In Search of a New Winning Strategy As with many retail sectors, sporting goods is equally vulnerable to tariffs, taxes and labor costs, but specifically the “tech disruption,” which is reflected in the 6.1% decrease in total 2018 sales, to $42.43 billion, according to the US Census Bureau. The sporting goods sector was also caught in the surprisingly disappointing Q4 2018, or holiday, retail sales numbers. Overall, the final results were much different than the predictions and sporting goods contributed with a 9.8% decrease in sales. Despite being slow to react and act, the industry has some bright spots, such as the increasing popularity of athleisure apparel, consumers attracted to companies’ “green” initiatives and increasing sports participation (See page 2 of the Profiler).

Manufacturers and Retailers Associations Squeeze as Much Positive from the Data As industry representatives, the professional sporting goods associations have the right to “spin” sales/revenue results to put the industry in its best light. (The following totals are calculated differently than the Census Bureau.) The Sports Fitness Industry Association (SFIA) reported 2018 wholesale sales of $92.3 billion, a 2.3% increase from 2017. Sales increased for all of the 4 major categories in the data – sports equipment, fitness equipment, apparel and footwear. According to the National Sporting Goods Association, total 2018 retail sales were $69.9 billion, increasing 1% from 2017. Full-line sporting goods stores were still the #1 sales channel, but the online channel assumed the #2 position from specialty sport stores.

More Active Americans, More Sporting Goods Revenues Much like hunger fuels the grocery and food services industries, so should retail sporting goods sales as the number of people who are physically active increased. That’s why the 1.6 million new physically active Americans is good news for the sporting goods market. The annual SFIA Topline Participation Report revealed a small increase during the past 5 years in the 7 categories it measures: fitness sports, individual sports, outdoor sports, racquet sports, team sports, water sports and winter sports. Although overall physical inactivity remained at 27.3% of the population, the largest percentages of Gen Zers (36.7%), Millennials (42.0%) and Gen Xers (39.4%) were participating in active high-calorie activities, a good trend for the industry’s future.

More Room to Grow with Latinx and Asian Americans Based on its latest Outdoor Participation Report (2018), The Outdoor Foundation revealed 146.1 million Americans 6 years of age or older participated in an outdoor activity during 2017, which was 49.0% of the total population.   Of particular note in the report is the average of a 1.0% increase in outdoor recreation among Latinx Americans for each of the last 5 years, and 0.9% among Asian Americans. Kampgrounds of America’s (KOA) 2019 North American Camping Report had similarly good news about Latinx Americans as they increased from 17% of new campers during 2017 to 22% for 2018.

The Competition at the Top is Fierce As the #1 sporting goods chain, Dick’s Sporting Goods generated $1.92 billion in Q1 2019 sales, or a very modest 0.6% increase; however, total sales were greater than the estimate of $1.90 billion and the company projects a 2.0% increase for all of 2019. According to Sports Insight (May/June 2019 issue), Hibbett Sports performed considerably better during Q1 2019, with a 25% increase in total sales, or $343.3 million, while the e-commerce channel was responsible for 8.3% of total sales. Finish Line, which was an acquisition of JD Sports Fashion in the UK during June 2018, had total sales of $1.2 billion for the 12 months ending 2/2/19. The parent company has closed 49 stores that weren’t performing to expectations.

No Room on the Playing Field for Lower-Income Households According to SFIA’s 2019 Topline Participation Report, 49% of American households with annual incomes less than $25,000 were physical inactive during 2018. SFIA is concerned lower-income Americans can’t afford to participate in sports and physical activity. Data from The Media Audit’s 2019 Rolling Aggregate Survey supports this disparity, as 49.6% of adults 18+ who shopped at a sporting goods stores during the past 4 weeks had incomes of $75,000 or more, with another 20.9% in the $50,000–$75,000 range. When analyzed by age groups with incomes of $75,000 or more and adults who shopped at a sporting goods store during the past 4 weeks, adults 18–44 were 44.2%; adults 45–64, 59.0%; and adults, 65+, 47.3%.

Advertising Strategies “Green” initiatives are certainly a positive story regional/local sporting goods stores can use in their advertising, emphasizing environmentally sustainable products they stock, which could be featured for one or more weekend promotions. Similarly, regional/local sporting goods retailers could also feature/promote athleisure apparel from start-up companies and/or local entrepreneurs, which wouldn’t typically be found at the national chains. Clearly, Latinx Americans are increasing their participation in outdoor activities, which provides regional/local sporting goods retailers with numerous opportunities to attract this audience with appropriate products and Spanish-language store signs and ad messages.

New Media Strategies Asking (and incentivizing) one or more Latinx American customers to be influencers and to connect with the Latinx American community via social media is another marketing strategy regional/local sporting goods stores can utilize to maximize reach into this audience. No doubt, many sporting goods stores support local youth and adult sports teams with discounts, sponsorships and other special offers, but they should also ask coaches, parents and adult participants to post short videos about products they’ve used successfully. Regional/Local sporting goods stores may want to co- promote with other local retail businesses (See table on page 4 of the Profiler) on social media: sharing a new, healthy menu item at a restaurant, for example, while it shares a new product for healthier living.