IADS Press Release: Rise of Sports Retail: Department Stores Become Fan-Focused Hubs
Sportwear: as Covid induced a new-found interest in sports practice among many customer demographics, the category thrives in department stores. To differentiate from specialized competition, they transform themselves into dedicated hubs for fans.
Competition in the sportswear category is intense for department stores. This is partly due to the level of equipment among customers, the price pressure coming from other types of retailers, but more significantly because of the limited number of relevant brands available on the market. Larger brands leverage their size to go direct to customers, and the most powerful dictate their conditions. Despite these challenges, the category shows dynamism in department stores thanks to the exploration of new categories and practices.
The post-Covid period, and life returning to normal, significantly impacted the market by restructuring the product segment breakdown, a phenomenon fuelled by the fact that customers needed less restocking in 2022 after massively buying equipment during lockdowns:
- Hybrid products, used both for sports practice and in daily life, decreased from a 50% share of the business to a mere 22%.
- Streetwear, a segment increasingly popular which can be worn in front of a screen but also in the office, increased its share from 23% to 45% of the total business.
- Technical products, only used for sports practice, grew from 20% to 31% in 2022 thanks to a new-found interest in outdoor activities overall.
By adding carefully curated equipment for new disciplines as well as new brands and activations, department stores were able to generate growth by building their credibility in the segment. In 2022 the sportswear share out of department stores’ total turnover was 6% on average, growing +14% when compared to 2021. The growth was mainly observed in store, as e-commerce sportswear share of business decreased on average by -6% among IADS members.
Making choices: department stores opt out of competition based on low prices
Consequent to inflation, e-tailers offer high discounts that department stores don’t match. A price war is raging in some markets where it is easy to find running shoes with a -30% discount with retailers offloading their excess stocks. Besides, e-tailers have expanded product catalogues, sometimes making department stores’ smaller offer less relevant. Finally, fashion and fast-fashion pure players and brands are more aggressively penetrating the sports market. DTC brands are also developing their own retail footprint, creating additional competition.
For these reasons, department stores have opted for a strategy involving curation and a focus on some categories.
To go beyond a limited brand portfolio, department stores combine events and new brands
Overall, members rely on a small number of major brands. Depending on the market, the best ones are Adidas, Nike, The North Face, Under Armour, Puma, On, New Balance, Asics and Lululemon. As a result, the category requires finding and onboarding additional brands to secure and leverage the business.
From this perspective, IADS partner NellyRodi spotted 50 interesting brands to follow:
• Outdoor (technical brands made for the outside and resistant to extreme conditions): Arc’teryx, Rains, Tropicfeel, Ecoalf, Finisterre, Roa Hiking, Volleback, Aether Apparel, CMF Outdoor Garments, Flotte, Hoalen, Alk Phenix, Spoonyard, Matek.
• Activewear (casual and comfortable clothing specifically designed for sports practice): Alo Yoga, Rapha, Girlfriend Collective, Yoga Democracy, Planet Nusa, Unrun, Chlore, Cardo Paris, Opoi, Hercule Studio.
• Athleisure (versatile sportswear combining function and fashion to wear daily in non-sport activities): Pangaia, Outdoor Voices, Vaara, Ganni Sport, AA Spectrum, Ninepine, Sporty & Rich, Madhappy, The Upside, Jonsen Island, Les Tien, 7 Days Active, Café du Cycliste, Colorful Standard, Cariuma.
• ‘Tech-ipment’ (new objects and innovative products that are useful to sports practice): Starck x Baliston, Suunto, Cowboy.
• Footwear: Eytys, Rombaut, Autry, Saye, Salomon.
• Food supplements: Feed, Poppi, Food Spring.
To make sure customers notice and are willing to try new products, brand activations are key, with pop-up stores at the top of the list. Initiatives such as Adidas soccer products shown prior to the World Cup and On Running shoes for instance show significant results. With cycling being increasingly popular, pop-up stores with Rose bikes and Mate bikes are also of interest.
Events and services come as a great complement to pop-up activations: Beco organises a successful fitness fest twice a year, El Corte Inglés uses influencers and social media to make brand collaborations more powerful, while El Palacio de Hierro organises happenings, cycling or yoga classes with experts. Last month, Boyner conducted their Dynamic Fest festival, a never-seen-before series of days of physical activities in a 2-hectare park.
Into the wild: outdoor practices win, including jogging, cycling and paddle
Activewear and sneakers remain hero categories in Sportswear. But besides increasing their footwear business, department stores are looking into new segments for growth. Outdoor sports are favoured: soccer, basketball, cycling, jogging and paddling are among the ones with great potential. There is a consensus on the idea of picking a few disciplines instead of being generalists. This strategic move requires building true credibility to be able to compete with specialist retailers and e-tailers: having expert sales associates in the chosen disciplines and making sure to offer head-to-toe equipment will be the winning ingredients to create a community of active customers.
Also, the Wellness category comes as an interesting complement to the Sportswear one. With its all-encompassing contours, Wellness could support the category as a unique way to link sports and beauty, and to generate additional business opportunities. In that regard, El Palacio de Hierro recently opened 1,872 sqm dedicated to wellness: it helps to develop different disciplines, brands and categories and is also a great way to bring additional experiences and services such as gym classes, a beauty bar and healthy restaurants. Pioneering in Wellness, Galeries Lafayette’s 3,000 sqm Wellness Galerie gathers a gym studio, a fitness store, beauty counters and services, as well as a multi-brand store.
Despite the competition, the outlook on the future of the category is positive: in addition to activewear and footwear as key categories, the onboarding of new brands allows the Sportswear business to continue growing in department stores. Instead of having a generic approach to the category, adding new sports practice equipment helps department stores develop the business but requires building true credibility with a significant and relevant product offer, expert staff and enough surface to demonstrate products. Thanks to its all-encompassing contours, wellness will be a good support to sportswear.
Read the full press release below:
Read the full press release, in French, below: