The U.S. market for athletic shoes is one of the strongest of the global markets. However, U.S.-based companies and their competitors have long been multi-national firms operating in diverse overseas markets selling footwear and also athletic apparel in increasingly competitive markets. The athletic footwear is highly dependent on fashion trends, customer preferences and other fashion-related factors. Many of the industry’s highest-margin products are sold to young males between the ages of 12 and 25 and are subject to frequent shifts in fashion trends.
Basketball Shoe Segment
One of the key drivers of strength in the U.S. market is basketball-driven sales growth, which was particularly strong during fiscal 2013. According to the research firm SportsOneSource, basketball footwear sales grew by 25 percent during the 12 months ended March 31, 2013. Analysts, however, are concerned about future industry growth, which in the past years was driven by footwear producers introducing new colors and materials to the market. A major concern is that markets other than basketball remain flat, and basketball-driven growth declines in the near-term.
Running Shoe Segment
The market for running shoes appears to be shifting towards higher-quality specialty goods. Manufacturers acknowledge strong demand for lightweight, performance-geared running shoes, but running shoe sales at mall-based retailers such as Footlocker and Finish Line have been flat. However, growth at specialty running-shoe stores based outside of shopping malls has been stronger, benefiting from a captive market comprised of dedicated runners. Runners now accept a faster replenishment cycle for running shoes, which translates into higher sales for producers. At the same time, several large producers are expected to bring new products to market during calendar 2013, which many expect to moderately boost sales.
Global consumer products manufacturers have long seen China as the most important market for carving out retail space to attract its growing consumer base flush with increasing discretionary income. Foreign athletic shoe companies faced a setback in China when in 1990 famed former Olympian Li Ning formed an athletic shoe company, also named Li Ning, which quickly became a significant competitor within China, although its fiscal 2012 operating results were poor. Most analysts expect the Chinese market to pick up in the near term as retailers clear out old inventories and introduce trendy new products that compete well with Li Ning products.
The U.S. market for athletic footwear during fiscal 2013 was approximately $13.8 billion, equal to roughly 19 percent of the $75 billion global market for athletic footwear. In the U.S., this reflects growth of 5 percent over the prior year. Future expectations are mixed as different retailers have applied varying strategies to the various shoe groups with different levels of success. Basketball brands associated with top athletes should be able to sustain higher prices going forward. Analysts expect increasing sales in the women’s running shoe segment, which actually saw sales decline by 3 percent during fiscal 2013. Producers are currently responding with new styles and colors. Overall, domestic athletic shoe sales should benefit from strong pricing carrying over from fiscal 2013, and continued demand for new technologies, neon colors and retro styles.
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