A variety of factors are contributing to a rise in net worth of the athletic apparel and footwear market, with sports retailer Nike sustaining their monopoly worldwide.
With $263billion generated in global retail sales worldwide in 2013, 15.3% of the global clothing market is now made up of sportswear and sport-based footwear. In the UK alone, sales are expected to reach around $5.8Bn by the end of 2014. In Europe, the athletic apparel and footwear market is forecast to total $93billion by 2018, with a compound annual growth rate (CAGR) of 6.2% from 2013-2018.
In the UK, swimming enjoys the most participants at 3 million; football, athletics and cycling are tied in second place with around 2.25 million regular partakers. This increased awareness of the health benefits surrounding regular exercise and increased participation has correlated positively with a general overall increase in the amount of disposable incomes people are enjoying. With a higher affordability, those participating in sports are demanding better quality, higher performance and more well-designed products, which also allow them to be worn in 'everyday' situations. This is a target market Nike have been quick to reap the benefits of, and a target market who are willing to pay a little extra for the ultimate design-performance convergence.
With an emphasis on the versatility of the clothing, comfort factor, style and fit of the sports wear and ultimately its place in the increasingly sports-friendly fashion world, consumer demand has given rise to a new style of sportswear in which design is nearly as important as purpose. This trend has translated into the aforementioned increased volume output in global sales, and is particularly positively affecting Nike. Out of the top 13 global sportswear retailers, including manufacturers from the US, China and Italy, Nike retains the global lead in terms of revenue with a turnover of over $26Bn. Adidas came in second with around $19.5Bn, and the V.F. Corporation third with a significant reduction in profit to just over $11Bn. In European terms, Nike achieved 12% of the market share in 2013; for Adidas, their share was reduced from 13.2% to 12.6% in 2012.
A key feature of Nike's new international sports apparel strategy is to focus on their cost efficiency but without compromising quality. Market fragmentation in the sportswear industry has allowed Nike to target iconic brands such as Converse All Star, whom they now own; market innovation, such as this tapping into the lucrative 'fashion' sports apparel industry, saw Nike's orders for branded shoes and clothing rise by 14% between January-April 2014. Coupling attractive designs with innovative technological performance advancements is part of the reason why Nike emerged as top on 'The World's Most Valuable Sports Brands 2014' list, published by Forbes. The brand value of Nike is now estimated to be $19Bn, an increase of $1.7Bn since 2013.
In geographical terms, the highest sportswear purchasing growth is projected to be in Latin America, with a 16.6% share of the market by 2020; Eastern Europe, with 13.6% share; and the Middle East/Africa region, with a $10.1% share. Globalisation - through which cultural norms, healthy habits and international sports events can be projected - could be cited as a key driving factor in the expansion of sports apparel to a global audience. Regardless of reasoning, however, Nike's monopoly looks set to continue as long as this trend is maintained.
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