4 minute read
THE SPORTS LICENSING BUSINESS
by SLTS
GAME CHANGERS FOR THE SPORTS LICENSING BUSINESS
By Dirk Sorenson, Director, Industry Analyst – Sports, NPD
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HAVING ACCESS TO DETAILED PURCHASING INFORMATION THAT TRACKS OVER $2 TRILLION IN ANNUAL CONSUMER SPENDING, The NPD Group has a unique
perspective on the macro and micro trends happening at retail, from the ebb and flow of individual industries, down to the changes impacting today’s sports licensing environment.
NPD’s retail sales data show that sports licensed apparel sales in the U.S. capture 7% of the $29.6 billion activewear market.* With online customization becoming an everyday offering for athletic shoe companies, sport licensing is poised to impact the $18.6 billion athletic footwear market* in very meaningful ways as well.
Consumer behavior is shifting in terms of how and where they are shopping, as is their approach to basic apparel choices. On top of this, consumers have a growing desire for products that are unique and have limited availability. Licensed apparel is a useful lever for activewear companies to utilize to engage with consumers who are seeking unique apparel choices in a category that is known and sometimes mocked for being nothing more than a “black yoga pant.” Look no further than Saturday Night Live’s infamous sketch on yoga pants to realize that the ubiquitous black pant is ripe for new design alternatives that can benefit from sports licenses.
According to NPD’s consumer data, 45-54 year olds represent the demographic spending the most dollars on sports licensed apparel in the U.S. However, some of the largest trends impacting apparel and footwear sales today may not resonate with this age group. A prime example is the emerging sharing economy. Companies like Rent the Runway offer consumers the ability to gain access to high-end apparel for a subscription. At the end of use, the customer simply sends back the garment and can have another item shipped for temporary use. This rental model has gotten a lot of coverage in mainstream media and is gaining popularity amongst Millennials and Generation Z. But with the majority of sports licensed sales going to an older consumer group, the opportunity for this type of sharing service to be adopted for this apparel category seems more challenging. In fact, a Seattle-based jersey rental startup called “Rep the Squad” shuttered its operations in June. The concept of renting team jerseys is appealing as it overcomes challenges associated with the cost of a player jersey that may be traded; however, the retail trend is not matching a larger consumer concern over the basic sharing economy. More emphasis needs to be placed on connecting these dots.
Another retail trend that has importance to the sports licensing market is the growth of the travel industry. In recent years, NPD has measured the growth of a number of non-apparel products that are related to travel. Stereo headphones, luggage sets and fanny packs all experienced double digit growth in the last year. Seeking licensed product opportunities in these categories, in other travel related categories, and in travel specific retail outlets is an opportunity for growth.
Deliberate strategies that create product scarcity are also seeing incredible results in today’s retail environment. In the last year, numerous products have benefitted from a lack of supply and the associated influence of social media. Limited availability bourbon like Blanton’s, the Dyson Airwrap and even Apple AirPods all gained strong media coverage because of the long lead times required to obtain these items. The scarcity of one item has generally led to an increase in sales across the brand. This approach has great potential to benefit sports license companies and retailers. Partnerships that create limited run sports licensed items can be a valuable approach in growing overall demand for the license. One needs to look no further than a recent collaboration between the Los Angeles Dodgers, Union Los Angeles and New Era--to create a high demand six piece capsule of items--to see how this scarcity approach may grow a sports license value.**
Seasonality is another factor at play that the sports licensing market should use to its advantage. With consumers looking for unique and meaningful gifts during the holiday period, NPD data show that sport licensed activewear experiences about 15% more revenue growth during this period than non-sports licensed products. Planning assortments and timing new or limited releases to coincide with the holiday season can only do more to benefit the licensing business.
With consumer sentiment maintaining strength,*** the U.S. sports licensing business is poised to maintain its share of the growing activewear market. Being aware of key retail strategies such as online sharing and product scarcity, leveraging seasonality and understanding the core consumer demographics that purchase licensed products will be important factors to accelerate and continue to grow this valuable piece of the sports market.
TO HEAR MORE ABOUT WHAT THE DATA SAYS ABOUT OUR BUSINESS, JOIN DIRK AT THE INDUSTRY BREAKFAST & KEYNOTE, THURSDAY, JANUARY 16 AT 7:30 AM.
*Source: The NPD Group/ Retail Tracking Service/ 12 months ending September 2019 **Front Office Sports: “Dodgers Hope Merchandise Collaborations Provide Bridge To New Fans” (November 2019) ***University of Michigan Consumer Sentiment (FRED) through August 2019
