Is Activewear Industry Finally Becoming Overstretched?

After years of steady growth as other sectors of the fashion industry have declined or remained stagnant, there appear to be signs beginning to emerge that the booming appeal of the activewear industry may also be coming to an end.

The activewear boom rose to popularity thanks to brands like Lululemon, Under Armour and Lucy who made comfortable and stylish workout clothes that were also fashionable enough that women wouldn’t mind wearing them outside the gym.

And wear those clothes outside the gym women certainly began to do.

In 2015 alone, the activewear segment of retail fashion accounted for $44 billion in total sales in the U.S. alone, according to The NPD Group, a leading market research company. Last year, activewear sales grew by 16 percent, compared to a 2 percent rise in year-over-year sales for the total apparel industry, according to The NPD Group. But if activewear sales were removed from the equation, total overall fashion sales actually would have declined by 2 percent last year.

But a Bloomberg report in April of this year believed that the activewear industry was becoming “overstretched” as discount retailers, like Walmart and Target, and fast-fashion retailers, like Forever 21 and H&M, are starting to roll out their own activewear offerings at lower price points and gobbling up the more traditional and recognizable activewear retailers’ market share.

Bloomberg noted that activewear selling prices dropped 9 percent in the first quarter of 2016, which led to a 6 percent drop in the dollar amount of activewear sales in the quarter, according to SportsOneSource.

Last week, Jefferies, a global investment banking firm, released data that showed that interest in denim is starting to reemerge as activewear sales continue to lag.

“We believe that the athleisure trend is plateauing, and we expect more conservative growth going forward,” according to a note from Jefferies Analyst Randal Konik.

Konik said that data shows that growth in activewear sales has slowed to the 4–5 percent range over the past year after remaining above 7 percent for years. He believes growth will remain in the 4–5 percent range for the next several years as well.

But The NPD Group believes that the activewear trend hasn’t peaked yet and that other factors are influencing the appearance of a decline.

“There is a lot of noise in the activewear market right now, as more manufacturers are marketing products that originally weren’t considered active or athletic apparel,” according to Matt Powell, vice president and sports industry analyst for The NPD Group. “Because activewear is so broadly used, available and defined by the sports and fashion industries, some of the bigger, authentic brands are feeling pressure. With the closing of some notable sporting goods chains this year, we see that the specialty channel has also felt some heat.”

Powell noted that activewear sales grew year-to-date through August by 5 percent at department stores and by 3 percent at national chain retailers — two areas where sales have not traditionally been strong for activewear — but declined at specialty athletic and sporting goods stores.

Interestingly, and perhaps what might lie at the root of activewear sales decline, is that NPD Group found that less than one-third of activewear consumers were using the apparel for athletic activities, which amounts to the lowest percentage in four years.

But sales in activewear as work attire or for recreational and social activities has actually grown over that time, which Powell believes offers an indication that consumer habits are shifting and they now want more fashionable quality activewear attire than simply clothes that they can go to the gym or for a run in.

“All of this noise is creating a confusing environment at retail and has, no doubt, influenced activewear sales and had a negative impact on the true athletic brands. My bet is that consumers will return to the authentic activewear brands as they discover that the wannabes’ products do not perform,” Powell believes. “Despite all this commotion, the activewear business remains quite solid, and any talks alluding to the demise of activewear or the athleisure trend are premature. I do not see a day when we return to more formal modes of attire and activewear, in any form, phases out of style.”