Sporting goods have seen a supercycle of growth that looks unlikely to end soon. It helps that the young are more sporty and health conscious, but there is a global trend towards casual dressing and consumer demand for sustainable products that sportswear companies are eagerly meeting.
Younger consumers are increasingly relevant to the global economy, especially in emerging countries. Even in aging populations, such as in the West, the youth of today will in the future become the people of prime consumption age – 35 to 54.
The young prioritise health and wellbeing more than previous generations – exercising more and eating more healthily. If they continue this lifestyle into adulthood, spending on fitness equipment and healthy foods should continue to grow. Indeed, all age brackets are already adopting healthier regimes.
These trends are supported in HSBC’s surveys of consumers in major global markets. Some 64 per cent of US millennials told us they are likely to increase spending on sportswear, as did 85 per cent of Chinese millennials. Nearly 90 per cent of respondents in mainland China said they wear sportswear at least twice a week
But even non-sporty people like sportswear. There is a fashion for ‘athleisure’ and a general trend towards casualisation, with trainers and tee-shirts increasingly acceptable, even in offices. Older generations are getting on board too, buying clothes that are comfortable.
Sportswear accounts for about a quarter of the global clothing market and its purchases are growing as sales of other apparel declines.
‘Athluxury’ describes luxury athletic wear and top brands promote it using celebrities and designers not known for sports prowess.
Meanwhile, customers are increasingly willing to spend more on products advertised as sustainable.
Sporting goods companies have been aggressive on sustainability because they face more consumer pressure than other apparel manufacturers and retailers. High profiles built up by spending on branding and advertising are easily damaged if products are revealed to be made by child labour in subpar factories.
Sporting goods, more than other apparel items, are seen as more than just utility. Marketing makes trainers a lifestyle – not just a just pair of shoes.
In the past decade, the sporting goods industry has witnessed a shift in its distribution channel. Online shopping now accounts for 20 per cent of sales compared with 5 per cent in 2010. And the regional mix is changing: the Asia-Pacific sportswear market has trebled since 2007 to reach USD91 billion a year – 26 per cent of global industry sales – and could be almost USD150 billion by 2024.
In the short term, coronavirus could affect supply chains and distribution, though major footwear producers have reduced their dependence on China. Shifting production closer to end markets can bring products to consumers in half the time and 3D printing is reducing costs.
First published 25 February 2020.
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The following analyst(s), economist(s), or strategist(s) who is(are) primarily responsible for this report, including any analyst(s) whose name(s) appear(s) as author of an individual section or sections of the report and any analyst(s) named as the covering analyst(s) of a subsidiary company in a sum-of-the-parts valuation certifies(y) that the opinion(s) on the subject security(ies) or issuer(s), any views or forecasts expressed in the section(s) of which such individual(s) is(are) named as author(s), and any other views or forecasts expressed herein, including any views expressed on the back page of the research report, accurately reflect their personal view(s) and that no part of their compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report: Erwan Rambourg
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