The global athletic shoe market explodes

The vendors’ sales increased by 11.5 percent in the U.S. to $14.0 billion. They grew by 14.1 percent outside the U.S., with rises of 9.2 percent in Europe to $9.6 billion, 9.8 percent in the Asia-Pacific region to $9.6 billion and 32.1 percent in Latin America to $5.5 billion. As the average value of the U.S. dollar appreciated by 5.3 percent against the euro last year, most European sales rose at a higher rate in terms of local currencies.

The lower sales increases calculated by NPD at retail in the major European countries, which we discussed in the previous issue of SGI Europe, indicate that some of the growth there at wholesale was due to replenishment of inventories after the economic crisis, which led to a 4.3 percent drop in the global wholesale market in 2009. Apparently, higher input costs had only a marginal effect on the prices charged by vendors in 2010, but they have started to work their way down the supply chain this year.

The Chinese market began to recover from a post-Olympic inventory overhang. Sales were also sustained by strong growth in other emerging markets, including Russia and Latin America, by the short-lived boom in the toning shoe market in the U.S., by a good lifestyle shoe business and by higher sales of technical products, especially in the running category.

Our annual study covers only the athletic footwear sales invoiced by the major groups and their licensees, excluding those of brown shoe brands such as Clarks, Cole Haan, Rockport and Timberland, which will be covered by another study that should run in Shoe Intelligence in September. They are mostly wholesale revenues, but they are getting a small boost from a rising share of revenues from own retail, which we are unable to break down here systematically. Where the figures have not been publicly reported, we rely on input from management or on in dustry estimates.

Published on Page 3 of this issue, SGI’s athletic footwear chart for 2010 continues to feature the Nike group at the top of the ranking with a market share of 36.1 percent, up from a share of 36.0 percent in the prior year. The Adidas Group’s share declined to 18.4 percent from 18.7 percent, due at least in part to the currency effect. Both groups lost some market share in the U.S., but Nike gained market share against Adidas in the rest of the world, where the gap between the two groups is smaller. Together, the Adidas and Nike groups have a combined share of nearly 55 percent.

Flooding the market with its toning shoes, Skechers jumped into second place in the U.S. and into fifth place globally, sharing the second tier in the global rankings with Puma, Asics, New Balance and VF Corporation (The North Face, Vans and Reef footwear). It will be different this year, especially in the U.S.

In the past years, the addition of more and more Chinese companies to our chart has boosted the total size of the market. There are now eight Asian companies on the list, and five of them are from China and selling mostly in China. This year, the big surprise comes from the inclusion for the first time of Olympikus’ estimated gross revenues from athletic footwear into our annual chart, which is something that we should have done before. Olympikus is the leading brand of athletic shoes in Brazil. It belongs to Vulcabras, which also has a joint venture and a management contract for the distribution of Reebok in Brazil, Argentina and Paraguay.

Helped in part by Brazil’s new anti-dumping duties on imports from China, Olympikus boosted its sales by more than 40 percent last year, which translated into a 60.7 percent increase in dollars because of the appreciation of the Brazilian real. Including Reebok, whose Latin American sales are included in those of the Adidas Group, Vulcabras’ total sales of athletic shoes rose by 46.4 percent to $962 million in terms of dollars.

The other major Brazilian player on our chart, Alpargatas, generated $392 million from athletic shoes through its own two brands of athletic shoes, Topper and Reinha, and the distribution of Mizuno and Timberland in Brazil, but we were unable to break down the sales of the different brands. As we are expanding our coverage of emerging markets, we provide more information on these two big Brazilian companies and on the Latin American market further down in this issue.

Last year’s brisk growth pace seems to be holding up somewhat in 2011, in spite of more normal inventory levels and the meltdown of the U.S. toning market. New technical running and basketball models have more than made up for the slack, and helped mask an initial wave of price increases. The major brands have reported strong sales in Europe recently. The business is growing again in China, offsetting the effects of the tsunami in Japan. Latin America seems to be in a hurry to catch Asia in time for the 2014 World Cup and the 2016 Olympics in Brazil. Price increases for the fall/winter 2011-12 collections have been generally accepted, and this will help to lift the overall market, too. While 13 percent seems a tall order to repeat, high single digits are not a bad guess for the wholesale market in 2011.

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