The sportswear market stands face to the crunch

   During periods of economic crisis, the luxury market is well known to florish whereas traditional sectors decline. Actualy it seems that the sportswear market show good results in spite of the shrink of the purchase power of people. We can focus on the case of France: the sportswear market reached 9,6 billion of euro in 2012 (+3% compared to 2011) and 9,7 billion in 2013. These good results can be explained by 3 factors:  good distribution channels , a wide range of prices proposed by brands and the permanent innovation from the leading brands.

   In France sportswear items are sold by 2distribution channels mainly : Mass retailing and specialized stores. In 2013, the 4000  specialized stores of Decathlon, Go Sport, Sport 2000 and Foot lockers sold for 7 billion of euro of sports items. Mass retailing stores sold 2 for billion of euro. Generally specialized stores and mass retailing stores are often located close. Thus, we have to pay attention to the fact that consumers tend to purchase more on the internet to waste less time. Internet is starting to compet with these 2 traditionnal channels with 700 million of euro of items sold.So we can asset that sports products are easily reachable for consumers.

   Moreover, people matched budget barriers for non food products. Among the sportswear items, people can find different ranges of prices from a same brand. As the leading brands have to compet with cheaper competitors, they do not only focus on premium products. For running , you can find Adidas shoes going from 60 euros to 450 euros. The average price for running shoes is 100 euro.So people make choice between non product food and can find easier to select 89 euro shoes rather than a 300 euro TV according to Adidas CEO Herbert Hainer.

   Then, according to J.Schumpeter, companies have to innovate in order to solve financial crisis. If leading brands succeed , that is because they invest a lot in R&D. Adidas is developping with the chemist BASF a material called Boost in order to improve the quality of the running shoes. In 2013, Adidas CEO Herbert Hainer declared they expected to sell 1 million of running shoes with these technology up 2015.Nike keep improving its running shoes with its "Flyknit Texture Knit 3D" so that football players had a better agility. All these investements in running and gym shoes might explain why shoes are the main drivers of profits on the sportswear market.

Edouard Lévêque

Sources:
http://www.entreprisesdusport.com/fr/marche-du-sport/chiffres-clefs/
http://www.lefigaro.fr/societes/2013/03/26/20005-20130326ARTFIG00328-adidas-n-a-jamais-ete-en-aussi-bonne-sante.php
http://www.nike.com/lu/fr_fr/c/football/innovation