For Athletic Wear Vendors, How Athleisure Can Continue To Grow By Remaining “Trendy”
Millennials are currently the largest demographic in the U.S. They now account for almost 80 million of the 319 million people living in the country. [1] To put this into perspective, the number of people born between the years 1981 and 2000 now comprise almost 28% of the entire population. Hence, it comes as no surprise that producers are now scrambling to change their strategies to best accommodate, potentially, the most important demographic at the moment. Most of the traditional advertising methods have proved ineffective when trying to garner interest from this age group. However, if companies better understand the psyche of such consumers, they should potentially increase sales, and in turn, revenues greatly.
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Most Millennials live with their parents, which provides this demographic with significantly more disposable income. This age group is also most likely to spend significantly more than they save. This leaves them with almost $200 billion in annual purchasing power. It was also observed that this generation is very frugal when it comes to purchasing certain types of products, while spending extravagantly on certain others. For instance, they are more likely to spend $200 on fashion than spend $10 on a healthy meal. So what does this mean for companies like Nike (NYSE:NKE), Under Armour (NYSE:UA) and Lululemon Athletica (NASDAQ: LULU)?
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A recent study conducted by MONEY gave us a glimpse into the minds of the Millennials. [2] Athleisure apparel was recorded as one of the ten things that this age group spends the most on. Primarily, the Millennials have helped athleisure apparel become fashionable to be worn outside the gyms as well. This is great news for brands that sell apparel like sweatshirts, yoga pants, leggings, etc. According to Marshall Cohen of the NDP Group, the athleisure bottoms business has “displaced the jean business one to one”. Furthermore, he added that sales of such apparel rose 13% within a year and now account of almost 17% of the total clothing retail market. For example, the amount of money spent on women’s tights increased by 24% in a 12-month span that that ended May this year. It was also noted that Millennials now make up about 45% of the sales in this category.
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Apart from the rise of Millennials, athleisure companies can also benefit from the fact that there is a general shifting trend to eat and live healthier in the U.S. With rising awareness of problems associated with obesity and diabetes, fast food visits have been on a constant decline over the last few years. For instance, McDonald’s revenue has fallen consecutively for seven straight quarters. [3] Soda sales have also dropped for ten consecutive years now. People are now focused on eating right and living a healthy lifestyle. In this respect, the number of gym memberships in the U.S. has also seen significant increases. The number of people with gym memberships has steadily increased from about 41.3 million in 2004 to 54.1 million in 2014. [4] More gym memberships mean higher sales of gym equipments and athletic apparel which will continue to benefit Nike and Under Armor.
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Given the current health revolution and the growing popularity of such apparel amongst the ever increasing Millennial population, it comes as no surprise that athleisure has become a more relevant clothing option than just a few years ago. It is, therefore, highly plausible that within the next few years, athleisure apparel is going to account for a much larger portion of the total apparel market.
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- 10 New Findings About the Millennial Customer, www.forbes.com [↩]
- Ten Things Millennials Buy Far More Often than Everyone Else, www.time.com [↩]
- McDonald’s Sales in the U.S. Drop for Seventh Straight Quarter, www.theguardian.com [↩]
- Number of Gym Memberships in the U.S. from 2000-2014, www.statista.com [↩]