According to a recent report by McKinsey & Company, the sporting goods companies and the brands saw their market valuations fall in the early months of the pandemic. However, they tended to outperform as compared to the rest of the apparel industry as the year progressed. Brands like New Balance and Under Armour have been quoted saying that 2021 will be a demanding year when it comes to the sportswear category, given that the people are slowly bending towards health. They are getting health conscious and the consumer demand is pulling up the sales.
2021: The positive year
The report states that 2021 will be a year of positive outlook. Even though the uncertainty caused by an unfolding second wave of COVID-19 and the relatively slow ramp-up of vaccinations is a concern, but as per 64 per cent respondents to the WFSGI–McKinsey Sporting Goods Survey, ‘better’ or ‘much better’ market conditions are awaited this year for the sportswear industry.
The biggest challenges, the report notes for the coming year are seen in supply chains and COVID-19-related issues, including ongoing challenges relating to physical-activity levels and indoor- and team-sport participation. The greatest opportunities, meanwhile, are associated with the potential return of large sports events, including, potentially, the Olympic and Paralympic Games and the ongoing rise in popularity of outdoor and home-based sports.
Trends to watch out for
McKinsey & Company noted that the categories that saw a limited increase in participation, or a decline, are likely to make a partial recovery, but at a lower rate than 2020’s winning categories. The great unknown for 2021 is the trajectory of COVID-19. A successful sportswear brand this year will be defined by an ability to make smart moves to leverage the opportunities prevailing within the industry.
As per the report, the key parameters or trends that will change the industry in the new normal are:
- Athleisure is going to rule the block and COVID-19 has accelerated this space to help the entry of newer brands within this segment. Innovation, the report says, will be the key differentiating factor for brands within this category.
- Sustainability is going to be the buzzword for the industry and will be an urgent consumer priority this year. Brands taking responsibility to design and produce circular products will become a customer favourite.
- Digital-enabled fitness and exercise communities will take the centre stage. Stuck at home, more people will try digital wellness and it will be the game changer in the time to come.
- The online business model that allows brands to sell directly to consumers is here to stay. COVID-19-related store closures have lifted the online growth curve to a new level, enabling multiple brands to grow e-tailing and even direct-to-consumer sales. As per the report, online penetration is expected to stabilise at around 25 per cent in 2021, six times higher than before the pandemic.
- Digital marketing is going to be the opportunity in the coming days. With physical events coming to a halt, building brand awareness, credibility and engagement within the digital space is bound to be the differentiator; brands will increasingly work directly with individual athletes as influencers, who have a much longer reach than events or associations. These activities, being more consumer-centric, brands will have to be sure of the messaging stance in order to get better results from online promotions and marketing.
- Supply chain flexibility is now going to be the path for change for every brand. More agile supply chains will become a permanent feature for companies. In a post-COVID-19 world characterised by shorter demand cycles, e-commerce and closer direct-to-consumer relationships, they will raise the bar high for most brands.
“Building stronger yet agile supply chain given the persistent uncertainty will make sense to both build stronger supply-chain partnerships and explore alternatives such as nearshoring. We have incorporated new ERP systems to constantly tackle our supply chain and bring every partner on to the same platform. There has been immense setback from our production or retail plans, given the pandemic. But we are managing by adding more production lines. We are not facing any issues in procurement of raw materials given our set up and working style. However, the second wave is challenging in terms of both offline and online sales as every next door is affected across the country. Business has been slow and is very stagnant, but we are optimistic that it will bounce back, as the situation improves,” mentioned Vijaya Raghavan, MD, Lavos Performance.
Lavos ticks all the boxes when it comes to staying abreast with the latest trends within the sportswear category and with their supreme quality, high performance garments made of bamboo fabric, they have emerged as one of the key players in the sustainable sportswear category.