After a year that is perhaps best left behind for most retailers, brands and reps in the active lifestyle space, there is hope for a renewal in 2024.
Many market watchers expect the long tail of the pandemic and the post-pandemic to continue with inflationary pressures, increased labor and manufacturing costs and inventory issues this past year to see some resolution in 2024. Still, most with a sharp eye on the retail sector and the financial markets that support it appear to be looking toward the second half of 2024 before inventories are right-sized and order books begin to somewhat normal again if a recession does not scuttle those plans.
SGB Executive reached out to a range of key leaders in the active lifestyle space before the end of 2023 to get perspective on individual or corporate views for 2024. The responses are broken across a multi-part series that will run this week, starting here with an active lifestyle marketplace overview and focused on the vision of people from trade associations, investment firms, and retail and component companies that serve a broader group of categories in the market.
Academy Sports + Outdoors
Steve Lawrence, CEO
Academy Sports + Outdoors is looking forward to the year ahead and we believe we’re well-positioned for continued success. We’re in the best inventory position we’ve been in in years and are prepared to provide fun for all through our strong assortment, value, and experience in 2024.
While the everyday shopper continues to face economic pressures, including increased prices due to inflation and the recent restart of student loan payments, we believe that brands that offer a strong promotional environment will be able to capitalize on consumers who are seeking value. In addition to providing that value, we’ve also implemented a customer data platform that will provide consumer insights that will better inform our go-to-market strategies, which we believe will deliver strong in-store and .com business in 2024.
Matt Elberts, Head of Outdoor Recreation and Sporting Goods
From an M&A perspective, the outdoor recreation and sporting goods market was quiet in 2023. Wading through inventory backlogs across nearly all channels, brands faced stiff headwinds as retailers limited open-to-buy dollars. That said, the enthusiast consumer remains healthy and has continued to support de-stocking with the help of a more promotional environment.
The team sports market, where channels are healthier, provided significant bright spots in M&A activity. High-profile deals such as Norwest Equity Partners acquiring United Sports Brands, Fox Factory purchasing Marucci and 3Step’s continuing rollup of the club/team space are steadily building momentum for M&A more broadly across the active living landscape.
In 2024, we anticipate an acceleration of activity across the spectrum as consumer purchasing patterns and inventory levels normalize. Private equity is more eager than ever to invest in these categories, recognizing the societal and demographic megatrends serving as major tailwinds. The environment is shifting quickly, and the divide between the highest-quality businesses and the rest grows wider. Businesses that recalibrated quickly after the significant addition of new participants in ‘20-‘21 and positioned themselves for growth following the turbulence of 2022/23 are ready to capitalize on a healthier M&A market in 2024.
Joey Pointer, President & CEO
This past year has been a remarkable journey of growth for us. We’re ending the year on a high note, with record sales driven across our brick-and-mortar and digital footprints and successfully opening 18 new stores, bringing our total to 292 when we include Marathon Sports. This growth is a testament to our franchisees, our team’s hard work at every level of our organization and our customers’ unwavering support.
In the face of economic uncertainties, our strategy is to stay agile and be more conservative as we approach 2024. We are enthusiastic about the opportunities in front of us and recognize that the retail industry is evolving rapidly. We want to stay at the forefront of this change. Our focus will remain on enhancing the in-store and online customer experience. One of the initiatives I am most excited about is rolling out a new customer rewards program. Additionally, we will expand our footprint by another 20 doors, with a continued focus on franchise growth.
Nora Stowell, Global Sales & Marketing Leader
Our industry is continuing to go through a time of transition. After coming off of a couple of record years, many companies are restructuring for growth while introducing new and sustainable products to meet the requirements of a new regulatory environment and consumer demand.
As an ingredient brand, Gore recognizes that our customers often depend on our materials expertise and innovation to help provide solutions to some of their most complex problems. One of the most recent examples is Gore’s ePE (expanded Polyethylene) membrane – a complementary material that provides waterproof, windproof, breathability, and durability benefits, has a reduced carbon footprint per Higg MSI and is PFC-free.
In 2023, Gore’s Consumer Fabrics customers continued the global rollout of new Gore-Tex products with the ePE membrane in general active, lifestyle, performance garments, lifestyle footwear, and snow sports gloves. Gore-Tex brand consumer products will continue to launch new products with additional customers globally in spring/summer and fall/winter 2024.
In spring/summer 2024, Gorewear will introduce its first products with the ePE membrane, including the new lightweight Concurve Jacket for runners. Gore Fabrics knows our customers will continue to seek additional sustainable materials options for their products, including solution-dyed or recycled textile components in laminates. We anticipate that the potential of our innovations will grow as we strive to expand the boundaries of comfort, performance, and sustainability.
Nathan Pund, Managing Director, Consumer, Food and Retail Group, Global Lead, Active Lifestyle
I expect 2024 to be a positive year for M&A and the industry. While challenges remain, many issues—supply chain, inventory overhang, lack of open-to-buy at retailers/etailers, and the overall promotional pricing environment—should largely be corrected after the hard work of 2023. Many strategics and financial investors will continue their portfolio rationalizations and operational improvements, leading to a steadier base of companies within the industry.
I expect the holiday shopping season of 2023 will show record results and show that consumers continue to want to spend their hard-earned discretionary dollars on outdoor gear and experiences. This bodes well for 2024, when the industry should be able to return to more normal practices. These positive results, combined with the potential for interest cuts, however slight, should make for a more robust M&A environment in 2024. Private equity players have a record amount of “dry powder” in investable funds and will see the improving market as an opportunity to invest again. Strategics should also play a stronger role in acquisitions after using the last year to make necessary internal changes and improvements.
National Sporting Goods Association (NSGA)
Matt Carlson, President & CEO
Let’s start with a couple of big-picture trends that will continue—the rise of Artificial Intelligence and continued industry consolidation. Artificial Intelligence creates opportunities for smart inventory management, increased personalization of shopping experiences, predictive analytics for stocking the latest and most popular products, supply chain optimization, dynamic pricing, and customer service interactions via chatbots. Ways to utilize AI will continue to evolve and will present an increased importance in managing Information Technology systems. Investments in technology would likely increase to meet consumer expectations for instant interaction and access to information about products they want to buy. Your AI system can also recommend products they don’t know they need yet! That grows business.
Industry consolidation continues to create pressure toward market dominance by a few major players. This shift in the industry will likely influence pricing, innovation, and the assortment of available products consumers can pick from. It further emphasizes the need for smaller industry players to focus on specialized expertise, engaging with their customers and communities and curating a product mix specifically targeted to their local customers.
One of the biggest operating challenges the industry continues to battle is finding good people to be part of their teams. The struggle has significant ramifications, particularly for retail and team dealer leaders trying to ensure their customers receive high-level service while keeping themselves and their employees from getting overworked and burned out. We have heard for years the need for the industry to develop younger talent, and it is imperative to consider different options where it is feasible, such as more flexible hours, job sharing and working remotely to fill roles. This can open the door to a larger pool of candidates and goes along with a McKinsey & Co. study published in 2020 that makes the case for increasing diversity, equity and inclusion as a pathway for growing business.
The industry has exhibited tremendous resilience in the last few years due to COVID-19 and economic challenges, but this is no time for complacency. It is important to stay on top of sports that are emerging and growing, such as girls’ flag football, girls wrestling and perhaps even cricket, in geographic areas where there are higher concentrations of Indian and Pakistani expatriates (New York, San Francisco, Chicago, and Dallas for example) to capture potential business opportunities. It is also vital to develop a wide range of collaborating suppliers to meet the demands of supply chain sourcing.
Our industry meets customers’ needs to be active and connect with their neighbors. We build stronger communities through the products and services we provide and create pathways for better health and wellness. We are glad to join you on this worthy journey!
Chad Lawrence, CEO
As a performance fabric supplier to the active apparel industry, we are cautiously optimistic about 2024. The post-pandemic inventory glut within active apparel seems to have leveled out, and product developers are craving new and innovative materials to bring surprise and delight to their consumers.
Since our launch in January 2020, product developers have used TurboDry to meet specific product performance needs. We are now seeing the desire to use TurboDry one-way moisture transport fabric construction technology in a broader range of products to improve the overall sustainability, performance and duration of the products created. We look forward to expanding our existing brand partnerships while creating new ones in 2024.
C.B. Tuite, Chief Sales Officer
It’s safe to say that the general outlook for 2024 is ‘cautiously optimistic’. Coming out of a rather unprecedented year in 2023, across all industries, the leading footwear brands remain hopeful that their continued de-stocking efforts will reset inventory to pre-pandemic levels as we transition into 2024. Some common assumptions are being made that retail trends will resemble those of 2021 over the next couple of seasons. And when it comes to product trends, we are seeing a rejuvenation in the importance of delivering more comfort to the consumer.
“Visible Comfort” consistently dominates material strategies across most categories. Sustainability and transparency remain critically important initiatives at most brands, but there’s a renewed sense of urgency around innovation and creating the most value possible.
A positive result from the slowdown in demand has been a refocus on products and the investment benefits of using better quality materials. Consumers expect more for their money. Period. So, footwear must not only look comfortable, it must also feel comfortable. And visible comfort + step-in comfort + long-lasting comfort seem to be the winning combination that most leading footwear brands are all betting on for 2024.
PGA Tour Superstore
Jill Spiegel, President
Golf continues its momentum and has grown to a $100 billion industry annually, an increase of more than 20 percent over the last five years, according to the American Golf Industry Coalition. Few sports have undergone the changes golf has over the past few years. People, in particular young adults, are experiencing the game in more casual and social environments. Think music on course, hooded sweatshirts and golf entertainment venues such as Five Iron and Topgolf.
The face of the game is changing, too. The average age of golfers is now 46, women make up 25 percent of all golfers, and Millennials and junior girls are the fastest-growing segments of the game. PGA Tour pro Jason Day recently remarked at the Grant Thornton Invitational, ‘I don’t think I’ve ever seen so many female junior golfers out at an event, especially a PGA Tour event, as I did this week.’
These trends are creating momentum, and that momentum is creating impact, which we believe will continue in the year ahead.
Running Industry Association (RIA)
Terry Schalow, Executive Director
The Running Industry Association is bullish that the run specialty channel will continue to grow in 2024, mirroring the mid- to high-single-digit gains from 2023. We see three elements that will fuel this growth: connecting more effectively with existing customers, welcoming new ones and using data-based systems for improved business efficiency and decision-making.
Run specialty retailers continue to refine and improve how they connect with their customers, using tools that help target customer communication and reaching them however they want to shop— whether in a brick-and-mortar retail environment that continues to thrive—as well as online. Events continue to be part of the toolbox for face-to-face customer relationship-building and something that is also welcoming new runners to the fold. This positive trend is well underway and will continue to grow momentum as the channel welcomes more customers, including those with diverse racial and ethnic backgrounds, the LGBTQ community and those whose body types might not reflect the traditional ‘runner’ stereotype. We believe that our ability to make these groups feel welcome in stores will build a consumer base that grows business well beyond where it is today.
Finally, the RIA recognizes the importance of aggregated market data and product data. We look forward to launching the Product Data Collaborative in 2024, making it easier for brands and retailers to manage and employ product data. This is a trend that is here to stay, as five years from now, we’ll be using data-driven platforms that don’t exist today. As an organization, the RIA looks forward to bringing these tools to fruition, helping to ensure the channel’s health.
Tom Cove, President & CEO
2024 looks to be a more settled year for our industry than any since 2019, with healthy demand for sports and fitness products, consumer sentiment improved as inflation pressures ease, and fewer inventory challenges. But the continued possibility of “looming recession,” global conflicts affecting the supply chain, and social discontent around the presidential election loom as concerns.
Health clubs should see growth with more people looking for innovation and variety of activities, with a positive bump from pickleball. In terms of participation, flag football, volleyball, soccer, and hiking are all poised to grow.
Joe DiGirolamo Director of Sales
Coming into 2024, brands are looking for more sustainable options when it comes to what their products are made with. Sustainability is at the forefront of everyone’s minds, and the insulation industry is helping lead the charge. Thermore has been a leader in sustainable insulation since the 80s, and we constantly challenge ourselves to innovate while, most importantly, protecting our planet.
We will continue seeing more brands making these changes and choosing to work with sustainable textiles, and we will be right there to lend a hand. We recently launched Ecodown Fibers Ocean, which is exclusively made from Ocean Cycle-certified plastics, the same plastics that makeup as much as 80 percent of plastic pollution in our oceans. This insulation proves that our industry is always evolving, and it’s our responsibility to use recycled materials where we can, think of new ways to give brands sustainable solutions and leave minimal environmental impact. I’m excited to see what’s ahead for the insulation and performance apparel industry in the new year.
Image courtesy Canada Goose
Look for more reporting below in the days ahead as SGB Executive surveys the leaders of the outdoor active lifestyle market and gets inside individual company assessments of issues and opportunities ahead.