Sporting items 2022: The brand new regular is right here

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Although the COVID-19 pandemic continues to impact business around the world, the sporting goods industry has managed to return to pre-COVID-19 growth levels amid difficult economic conditions. In 2020, sporting goods industry leaders focused on three key trends: consumer shifts, the digital leap, and industry disruption. In 2021 these trends continued, sometimes accelerated, or took interesting new turns. With many people still working from home, athleisure has continued to gain ground, reflecting a new attitude towards traditional workwear. Increased health awareness has given many people a new perspective on sports and general fitness. E-commerce is thriving as consumers continue to shop online even as lockdown measures have been eased. Digital forms of individual or community movement and physical activity are growing in popularity and have created new opportunities for sporting goods companies. Meanwhile, sustainability is more important than ever as the COP26 climate conference highlights the need for companies to scale up their decarbonization efforts as they seek to differentiate their offerings.

Personally, I’m more excited than I’ve ever worked for a sports company. We all know that exercise is an important contributor to health and as an industry we have the power to change lives for the better.

Kasper Rørsted, Chief Executive Officer, Adidas

state of the industry

At the beginning of the pandemic, sporting goods companies saw, with a few exceptions, a significant drop in sales and lower margins. These shifts resulted in a power fork (Figure 1).

Before the pandemic, the majority of listed players saw earnings before interest and taxes grow by 8 percent to 15 percent and annual revenue grew by 5 percent to 10 percent. In 2020, a few specialized players were able to break away, with margins and revenue growth rising to over 15 percent. Nevertheless, most sporting goods companies continued to achieve above-average economic profits.

In 2021, the sporting goods industry saw a broad recovery. Globally, the sportswear market almost fully recovered to pre-COVID-19 sales in 2021, driven by consumers in China (23 percent growth over 2020) and the United States (15 percent). Overall, 14 percent year-over-year growth in 2021 will be more than double the compound annual growth rate (CAGR) between 2015 and 2019 (5 percent).

exhibition 1

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The last two years have actually felt like competitive sports for many of us – this is the new reality. We saw a big change, comparable to the 1920s when Coco Chanel freed women from corsets.

David Alleman, Co-Founder, On

Over the next 12 months, we expect the tailwinds from 2021 to continue, despite some uncertainties caused by new viral variants such as Omicron and tightened restrictions again. The medium-term outlook is indeed positive, as the global sportswear market is projected to grow at 8-10 percent annually through 2025, from €295 billion in 2021 to €395 billion in 2025 (Figure 2).

As more and more people commit to leading healthier, more active lives, sporting goods companies have an opportunity to explore new areas of growth.

exhibition 2

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During the pandemic, digital was the only way to connect – now it’s completely normal.

Caio Amato, Brand Leader, Oakley

Trends that will shape the industry in 2022

This second edition of our report confirms the trends we unveiled last year and examines an exciting new selection of trends poised to shape industry fortunes into 2022 (Exhibit 3).

exhibition 3

Five key trends will shape the sporting goods industry in 2022.

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We believe that appreciating sport and living an active life is inseparable from preserving this planet.

David Alleman, Co-Founder, On

Our research proposes five key themes that reflect the current state of affairs: the continued growth of digital, an acceleration in sustainability, a closer connection between social media and commerce, the transformation of distribution channels, and a need for new supply chain strategies. None of these trends are new, but over the past year they have gained prominence, widening the gap between various industry players, with economic gains increasingly concentrated in a small group of players. The consequence is that some industry players have to adapt their business models quickly. In each topic, we present strategies that can help you do this.

  1. Evolving Attitudes and Behaviors: Consumers will continue to be active in new and different ways in 2022 amid rising health consciousness and greater engagement with digital and community-led exercise—often away from traditional gyms, but also as part of traditional gyms and at-home exercise. Our report shows that younger generations and consumers in China, India and the United States are generally more optimistic about future spending than older generations and consumers in other regions. Sporting goods are one of the categories they’re looking to invest in, a positive indication that the tailwinds of 2021 will continue into 2022 — at least for industry players keeping up with rising consumer expectations.
  2. From social media to social commerce and digital ecosystems, social media continues to serve as an effective platform for influencers and digital communities to foster closer connections between consumers and commerce, and leading players are capitalizing on this growing trend. Businesses in 2021 that have been able to streamline this connection between engagement and revenue have been able to significantly increase profits and even build digital ecosystems for customer engagement – from the company’s website to proprietary apps and retail stores – by generating the Using data to inform areas like this, like product development and demand planning. And the social media space is constantly evolving: the use of live streaming, both as a promotional tool and as a shopping channel, is now well established in Asia and is expected to grow globally. Early adopters among the sporting goods gamers are trying to break into this “metaverse” arena, and others are expected to follow suit.
  3. The Sustainability Imperative: The pandemic and COP26 have helped raise people’s awareness of sustainability, including a demand for more sustainable products. As consumer expectations rise in this space, the bar for companies to differentiate themselves is rapidly raising. Leading companies will focus even more on sustainable materials, circular business models and helping consumers make choices that reflect their values.
  4. The Future of Channels: Over the past year, the importance of digital channels has increased, even as physical stores began to reopen (Exhibit 4). We’ve seen players transition to offering direct-to-consumer (DTC) models, creating a stronger online presence, and consolidating their retail partner model. In 2022, companies will have to play to their strengths. New players will prioritize DTC and continue to focus on partnerships with select retail partners. Meanwhile, retail stores will try to give brand names a clear advantage to prevent them from churn. However, brands that are leaving will open up space for smaller brands. Many players will repurpose physical locations as experience- and service-centric elements of an omnichannel offering.
  5. Solving the supply chain puzzle: Demand volatility, production bottlenecks, rising raw material and transport costs and logistics chaos are causing chaos in global supply chains (Figure 5). At the same time, consumers continue to expect fast and convenient delivery. Players will want to strategically review their supply chains to be better prepared for an uncertain future.

exhibition 4

Digital penetration of sportswear has remained at around 45 percent over the past two years.

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The trend towards online selling has given us much more information about our consumers than before when most of our business was done through retailers.

Duncan Scott, Senior Vice President of Strategic Sourcing and Quality, New Balance

exhibition 5

Bottlenecks and congestion in ports reduced daily container capacity by 14 percent in 2021.

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The changing trends that the sporting goods industry experienced in 2021 are likely to become even more prevalent in 2022, with uncertainty becoming the new reality. In this challenging environment, there are many risks and opportunities. The most successful players will likely be those who can adapt flexibly and boldly adapt to the new trends as they emerge.

With COVID-19, we will continue to see disruptions on both the demand and supply side for the next three to five years. We need an extra pillow layer.

Duncan Scott, Senior Vice President of Strategic Sourcing and Quality, New Balance