A global study from Signa Sports United, Europe’s sports commerce platform, and Boston Consulting Group (BCG) predicts tailwinds from COVID-19 will accelerate sports participation rates in the years ahead and drive sports retail revenues at twice the pace of global GDP. The study predicted strong growth prospects for “online category champions” and e-commerce overall.
The report, “Sports in the Digital Age—How Online Vertical Specialists and Brand Direct-to-Consumer Outpace Generalist Sports Retail,” included a survey of 19,000 consumers across four countries (U.S., UK, France, and Germany) from January to March 2021, paired with interviews. Findings from the survey showed 47 percent of respondents had focused more on health and wellness during the pandemic and 55 percent expected to maintain this habit. Super-enthusiasts, exercising at least four times a week, have spent 10 percent more on sporting goods during the pandemic.
The study forecasts global sports participation to increase by one billion people by 2025, reaching 3.5 billion people. This makes sports the second most common global leisure activity after traveling, with 35 percent of the world’s population participating in sports at least once a month.
The 3.5 billion estimate represents growth of about 30 percent from 2.7 billion in 2020. In 2015, the figure was 2.3 billion.
Sports participation rates in the U.S. in 2020 increased by 8 million, up 4 percent year-over-year, to 230 million active people, which researchers said is the steepest increase in over a decade. U.S. female participation in sports grew 15 percent since 2010.
Seven Percent Annual Growth Predicted For Sports Retail
Global sports were found to be a $1.1 trillion market and growing. Sports retail, the largest part of the sports market, accounted for $475 billion of spending and is anticipated to grow 7 percent annually to reach $670 billion in 2025 at 1.4x the rate of GDP growth.
The sweet spot is e-commerce, which is expected to continue to see double-digit CAGR (compound annual growth rate) from 2020 to 2025. Sports e-commerce is expected to expand three times as fast as sports offline retail, climbing to 30 percent of online sales share globally, up from 24 percent currently.
Another factor driving gains in the sports category is the increasing speed of product innovation that’s driving up selection and average price points. For example, unique SKUs offered in the Bike and Outdoor categories increased 40 percent over the last two years for leading online retailers.
Among regions, Western markets (North America and Europe) lead the way. The study noted, “Being home to more active consumers with higher disposable incomes, account for 55 percent of global sports retail with significantly higher spend per capita of $408 versus $182 in the rest of the world.”
Online Category Champions Find Strong Niche
The study found that while brands such as Nike and Adidas emphasize direct-to-consumer (DTC), two winning strategies in sports retail include being “the largest or being an online category champion.”
The sports market was found to continue to be highly fragmented. The three largest global sports retailers (Decathlon, Dick’s Sporting Goods and JD Sports) jointly accumulate just 7 percent market share of the global sports retail market.
Online category champions, currently capturing 7 percent of the global sports retail market, are projected to grow above the market and gain share.
Specialized online sports retailers were found to be two to three times more likely to be the preferred shopping destination for equipment intense sports such as biking, tennis, golf, horseback riding, or winter sports, with 28 percent of sports enthusiasts intending to shop more through online vertical specialists in the future, the study found.
The “top reasons to buy from an online vertical specialist are curation and recommendation across exclusive assortment, value-added services and customization potential, connecting with a like-minded community and access to latest trends, collections and product innovations.”
The study also found consumers spend more with online vertical sports specialists than multi-brand online fashion retailers. Online vertical sports specialists were also found to benefit from a “massive data advantage” that informs future curation and assortment versus generalist players, especially offline.
The study concluded, “Global sporting goods brands are shifting their business focus to fewer but more digital retailers and channels that best convey the brand image. This will accelerate consolidation and shift more business into the hands of leading online vertical sports specialists.”
Other insights from the study:
- In 2020, over 830 million people globally were using wearables or fitness apps. Fifty-six percent of all sports enthusiasts expect to adopt wearables in the future, mainly to measure performance, to educate themselves about a healthy lifestyle or to take part in online training sessions; and
- Among categories, fitness is the largest DTC category with 20 percent of sales coming from either a brand’s store or website, followed by soccer, 19 percent; running, 17 percent; tennis, 13 percent; and outdoor, 9 percent.
Photo courtesy Signa Sports