By Andy Kerrigan and Emmaline Harvey
At the recent WSA show, there was a dust-up regarding the health of the action sports footwear market following an analysts presentation suggesting that Skate Footwear was waning in popularity and might be in for a difficult Back-To-School season. That report led to a room full of frantic investors scurrying to get word back to Wall Street as industry insiders looked around to see what had just happened. The truth, however, is that the segment appears to be one of the most vibrant growth markets in the sporting goods industry, with both retail data and voices from the sales floor supporting that argument. In fact, Action Sports Footwear sales increased in the low-teens for the second quarter in dollars, and mid-singles for the year-to-date through the middle of August, according to retail point-of-sale data compiled by SportScanINFO.
The actual story lies deeper than just the category-wide sales number, however, as strong growth in Skate and Surf Footwear more than offset continued declines in Wheeled Footwear.
“We view the skate market as extremely healthy and one of the few athletic footwear categories continuing to show momentum in a challenging economic environment,” says Steve Murray, president of Vans. “Our view is that authentic skateboarding brands-particularly those with strong links to an alternative lifestyle sub-culture through not only action sports, but also music and art-have injected a freshness to product design thats differentiating the category from the sea of white athletic shoes out there in the wider marketplace. For sure, were benefiting from consumers need to be different-theres a streak of individuality running right through the core of skateboarding-and the brands that capture this best in their product will continue to win. Authenticity is key, though. The guys that jump in just because its a growing segment will find it difficult to make a cultural connection with the consumer.”
Mario Gallione, SVP of Journeys Group, spoke at a financial conference conducted by Susquehanna International Group at the WSA Show, and expressed a similar view. “There are brands that are up strong and there are brands that are down. Everybody takes their turn in the barrel. But the skate business as a whole is very healthy,” he said.
For the year-to-date period, Skate Footwear sales increased in strong double-digits, with growth coming mostly from the family footwear channel, while full-line sporting goods and mall specialty stores posted declines. For the most part, the mall specialty and full-line retailers have focused on the athletic end of the business, bringing in skate or action sports lifestyle product from the likes of Nike, Adidas and, of course, Chuck Taylor.
The family footwear channel benefited from a confluence of trends as manufacturers broadened distribution to more retailers, while consumers, especially parents, sought better value at lower prices. Vendors are addressing this category with cheaper vulcanized looks that make mom happy because of price, while the kids are happy because they still get to wear a cool brand. The vendors, in turn, are keeping core retailers happy by offering exclusive collections that allow them to sell unique footwear at a slightly higher price point.
According to the SportScanINFO data, DC Shoes, Etnies and Nike all saw market share increases for the year-to-date period. Galliones comments also appear to be backed up at the core level, with retailers contacted by SGB commenting that sales are up and business is good.
“Sales are very good,” says Amy Beams, owner of Furnace Skate Shop in Seal Beach, CA.
Though there has been some discussion of a return to performance from the low-tech canvas styles that have been popular for the past few years, the trend does not yet seem to be playing out at retail, at least not to the level of super-tech.
“The market is splitting between performance and non-performance, just like in the rest of sporting goods footwear,” says Matt Powell, senior retail analyst for The SportsOneSource Group. “It seems vendors still have an emphasis on signing up teams and riders and creating performance footwear geared toward that aspect of the market. However, that is not where the real volume is. The performance product is more about maintaining that image. It creates a halo effect that helps to sell through the non-performance to the larger market. The exclusive distribution with core shops getting special product and lines also helps the effect.”
“I think the performance thing is a bit of wishful thinking,” says Josh Frasier, owner of Black Sheep Skate Shop in Charlotte, NC. “The core skate guy is a bit more price-conscious when he is older and spending his own money. This guy is less affected by marketing and hype. Hes more apt to buy the inexpensive, low-tech, classic skate shoes that cost half as much-even when they are less durable and he has to purchase them twice as often. However, we are seeing some demand from the parents of the younger guys for shoes that utilize technology for increased durability (as opposed to skate features, performance or protection). Nike SBs Zoom Tre ad is the best example of this.”
Back in California, Furnaces Beams also notes that Nike seemed to succeed with a technical skate shoe, even though most of the focus was on fashion. “Everyone calls it performance only because its skateboard, but its not performance like New Balance or Nike,” explains Beams. “Nike does make a technical shoe; its a skate shoe that sells, and definitely the skate shoe is becoming more fashion-focused. We just increased our Nike [inventory] because Nike is our most colorful shoe.”
At the core shop level, the talk does indeed seem to concentrate heavily around Nike SB and the work that the company has done in providing unique product that, through narrow distribution, is in high demand among both skaters and sneakerheads.
“Nike is our biggest brand mostly because of its crossover appeal,” comments Frasier. “They have done a great job with the Nike SB line, keeping distribution tight and making this a highly desirable product line. The Blazers and Dunks are both really hot.”
Action sports, more than any other segment of the industry, is driven by brands and nowhere is it more important to have the newest, coolest brand on your shoe wall than here. Though Nike has the volume, and certainly the marketing dollars, to keep it, the current hottest brand on the floor appears to be Supra.
“Supra is definitely our up-and-coming brand right now,” reports Frasier. “We were one of the first dealers to pick up the line and it took a little bit to get going, but now the word is out and with celebrities starting to wear the product more, its just flying out the door. The SkyTop is one of the best-selling styles from them. I think that theyre doing so well because they are actually introducing new and fresh product, not just rehashing old styles.”
Whether at core or family retail, the Skate Footwear market is driving the overall action sports footwear business, with surf also helping out. As the Heelys business falls to a more sustainable level and year-ago comparisons become more nominal, action sports footwear as a whole is expected to see even more growth. At least the market has one seemingly dependable bright spot as it looks ahead to an unpredictable back half of the year.