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Is the Activewear Market Oversaturated?

From startups to established retailers, everyone is getting into the activewear game. But are we headed for a bubble?
Photo: iStock

Photo: iStock

Shortly after Slate writer Meg Wiegand posted a story railing against NikeLab’s Sacai collaboration, she took to Twitter to make one more declaration:

Should Weigand decide to develop her own activewear line, she may be dissuaded by the stiff, plentiful competition. If there ever was a gap in the activewear market, it has been filled with thousands and thousands of pairs of printed leggings. Over the past two years, brands and retailers ranging from the mass (H&M, Forever21) to mid-priced and upscale (Theory, Tory Burch, Cynthia Rowley) have developed activewear lines. Not to mention the dozens of independent upstarts — including Live the Process, Alala and Outdoor Voices — that have helped fill the virtual shelves at Net-a-Sporter, Carbon38 and Mode Sportif.

And then there are the labels that have been doing great activewear for years. Lululemon, which has experienced its fair share of PR nightmares over the past couple of years, saw net sales climb 13 percent in 2014 to $1.8 billion. (Even comparable store sales — i.e., sales at stores that have been open at least a year — are up 3 percent. Not bad.) Athleta is a bright spot in Gap Inc.’s portfolio, with some analysts suggesting it’s a candidate for a potential spin-off. (Which, if it happened, could be great for shareholders.) Stella McCartney’s ongoing line for Adidas has proven so successful that this year, the London designer launched Adidas Stellasport, a more gently priced collection sold at Topshop.

The activewear market is clearly crowded, with new entrants announced on a near-weekly basis. (Country music stars Carrie Underwood and Blake Shelton are the latest celebrities to lend their names to the labels of workout clothes.) Editd, a research firm that culls real-time market data for the fashion and apparel industries, says that it has seen a year-over-year increase of 235 percent in the number of new women's activewear leggings up for sale at online retailers in the past three months. Top brands include Nike, Beyond Yoga and Misguided Active. “I think it's quite interesting to note that, in the last three months, retailers that [we] track have grown the number of activewear brands they stock by 75 percent compared to one year ago,” says Katie Smith, the company’s senior retail analyst. “Like denim before it, activewear is creeping into the basics of our wardrobes.”

But does that mean that, just as it did for premium denim in the 'aughts, an athleisure bubble is forming?

Premium denim emerged as an exciting business prospect at the turn of the last century. Paper, Denim & Cloth was established in 1999, 7 for All Mankind in 2000, and True Religion in 2002. While Diesel had been around in different guises since the late 1970s, this new era of low-slung denim attracted fashion-y types willing to spend a truly incredible amount of money — sometimes $150, sometimes $500 — on a pair of jeans. (It’s important to remember that, in 2005, the average denim spend was just $25.)

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By the mid-'aughts, there were already warnings of a denim bubble: Trendy brands like Chip & Pepper were falling out of fashion, replaced by more discreet labels like J.Brand. After the 2008 financial crash, the bubble finally burst. Jeans that had been going for $300 to $400 were now priced under $200. The number of denim labels thinned out, too. Today, there are a few beautifully done high-priced niche brands — including Chimala and 3x1 — and a handful of well-loved premium labels: Acne, J.Brand and Mother among them. Madewell has had success with high-quality denim in the $125 range, and the demand for no-stretch, vintage Levi’s has given way to upstarts like Denim Refinery and Re/Done. But while there will always be a place for denim in our wardrobes, its presence continues to shrink. (NPD reported that sales of jeans were down 6 percent in 2014. While that isn’t a massive drop, it’s significant because denim is a commodity that is typically replenished time and again.)

In many ways, activewear is replacing denim. While Editd says that the average price of a piece of activewear is about $64, and a pair of Lululemon leggings typically costs about $98, there are much, much pricier offerings. Fendi’s stretch-jersey stirrup leggings are currently available at Net-a-Porter for $900, while prices for hip London-based brand Lucas Hugh creep into the $400s. In many ways, activewear is seen as the new easy money maker for retailers: Ann, Inc., Gap, Inc., and Urban Outfitters have all invested heavily in athleisure’s potential.

And to be sure, there are buyers out there. NPD predicts that the global activewear market will reach $178 billion by 2019. I’ve interviewed women who own more than 20 pairs of leggings, and plenty who are happy to pay more than $100 for a pair. But how much is too much? How many more brands can possibly benefit from this boom?

“There are still plenty of opportunity and niches to explore, and there will be fast-moving micro trends — like Stan Smiths or bold-print sports tights — within the macro trend,” Smith says.

Jim Shea, chief marketing officer at First Insight, a research firm that helps retailers determine optimal product prices by surveying consumers, agrees. “For this reason, we'd keep advising retailers to invest in the segment, but only if that suits their customer and price point," he says. "It still looks strong, based on the prices consumers are willing to pay. If there were too many [brands] jumping in, those numbers would be going down.”

It seems that very few retailers are willing to think hard about whether activewear makes sense in the long run, even if the short-term results could be great. J.Crew CEO Mickey Drexler is an anomaly. "Well I'll tell you where we thought about being in, was the active professional kind of business, the yoga or the Under Armour kind of business,” Drexler told Bloomberg TV in October 2014. “But we're not getting in because we don't have the expertise to do that.”

For now, activewear seems like a safe bet, and there will undoubtedly be more labels popping up, introduced by both established retailers and venture capital-backed startups. But the trials of the denim industry should serve as a warning: nothing lasts forever.