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Sneakernomics: Trouble In Performance Sneakers

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These are interesting times in the athletic shoe business. In all the years I’ve been researching the industry, I’ve never seen a time like this.

There is not a single, major performance shoe category that is experiencing growth right now, yet sales remain solid - up in the mid-single digits for the year so far.

Sports, like any retail business, is a fashion business. While sneaker sales have shown steady growth for more than a decade, there has been tremendous turmoil at the category level, and the speed of change is accelerating.

One example of the movement away from performance is in the running category. The technical-as-fashion running trend crashed at the end of 2013 and has been challenged since. According to retail sales data from The NPD Group, for the year so far, sales of performance running shoes have declined in the high single-digits, while sales of lifestyle running shoes grew by nearly half. Lifestyle running shoes  represent about 30 percent of total running sales for the year so far, up from 20 percent for the same period last year.

We are seeing this kind of shift across all major performance categories. The sneaker business is in a retro-style cycle right now, where low-tech and no-tech shoes are in vogue. If we layer retro running over performance and lifestyle, performance comprises an even smaller share of the total running business.

One of the key stories for the year so far has been the turnaround for Adidas. Most of their recent success has been due to non-performance styles.

So, what does this mean for the industry?  Like any change, this shift will present challenges and opportunities.

On the plus side, brands and retailers are not tied to specific technologies or sports activities; the playing field is wide open. In addition, every brand should be able to participate in this trend, as long as they are  unafraid of the word “fashion.” Every sneaker retailer should also be able to participate, by adding non-performance styles to the mix.

However, there is potential danger here as well. Brands that do not have a sneaker heritage can now make sneakers, which opens the door to a greater number of non-technical brands creating fun fashion sneakers. This is likely to result in confusion and noise within the marketplace. Likewise, the field of retailers can expand. Since the shoes that are in demand do not have a technical function, any footwear retailer can play here.

We’ve seen several performance-driven sports retailers share their plans for migrating to the lifestyle categories. Since this is not their core competency, it may be challenging to make this shift, but it’s the right thing to do.

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