After spending most of the last two months in an airplane or at trade shows (and far too much time in Las Vegas), it only seemed appropriate for Sports Executive Weekly to take an overall look at the market for 2005 and offer up a humble assessment of the possibilities and opportunities for the year ahead. Despite the flu, two or three colds, and more than a few pounds packed on, the SEW team was able to see through the fog and identify a few clear trends for the year.

The MAGIC show brought the major show season to a close for spring, again representing the industry’s single best venue for exploring trends across the apparel and footwear categories. The show has gotten so big, Sports Executive Weekly felt compelled to add an additional day to our editorial coverage, but even that extra allocation of time fell a bit short with the addition of the Project Show and a much improved Pool Show format that provided venues for niche brands to stand out from the ever-widening exhibitor list at the big show.

While the much-ballyhooed talk about the move away from licensed apparel and the move to a a more “dressed up” look for the urban consumer is clearly having an impact on the athletic apparel business, SEW believes that the shift in fashion will have little effect, other than silhouettes and materials, on the athletic footwear business.

One clear message was evident at shows this spring: Denim is Still King.

Each season there is more to learn about the trends that directly impact the world of sporting goods.  Sporting goods retailers are starting to get this and their attendance numbers are clearly growing as well. Significant teams from The Finish Line, Hibbett Sporting Goods, Shoe Carnival, Modell’s, and Sports Chalet, were all highly visible in the aisles as they looked for an edge to set them apart from the crowd.

So what’s the attraction?  MAGIC gives us a view into what is next in the world of teen fashion apparel.  And where apparel goes, footwear follows.

The fashion trends in apparel were a little more difficult to discern than in prior years, as the changes were more subtle, but after much observation and conversation, SEW did find a few consistent trends through the shows.
Just last year SEW wrote that we could not imagine any more denim lines, but this year’s show provided an even larger offering than any previous MAGIC.  The “alternative” Project and Pool shows were probably two-thirds denim and all at premium price points. The premium, slim denim trend is clearly here to stay for awhile, a trend that is great news for athletic footwear. The trend to narrower silhouettes in sneakers looks perfect with the skinny jeans.  Hottest label in denim was True Religion.

Luxury continues as a key trend, with better fabrics and better brands in abundance.  Burberry, Lacoste, and Coach were everywhere, with show attendees providing as much (or more) insight into trends than many of the booths. Brands that are presented as “better” and “exclusive” will fare much better than brands that have become commodities.  Look for brands in footwear that speak to the luxe customer as key.  Lacoste footwear is one of the hottest brands in the market.  Skechers could have some fun with the Fox brand.  Nike will definitely have some fun with their “white label” better product and the secret “Blue Ribbon Sports” initiative.

As a subset of luxury, logos were everywhere, but especially on polos and woven sport shirts.  Hot logos included Lacoste, Burberry, Le TIGRE, and Polo.  While few of the retailers in the sporting goods space will have access to these brands, there is some potential for private label polo’s, especially at price-points.  If a retailer can break through with a better logo brand, it will be very meaningful to sales.  The branded athletic polo’s do not fill the bill here, since most have not yet established themselves as sportswear.

Polo’s are still tops at Le TIGRE, but they also see more layering with wovens over top and crew silhouettes underneath. They are also placing more sweaters for Fall ’05. Track Jackets are now the #2 item after polo’s. Management told SEW that 60% of the department store business is in the Basic Polo and the Classic Stripe. They are still limiting distribution to better stores, shipping to all Nordstrom and Bloomingdale stores as well as the fashion boutique stores and better menswear shops.

SEW would see opportunities with a number of the sports fashion brands to exploit this end of the market. Polo’s from Puma, Fila, Le Coq, or even a Fred Perry could make a statement here.

The athletic footwear brands in attendance were focused on short run, high price-point, niche marketed styles. We saw great niche products from adidas and Rbk and smaller niche stories from Le Coq Sportif and the Rocawear collection at Pro-Keds. New Balance’s PF Flyer business has also reached its stride, delivering some of the best looks at the Project show.

PF told SEW that they had booked more volume for 2005 by the Project show this year than they did for all of 2004. NB has done right by the brand, investing the resources to really make a go of it and allowing PF management to bring in new exclusive non-NB reps to focus on the brand. NB tapped Daran Godfrey, who most recently came from Tare7/Airwalk, to run the sales effort in PF footwear. Apparel is now done out of NYC by a showroom group that is designing, developing, and selling the product. PF is showing new lines twice a year, but flowing goods quarterly. PF breaks the segmentation of the line down through three categories; Classics, Grounder, and Center.

SEW also saw some product with classis PF looks that now include some NB technology. Adding AbZorb to the heel in the Fusion and adding it in a full length footboard in other styles is giving the brand a best of both worlds positioning.

Asics’ Onitsuka Tiger line is getting quite a bit of attention these days, with even their competitors agreeing that O.T. now has the #2 position behind Puma in the sport style category in the better boutiques.

Asics is really working on two programs to feed the fashion end of the business, with O.T. committed to very tight distribution and the Sportstyle line, which is made up of more retro re-issues, serving a little broader distribution.

Hot O.T. looks at the Project show included the Gantray, which was a mountain-climbing shoe “back in the day”. It’s the first strong attempt SEW has seen mixing outdoor with the hot fashion athletic looks. The Mexico ‘66 and the ‘81 are still the top-selling shoes for O.T. as the company keeps re-coloring and adding new materials to these key staples to keep them relevant in the market.

The biggest release from O.T. this year will have to be the Corsair, which is the style first brought to the U.S. by Phil Knight and Blue Ribbon Sports as the Cortez. O.T. is releasing a limited run in July for the 30-year anniversary of the shoe’s launch.

The Hard Urban hip-hop look is pretty much over.  Brands still making a strong stand here include Rocawear, akademiks, and LRG. In women’s, it was all about Baby Phat and Apple Bottoms. But the consumer here is not locked into one brand or one look.  The cartoonish “total hook up” looks are out.  While denim may stay over-sized, it is hooked with preppier polo tops. The ensemble is still worn with athletic footwear by day, with more emphasis on dressier shoes or the boutique fashion sports brands at night.

The older male will take more of an “Usher look” as their influence, mixing striped wovens with a sport coat, denim, and either Classics or sport style footwear. For women, it’s about less is more as jeans get lower and tops get smaller. The women’s business will be a bigger problem for footwear as the dressier looks tend to work better with heels.

akademiks told SEW that the cleaner denim looks are more important on the coasts, while the heavily detailed and more ornate denim goods are still the norm in the Midwest and Southeast. In the South, everything has to match. They told SEW that wovens are slowing down and polo’s were obviously the hot ticket for spring. The brand is showing rugbys for fall delivery, a possible indication of how the urban guys will handle preppy in the back half.

akademiks is broadening its appeal through more licensing deals, but also introduced belts for the first time at the show. Management said they looked around for a strong partner, but decided in the end to do it themselves. They said women’s handbags are next. SEW was shown a few Fall ’05 adidas footwear styles in the booth that will carry the akademiks name as well. They are only expected to sell and ship “a few thousand pair” of classic looks with denim treatments to hook with the apparel. The small adidas offering was a bit confusing as akademiks also inked a footwear licensing deal with Kia Group to produce and sell a line of akademiks footwear. The product will be managed under Kia’s House of Brands division that also includes the Naughty Monkey brand. The new akademiks footwear line will start shipping 6/1 and is currently built to be about 80% men’s and 20% women’s, but they said the women’s side is “exploding”. The line is purely fashion, with some influence from sports silhouettes as well.

SEW found it interesting that Jordan brand, after several years of absence, came back onto the MAGIC show floor with a subtle-as-a-sledgehammer presence at the front of the Streetwear section just as Rbk departed for the Project show. Jordan was last at MAGIC in February 2001, but didn’t even show shoes back then as they focused on launching a sportswear line.

SEW can only assume that Nike is looking for more apparel customers as they work to expand the brand beyond traditional urban basketball looks into denim and better tops. Management told SEW that women’s is a new initiative here as they “test the waters” with a teaser launch for Holiday and a broader statement launch for Spring ’06. Jordan president Larry Miller told SEW that Jordan brand is a $500 million business now.

The whole “Dress Up” look is in play, but not suits and ties.  The look is better-denim based and always has sneakers as a part of the look.  Anyone who really believes that urban youth are going to wear suits and ties is out of his mind. The look will serve to push other looks up the fashion ladder and out of the street looks, but SEW doesn’t see slacks and loafers anytime soon.
All of the trends SEW did see as important bode well for the athletic shoe industry.  Athletic always performs well when denim is dominant, and the market is clearly in the midst of both those cycles.  The luxury cycle also plays to the better price-point technological looks that have been driving sales and the unique sports style looks that are keeping the market fresh each season.

>>> In SEW’s opinion, every retailer should make MAGIC, Pool, and Project mandatory for their buying teams. They won’t be there to find the next big close-out deal, but they might just find ways to grow gross margin, eliminate a few markdowns, and capture new customers…