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What Next for Women’s Activewear: Dispatches from the Denim Market

2/4/2014
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Stylish women’s activewear is bringing in the big bucks.

Gone are the days when female consumers were satisfied donning a ragtag ensemble of frayed, oversized cast-offs for their fitness pursuits. This is not an ephemeral frenzy driven by January’s good intentions, detox plans and gym memberships, but, rather, part of a larger healthy lifestyle drive that is gripping the masses. While most prominent in Western markets, the trend is picking up pace in Asia Pacific as well.

As the category begins to pique the interest of everyone from sportswear heavyweights to luxury labels, it is interesting to draw parallels with the denim market. Having witnessed a similar premiumisation trend, and relying on the same basic premise of melding fashion with function, here is what the jean’s story predicts for women’s activewear:

Premiumisation of Basics

Once upon a time, it could have been considered rare for anyone to pay a premium for something as basic as a pair of jeans. Now, it is not uncommon to see fashion-savvy female consumers fork out up to US$200 for skinny jeans such as those sold by J Brand. In 2012, value sales of super-premium jeans grew by 4% in Western Europe, compared to a meagre 0.2% rise for economy jeans. Luxury department stores, specialist boutiques and even e-commerce start-ups are finding success by investing in the super-premium jeans category.

A similar trend is picking up pace in sportswear, despite the inevitable sweat and frequent washing gym clothes are subject to. Brands like Australia’s Lorna Jane, the UK’s Sweaty Betty and, most famously, Canada’s Lululemon have racked up cult followings selling US$100 yoga pants. The emergence of even pricier brands like Lucas Hugh, where a pair of leggings can cost £225, suggests the category is graduating into a bona fide luxury commodity.

The premiumisation of both jeans and sportswear indicates that there is an overarching allure to pieces which have a high frequency of wear and can be worn on numerous occasions. A winning mix of durability, functionality and fashionability will continue to command premium prices.

Sporty Spices Up with Fashion Involvement

Arguably, jeans have never had a moment out of fashion. However, a big part of product reinvigoration, especially for premium denim brands, is leveraging seasonal fashion trends for coloured, printed, waxed and coated variations.

It has now also become a commonplace sight to see magazine editors flit between shows during Fashion Week in their neon Nike Frees. It is chic to turn up to dinner having thrown a jumper over Lululemon yoga pants post-workout. Performance sports clothing and footwear have become integrated into daily attire, and, as such, it is likely that designs will see closer alignment with seasonal trends and colour palettes.

Designer collaborations have also been seen in this space. adidas has already made headway with its long-term partnership with Stella McCartney, and, at mass level, a lower-profile collection with Inditex-owned brand Oysho. Fashion collaborations are likely to become a popular marketing strategy for sportswear brands that have not focused on female consumers from the outset.

General Apparel Brands Threaten Specialists’ Dominance

Partnerships aside, it is likely that fashion brands will want to go it alone in this compelling category.

At the premium end of the market, jeans have become a natural extension of the ready-to-wear business, and often a more profitable endeavour (like in the case of Calvin Klein Jeans). It is very likely that designer fashion brands will launch activewear as a similar addition. Emporio Armani already has EA7, and affordable luxury brand Tory Burch has expressed an interest in launching activewear.

At the mass end, brands like Zara and Uniqlo have been stealing share in jeans from iconic denim labels like Levi’s and Wrangler due to a high degree of perceived product substitutability and tough price competition. Sportswear is now a sizeable opportunity for them, given it is outpacing general apparel growth. 2014 has already seen high street favourite H&M launch its own sportswear range, and the brand is planning on dressing Swedish athletes during the 2016 Summer Olympics.

With general apparel brands across the price spectrum impinging on their territory, specialist denim brands have shown a marked return to their roots, focusing on product innovation and authenticity to stand out from the crowd. Recent launches like Wrangler’s Denim Spa and Levi’s Revel suggest targeted solutions have become a new source of growth. In a similar fashion, ongoing innovation on the part of activewear specialists will remain paramount in retaining market share.

Survival of the Fittest

The lucrative nature of the premium denim market has brought it to the forefront of mergers and acquisitions activity. The women’s activewear market, while at a comparatively nascent stage of development, has already witnessed some high-profile transactions like VF Corp’s acquisition of Lucy in 2007 and Gap Inc’s purchase of Athleta in 2008.

Following the acquisition of J Brand in 2012, Fast Retailing should consider adding a women’s activewear brand to its portfolio. This could well provide the impetus needed to accelerate the company’s growth in North America, where active lifestyles are most established. The category is one which could also be of interest to luxury conglomerate Kering. Investment in women’s activewear, either as part of Puma’s revival or through acquisition would complement the company’s extensive designer fashion portfolio.

With the category still on the cusp of growth, it is evident there is still a lot to play for.

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