Performing better than general apparel and other consumer goods sectors, the global sporting goods market declined by around 7 percent to around €285 million in 2020 because of the Covid-19 pandemic, according to a preliminary estimate made by McKinsey & Co. in a webinar hosted by the World Federation of the Sporting Goods Industry (WFSGI).

The rates of the decline varied from 7 to 12 percent in most continents, but in Asia, the Chinese market grew nicely, leading it to raise its share of the global market to about 14 percent from 10 percent previously. The worldwide drop followed continued increases of 5 to 7 percent over the last few years, based on NPD data, and according to Robbert de Kock, president of WFSGI, 2021 may also turn out to be an “exceptional” year.

He noted, however, that industry executives are generally optimistic about the immediate future. A poll of WFSGI members shows that only 6 percent are afraid that the situation will become more adverse, while 62 percent predict that 2021 will be better than 2020.

As we know already, outdoor and individual sports like fitness, running and cycling have been booming during the pandemic, while team sports and others such as golf and surfing have suffered from travel restrictions.

The pandemic has also accelerated certain trends, such as a rising participation in sports by women in the U.S., the U.K. and other countries. Many companies have reaped the benefits of their investments in this area and in others, such as digitalization, the growing athleisure market and the growing market China, which has proved more resilient to Covid-19.

Alexander Thiel, who has been advising sporting goods companies at McKinsey for ten years, remarked at the outset of the webinar that the current crisis will lead to a much clearer distinction between winners and losers, depending on their adaptation to “the new normal” in the sector and their reactions to eight general trends in the market. Decision-makers, he said, have a choice to capitalize on these trends, and enter a “virtuous” cycle, or to minimize their transformation, and fall into a “vicious” cycle.

The eight trends are analyzed in-depth in an 80-page report that can be downloaded free of charge from WFSGI’s revamped website:

  • Athleisure: This mega-trend has been accelerated by the pandemic, with people choosing comfort instead of formalwear because of remote working, and research shows the 76 percent of industry executives expect the trend to continue to rise. It has led fashion companies like Fendi, Kenzo and Calzedonia to move into activewear. The fashion world has the advantage of shorter development cycles, but sports companies can counteract with their knowledge of the market and their ability to innovate in design and materials. A poll of participants in the webinar showed that 44 percent consider this theme as being “highly relevant.”
  • Physical activity: De Kock pointed out that the level of physical activity continues to be lower among members of low-income households than among wealthier people. Furthermore, the restrictions imposed by governments on social interaction because of the pandemic caused a drop of almost 50 percent in physical activity among young people aged 6 to 18. De Kock insisted that companies and associations like WFSGI must convince governments, educational authorities and other institutions and stakeholders to join them to reverse the trend. A poll of participants in the webinar showed that 58 percent consider this topic to be “highly relevant.”
  • Sustainability: The number of sustainable SKUs has increased by 58 percent since 2017, and the trend is bound to continue, especially among young and educated consumers. However, the industry is hindered by insufficient production of recycled materials around the world. Some materials just cannot be recycled. According to de Kock, brands should take on the responsibility of promoting sustainability as well as the durability of their products and the purchase of second-hand items, even though some stock-listed firms are being asked to generate more revenues. “There must be a balance,” he said during the conference. A poll of participants in the webinar showed that 56 percent consider this trend to be “highly relevant.”
  • Digital fitness: The use of health and fitness apps underwent a fourfold increase during the 2020 Covid year. The success of internet platforms like Peloton and Zwift has demonstrated the growing popularity of connected fitness, which has been heightened by the Covid-related closure of many gyms. A hybrid business model is shaping up, however. A leading U.S. gym operator said that he expects 56 percent of his members to return even as they complement their gym routines with training at home. Thiel predicted that this trend will continue by incorporating the “community element” in the connected fitness experience, leading to better sales conversion for the brands and retailers that link up with digital platforms. A poll of participants in the webinar showed that 40 percent consider this trend to be “highly relevant” and another 41 percent “relevant.”
  • Online & DTC: This is another trend that has been accelerated by the pandemic, as 84 percent of Generation Z customers who had not previously shopped online began doing so during the retail lockdowns. There were also 19 percent more baby-boomers and 31 percent more older people moving online for the first time. At around 25 percent of the market, online penetration in retailing was six times higher than before the lockdowns, and observers feel that it will tend to stabilize at this level after the virus is defeated, requiring a “cultural transformation.” A poll of participants in the webinar showed that 47 percent consider this topic to be “highly relevant,” while 19 percent feel that it was the “most relevant” trend.
  • Marketing through influencers: Sports brands are endorsing more individual athletes than before, because they have many more followers than sports associations or sports clubs, and 72 percent of consumers feel that they should stand for something. These ambassadors must embody the brand’s specific values. A poll of the participants in the webinar showed that 43 percent consider this topic to be “relevant,” and another 34 percent tagged it as “highly relevant.”
  • Purpose-led retail: Traditional brick-and-mortar retailers are under pressure and must reinvent themselves, creating new brand experiences and trending toward “omni-experiences” across multiple channels. Some of their stores can be just “showrooms.” They should invest in better fulfillment of online orders and other services. Brands and retailers should collaborate more to improve the process. They also should choose the locations of their physical stores more carefully. A poll of participants in the webinar showed that 54 percent consider this topic to be “highly relevant.” An additional 24 percent call it “relevant” and as many as 15 percent say it is the “most relevant” trend in the market.
  • A more flexible supply chain: The disruption caused by Covid-19 has raised the bar for company agility in sourcing and logistics. Many have looked at alternatives to China, like Bangladesh, or at reshoring to closer low-cost countries, like Turkey and Mexico. In many cases, brands discovered that they had no alternative but to deliver products directly to consumers, doubling the related volumes from 2018 levels. Anyhow, it will be important to do everything possible to speed up deliveries and reduce inventories. A poll of participants in the webinar showed that 51 percent consider this topic to be “highly relevant,” with another 11 percent electing it at “the most relevant” one.  McKinsey’s report for WFSGI on the “new normal” provides examples of agility in the supply chain.