue for some years to come.
Is one of the outdoors booms. Cycling will remain in high demand, and now with the new electric bikes this sector will grow.
- Multifunctional clothing
A new trend is the generic walking/running/outdoor/cycling apparel. We will see a significant growth in the next years across Europe. This will help the partnerships between sport brands and fashion lines, that in the future will become more and more blurred.
- The Women’s Market
A few years ago, there was a lack of good products for women. The practice of sport in the woman sector has increased in the past few years, therefore, the manufacturing of these products have drastically changed. This is a relative immature trend, and woman’s products are driving an increasing boost to sales.
- Team sports
- Innovation & Smart technology
Consumers require technological advances in many industries, and the sportswear industry is no different.
New high-tech materials and technical improvements will optimize the equipment’s functionality.
The 2 main multi-brand suppliers in Europe are Intersport International, based in Switzerland, and Sport 2000, based in Germany.
Intersport is in fact the world’s the largest group specialized in sport goods trade. It has presence in 40 countries inside and outside Europe. In 2015, the group’s revenue was 13.7 billion dollars.
Sport 2000 International is the number 2 among Europe’s groups. It is present in 25 countries and their sales were more than 6.5 billion dollars.
Finally, we have the French chain Decathlon, which has recorded a turnover of more than 6 billion Euros in 2011. That made Decathlon becomes the largest specialist of sports good retailer in France, Italy, Spain and Portugal. Their main characteristic is that a 60% of their goods manufactures are their own label strategy.
In Europe, UK is the country which shows a bigger growth in the sports apparel industry. There, Sports Direct (belonging to Sports 2000 group) has reported sales of £2.186 billion in 2013 and it has been growing at a 20% growth rate.
The sports apparel industry is on its maturity stage. However, its industry life cycle has seen a strong growth rate all over the world. Because of innovations and constant new modernization, this industry has persisted to cycle particularly in the growth stage. A good number of companies in the sportswear sector usually begin as small firms that are just start-up’s. They tend to have few products that disintegrate even before attaining the ‘early growth-stage’.
This has led to some of them merging because of financial barriers and most of them usually exit the business completely
However, some specialists state that some of the sportswear companies reach the maturity stage and they have to keep on renewing their marketing strategies, innovating new products and gain different usage so as to produce a new growth stage.
The sportswear industry in Europe has been growing over the years. Today, many people buy sportswear attires in line with the exercise culture. As people want to exercise and get fit, they buy sportswear to serve this purpose. Others buy sportswear to support their teams or just play just for fun. Therefore, the sportswear in Europe is growing and will continue to grow in the next few years especially because of sports and fitness awareness in Europe.
However, the future of this sector will be in the emergent countries in Asia, like China and India, where the increased of their income and improvement on their lifestyle expects that they will be the leaders in revenue-generating by 2020.