Sportswear outperformed apparel and footwear over 2017-2022. However, not all brands capitalised on this favourable trend. On the bright side is lululemon, the brand that keeps surprising with strong growth even in markets where others struggle. What makes the difference to compete – and win – in the competitive sportswear industry?
The top 10 brands in sportswear account for 39% of overall sales in 2022, up from 37% in 2019
Source: Euromonitor International
Nike and adidas remain the leading players, but other brands grow faster
The top 10 brands in sportswear accounted for 39% of overall sales in 2022, up from 37% in 2019. Nike and adidas remain the top two globally, but not without challenges. Nike has lost shares to local players in China, its second largest market; and adidas’s global sales haven’t returned to pre-pandemic levels yet, but instead further dropped by 2% in 2022.
It is difficult to break into a market where top players are strongly positioned; however, there has been an influx of fast-growing brands attempting to steal share from those at the top through innovation and/or specialised products targeting undeveloped segments. Among them is lululemon, which has grown by 94% since 2019, jumping six positions to rank sixth in 2022. Chinese brands Anta and Li-Ning have also gained significant shares to become seventh and eighth despite their regional focus.
lululemon appeals to wellness lifestyle and sense of community to succeed
Despite its smaller geographic footprint, lululemon has been able to break into the World’s Top 10 brands in sportswear. Market momentum has helped the brand, but most of its sales growth has come from gains in market share.
lululemon eludes standard practices of wholesale and discounts
lululemon makes things differently from its closest competitors. The brand has eluded standard practices for the apparel industry: wholesale and discounts. It sells mainly in its own stores, online and mostly at full price.
The brand relies on the wholesale channel (premium yoga studios, health clubs and fitness centres) to build brand awareness rather than it being a significant revenue contributor. Its stores are tools to engage with its consumers and community, and many of them also house fitness studios, meditation spaces and “fuel” bars and host yoga/training sessions and events.
The brand was also a pioneer in marketing strategies, relying on word of mouth from the beginning, engaging with local fitness instructors ("ambassadors") to act as "influencers", a practice that was not common more than two decades ago. The strategy was successful and more cost-effective than traditional marketing using famous athletes and sponsorship, common amongst other sportswear brands.
But most importantly, the brand successfully created a community around wellness when the trend was in its nascent stage. The loyalty of this community is so strong that it even has its own lingo: ambassador, angel, educator, lulu, unicorn and WMTM are a sample of lululemon’s glossary used by its fans.
Lululemon has defined geographic expansion, product innovation and consumer experience as its core strategies, moving forward. In 2022, the brand opened in its 18th market, Spain, and announced that it will continue expanding its store network in the coming years, with a focus on China given the strong potential of this market, where the brand has been outperforming Nike and adidas.
In the last two years, the brand entered footwear and launched hiking, golf and tennis apparel, signalling its intention to expand its portfolio.
The other side of the coin: Vans, adidas and Under Armour
Why are these brands still struggling to recover?
Unprecedented supply chain issues, prolonged COVID-19 restrictions in China (the second largest market) and the war in Ukraine impacted brands across sportswear. But seven out of the top 10 players returned to pre-pandemic levels by 2022. Then, why are these three brands still struggling to recover?
For adidas, the scandal around its collaboration with Kanye West, and having to exit Russia (one of the few markets where it outsold its main competitor, Nike) further hurt the brand’s sales in 2022. The brand didn’t lose its second position, but its 2022 sales remain 2% below 2019 levels.
As for Vans, it seems that the brand has exhausted its market, and having its shoes everywhere and for everyone made it harder to differentiate in a crowded industry. Despite some signs of recovery in 2021, sales in 2022 remained 6% below pre-pandemic levels. The brand announced significant changes to its distribution, innovation, and marketing strategies, but is yet to see if these efforts will help to recover shares.
On the other hand, by being mainly focused on performance, Under Armour lost opportunities that outdoor and sports-inspired brought since the pandemic as consumers embraced wellness as a lifestyle and favoured outdoor activities as part of their journey to improve overall health. Under Armour fell two positions since 2019 to rank fifth in 2022. Last year, Under Armour launched SlipSpeed, its first move outside of performance showing signs of understanding the need to keep pace with consumers’ evolving needs.
The physical, lifestyle and spiritual components of wellness are becoming more intertwined and so are expectations of associated products and services. Sportswear brands’ message must be adapted to include those looking for options beyond performance and competition and accompany consumers’ journey to wellness.
Learn more about sportswear companies in our reports Lululemon Athletica Inc in Apparel and Footwear, Under Armour Inc in Apparel and Footwear, Nike Inc in Apparel and Footwear, Adidas Group in Apparel and Footwear.
And read our article, Sportswear Brands Can Grow Tapping into Wellness Trends, for more analysis on the sportswear market.