by Dick Silverman
What is the fastest-growing category of retail purchases in the athletic footwear market? According to Merrill Lynch's ninth athletic footwear buyers survey -- with responses by retailers representing 7,000 stores -- running is speeding away from the pack.
Almost half the retailers answering the survey -- 45 percent -- revealed running was their fastest-growing category. Interestingly, no other single category grabbed more than 10 percent of retail responses. The Merrill Lynch survey also found that outdoor footwear -- cited by 10 percent of respondents as the fastest-growing category -- showed momentum for fall sales.
After running and outdoor, the next most popular categories were sandals, cited by 10 percent of responding retailers; cleated footwear, at 7 percent; followed by skateboard, walking, cross training and basketball shoes, each with 6 percent. Significantly, "The important basketball category shows little signs of picking up for spring," Merrill Lynch reported.
Merrill Lynch noted running shoes benefited from consumer use for both running and walking and by intrigue over the various fashion styles.
The Trend Watch
What new trends do retailers see developing for the future? As part of the "white shoes versus brown shoes" battle in recent seasons, retailers expect casuals (including skateboard shoes), along with outdoor and trail running shoes, to gain momentum in upcoming seasons. "The proliferation of brown shoes in brands such as Lugz and Timberland, as well as the top athletic brands, offers retailers diversification away from their tendency on the 'hero product,'" Merrill Lynch revealed.
Additionally, many retailers see renewed popularity of skateboard shoes, reflecting the category's continued acceptance as casual shoes among 14- to 24-year-olds.
Trail running shoes also were cited as an emerging trend. Although the category has been solid for some time, this was the first survey in which more than 10 percent of respondents actually cited the segment. The shoes are gaining because they combine the popularity and comfort of running with the casual influence of outdoor styles, Merrill Lynch explained.
In pricing trends, Merrill Lynch said retailers are focusing on the $60 to $90 "kill zone." Furthermore, explain the analysts, while some athletic shoe prices have soared as high as $180, the emphasis to improve product at lower price points reflects retailers reacting "to the challenge that exists in maximizing where the opportunity is to do most of their volume."
Designs Profit
Retailers were mixed on the impact of major designers -- Nautica, Tommy Hilfiger, Donna Karan and Ralph Lauren -- entering the athletic market. Fifty-one percent of retailers felt the designer brands will have no effect. While 7 percent felt it would bring positive results, 20 percent warned it could bring a negative impact and 22 percent were not sure.
Brands That Consistently Sell Through At Full Price New Balance 9% Adidas 22% Timberland 4% NIKE 44% Asics 4% Other 17% Brands Marked Down Most Consistently Reebok 34% Converse 11% Avia 5% Fila 31% Asics 5% Other 14% Note: Table taken from pie chart
Perhaps because they compete more directly with department stores, larger retailers operating 20 or more outlets said more often -- 35 percent -- that the designer trend would negatively impact their businesses. Thirteen percent of that group predicted it would positively affect business, with just 4 percent unsure. "We believe it is too early to determine the long term effect," Merrill Lynch forecast, adding, "It is also possible that in the long term these [designer] brands could expand into these channels of distribution with in-store shops selling apparel and footwear, driving beneficial results."
A Brand New Game
While athletic retailers consistently sell some brands through at full price, other names are repeatedly marked down.
The brand mentioned by the most retailers -- 44 percent -- as most often selling at full price was Nike. "This result is not surprising despite the slowdown of planned increases for the brand," Merrill Lynch stated. "Nike continues to be the most popular brand and has dominated this question whenever it is asked. This is consistent with their product strength, marketing capability and breadth of product line."
Coming in second for brands selling most often at full price was Adidas, cited by 22 percent of retailers; followed by New Balance (9 percent); and Asics and Timberland, both with 4 percent. Other brands represented 17 percent of responses. "Adidas showed significant improvement," Merrill Lynch explained. "The brand has enjoyed strong momentum in recent seasons, especially in running. Although its basketball line has struggled, both management and retailers have recognized this and by placing fewer orders have limited their markdowns for this category."
On the flip side, Reebok was cited by the most retailers -- 34 percent -- as the brand most consistently marked down. This was actually an improvement; 54 percent of retailers cited Reebok in the previous survey.
While Merrill Lynch believes Reebok's success with its DMX line may have helped the firm, it also noted that many Reebok markdowns may have been influenced by the large volume of Reebok Classics sold as loss leaders in some stores.
Next on the markdown list were File at 31 percent; Converse at 11 percent; Asics (also highly ranked on the full price survey) and Avia at 5 percent; and all other brands at 14 percent. For Fila, this survey figure represented a rise on the markdown list, up from a previous 23 percent. "The brand has struggled as its key category, basketball, has slowed at retail and some of its hero shoes, such as the Grant Hill III, have under-performed," Merill Lynch reported.
Sportstyle introduces The Numbers Game, a monthly presentation that will offer the latest statistical updates on sales, market share and brand data impacting and influencing the athletics market. This continuing infusion of research is specifically designed to help retailers better position merchandise for higher sales and profits.