Global sports markets flatten amid recession

Worldwide sales of sports equipment, apparel, and footwear sales remained flat at US$284bn in 2008 – but in what is seen as good news for the industry, sales of ‘sport use’ apparel and footwear products are on the rise.

The trends are seen in a new report, ‘Global Sports Estimate 2009,’ published by market research firm The NPD Group.

By region, its study found a 1% decline in all of the Americas (North, Central, and South), driven by a 2% drop in the United States during 2008.

Sales in Europe lagged as well, with a 1% fall.

However, the overall picture was stabilised somewhat, due to the contributions made by Asia, up 4% and the Middle-East/Africa, up 7% in 2008.

In the emerging countries, the so-called ‘wealth effect’ may have contributed to the growth.

“In some cases, it was a combination of things that triggered double digit growth,” said Renaud Vaschalde, global sports industry analyst, The NPD Group.

“For instance, China’s growth skyrocketed 15% in 2008 and for the second consecutive year.

“This was due to the combination of things like a growing middle class and one that has more disposable income, as well as the fact that the Olympic Games were hosted in China that year.”

In contrast, most of the developed countries posted negative results.

“Clearly in Japan, the US, and Western Europe, the sports market underperformed relative to the economy,” said Vaschalde.

‘Sport Use’ rise
Overall sales of ‘sport use’ apparel and footwear products are on the rise which is good news for the industry.

There were positive results seen in the market size for running, walking/hiking, swimming, cycling, training/fitness/work-out, and soccer/football – all of which are convenient and easy to pursue, family friendly, or fun to do.

Additionally, the reappearance of snow helped the snow sport industry post growth worldwide in 2008.

However, there were mixed results in some sports. Golf, basketball, and tennis lost some ground while hunting and fishing were hit by diminishing wildlife resources.

In Europe manufacturers have been trying to grow the women’s sports market, but this strategy has been hindered by work and childcare commitments leaving little time for exercise.

Other obstacles impeding growth in the sports industry are cultural in nature.

In the US, for example, soccer, it has not yet taken hold as it has in European countries. Conversely, basketball, baseball, and American football are very popular in the US, but there are no signs that they have gained wide acceptance globally.

The stagnation of the sports industry worldwide is evenly distributed between footwear, 0%; apparel, -1%; and equipment, 0%.

In the Americas, footwear declined 3% in 2008, but this trend is not evident in other regions, where footwear is flat or growing.

In sports apparel the trend shows a decline in Europe, down 4%, while the rest of the world showed growth or levelled off.

Outlook for 2009
There are signs that the party is over for China in 2009, with huge declines in exports that are not being compensated for by the domestic sales. Additionally, some retailers still have a stock of unsold Olympic merchandise.

In Southern Europe, many manufacturers are taking control of their own distribution and retailers are getting into the private label business.

However, despite these efforts, “the size of a business is the key component to a successful game plan,” says Vaschalde. “And many medium sized brands and retailers cannot afford to play it.”

On the manufacturer side, NPD says there are segments – notably outdoor and swimwear – in which there will be further consolidation in the coming year.

Mergers and acquisitions activity in 2009 and 2010 might mean that some brands will disappear or be acquired in a brand portfolio strategy by bigger companies.