The war of sneakers

On one side we have the big names of global sportswear, on the other side the new brands that are breaking out of their niche with a great momentum. The global sneaker market is increasingly resembling a battlefield. While it is true that consumers have put the pandemic behind them and are going towards a return to more formal footwear, sneakers continue to march at a brisk pace. Or rather, running. According to Pwc, total global athletic footwear market sales in 2022 amounted to about 72.7 billion dollars, 66.5 billion euros at yesterday’s exchange rate, and are expected to exceed 100 billion dollars (91.5 billion euros) by 2026.

«The biggest brands in the global sports footwear market are Nike, Adidas, and Puma. In 2021, Nike generated footwear sales of 28 billion dollars (25.6 billion euros), more than Puma and Adidas combined», Erika Andreetta, Emea fashion & luxury leader and partner at Pwc Italy, told MFF. With the end of the partnership with Kanye West and the loss of the Yeezy collection which affected budgets more than expected, Adidas is experiencing a moment of uncertainty and other brands could seize the opportunity to grab its market share. Vying for the german label’s spoils would not only be major competitors, but also emerging brands with a still relatively small reach.

The company has never said how much the Yeezy collection has generated since its birth in late 2013, but analyst estimates claim it accounted for up to 7% of the group’s total revenue in its best years. «Nike has a much stronger base and could end up taking market share back from Adidas, but the current situation could also make room for emerging sneaker brands such as Hoka or Swiss On», Tom Nikic, senior equity research analyst, apparel & footwear at Wedbush securities, said.

Hoka, a running shoe brand owned by Deckers outdoor corporation along with Australia’s Ugg boots, has in fact shown unstoppable growth in recent months, with net sales rising 90.8% to 352.1 million dollars (322.2 million euros) in the third quarter. It was a succession of records that, only two quarters ago, had led the company to break through the 1 billion dollars mark (more than 910 million euros) in sales on a 12-month basis, while in the last three months it has surpassed the 1 billion dollars mark in the last nine months alone. However, it is not only Hoka that seems to be a cloud on the horizon for the industry giants. The on brand is also reporting stronger results quarter after quarter. Last month, the brand closed the 2022 fiscal year by achieving sales of 1.22 billion Swiss francs (+68.7%, 1.23 billion euros), surpassing the billion mark for the first time in its history.

According to experts, these brands are possibly profiting from a reversal of strategy applied by the major players in the sector, who are reducing their wholesale activities while increasing their investments in the direct-to-consumer channel. This is how footwear retailers, Foot locker for instance, are starting to bet on alternative brands to replenish the assortment of their stores and thus cope with the reduction of allocation by Nike and the loss of Adidas Yeezy. This move, according to statements by Foot locker’s management, has allowed it since last fall to attract a growing number of runners and sneaker enthusiasts to its stores. As a result, it has generated increased demand for Puma, Crocs, New balance, as well as On and Hoka products. The US chain has also implemented a partnership with Adidas focused on basketball shoes that could partially stop Yeezy’s losses.

«Overall, within the global footwear market there is a growing popularity of sports shoes, which are not only worn for sports, but also as part of everyday fashion», Erika Andreetta explained. «The sports footwear market has grown rapidly over the past decade and is expected to be worth about 77 billion dollars (nearly 70.5 billion euros) globally in 2025. The US generated the largest revenues from this segment in 2021, followed by China». In the long term, the outlook seems bright, and for the sneaker market estimates maintain an upward trend.

Nonetheless, in the post-pandemic era, the development of the industry as a whole may appear to be slowing, especially due to the reversal of high-end brands. Indeed, the latest retviews data reveal that after a boom in recent years fueled by the spread of streetwear, luxury brands are now reducing their focus on sneakers to concentrate on formal, after gradually carving out spaces in the market through successful collaborations that have resulted in models such as Dior x Air Jordan 1, Prada x Adidas superstar, Nike Air Humara x Jacquemus, or recently, Nike Air Force 1 x Tiffany & Co. 1837, which have sold out within hours of launch. Although declining, sneakers still represent the strongest footwear category for the luxury world, retviews nevertheless pointed out in the report.

«Between 2010 and 2022, the sneaker market grew steadily at an annual rate of over 20%. Between 2019 and 2022, specifically, the sneakers market grew 18% due to a price and volume effect», Claudia D’Arpizio and Federica Levato, senior partners at Bain & company, concluded. «This segment represents one of the driving forces behind the volume growth recorded in footwear, with brands gradually elevating the value of their products thanks to a growing desire on the part of consumers, particularly younger ones». (all rights reserved)