A Bigger Playing Field: Active Brands Tackle Growth by Going Mass

In a radical shift in the way sports apparel is marketed and sold, big-name activewear brands are entering the mass channel in a major way.

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NEW YORK — The mass market is getting more active.

While retail powerhouses such as Wal-Mart and Target have offered sports equipment from major brands for years, they haven’t sold that much activewear or footwear. Now, in a radical shift in the way sports apparel is marketed and sold, big-name activewear brands are entering the mass channel in a significant way.

The brands have little choice. Sports retailers like The Sports Authority are focusing on fewer vendors, there continues to be consolidation in the sports and department store channels and mass retailers are becoming ever-more dominant.

As a result, active brands have to explore new avenues for growth — and Wal-Mart and Target are their tickets.

Nike jumped into the mass channel with its purchase of Starter in August; Danskin has started selling Danskin Now at Wal-Mart and also sells a line called Freestyle, A Danskin Company at Target, and Champion debuted its C9 Champion activewear line in Target in July and is aggressively marketing the collection on television and in magazines.

Wal-Mart and its mass discount brethren are the “last big frontier for these athletic brands,” said Matt Powell of athletic consulting firm Princeton Retail Analysis. “None of these guys has any kind of footprint in the largest retailer in the world. There is a huge opportunity to expand share overall and to build a market that doesn’t really exist today.”

The three big players — Wal-Mart, Target and Kmart — together sell about $8 billion worth of athletic apparel, although not many big-name brands, and $2 billion worth of athletic sneakers, representing a mere sliver of their combined annual sales volume, Powell said. The three stores combined have annual sales of $327.5 billion, dominated, of course, by Wal-Mart.

“That [volume] really says you need to be in mass,” said Charles O’Shea, bond analyst with Moody’s Investor Services. “Wal-Mart is only going to be doing more and more with apparel, so if you can finesse a brand into mass, and do it without diminishing your core brands, that’s important.”

Brands sold in Target and Wal-Mart almost inevitably grow sales volume annually, since both retailers have been expanding their selling space by 10 to 12 percent a year for decades. Wal-Mart, for example, will add 50 million new square feet of selling space in fiscal 2004. To generate equivalent growth, a vendor would have to open several major accounts every year but the reality is that, with industry consolidation, there are fewer options for such aggressive growth.
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