Sports and Fitness Industry Continues to Grow in 2022
While sales may have cooled from their pandemic-fueled fever, the sporting goods industry is still holding its own.
After jumping a record 15.8 percent in 2021, the industry still managed to post a 4.3 percent growth rate in 2022, the second-largest increase since 2010, wrote Tom Cove, president and chief executive officer of the Sports & Fitness Industry Association in the organization’s new 2023 State of the Industry report. The figures include sports, fitness, outdoor and active athletic apparel, footwear and equipment.
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Cove attributed the uptick to the continued growth of physically active Americans, a number that grew for the fifth consecutive year, with 77.6 percent of all Americans taking part in one of the 124 sports and fitness activities the group tracks. This figure represents 15.3 million more people than pre-pandemic.
One potential pitfall, however, is that the gap between dedicated and casual participants continued to widen over the past three years. The number of casual participants has grown from slightly over half of all Americans in 2013 to 56.4 percent in 2022.
“While a positive trend in recent years, it also poses a considerable challenge to the industry going forward,” the report said. “These casual participants as a group, who are more likely to be impacted by rising costs and mounting pressures on their time, will need to be engaged regularly by the industry to grow, if not maintain, their strong participation levels going forward.”
Looking at the industry overall, Cove said, “supply chain hangover, rapidly rising inflation, and the looming threat of recession made for a complicated operational year for many companies and individuals.” Rising prices of staples such as gasoline and groceries influence consumer inclination to purchase sports-related products “which generally are discretionary,” he said.
One lingering issue facing the industry is navigating inventory levels. A major headache for many companies in 2021 when goods were hard to come by, the situation has improved, Cove said, with 67 percent of responding companies reporting higher inventories last year. But now the issue is one of oversupply, which has led to increased promotions to clear goods as well as order cancellations. Some 37.8 percent of respondents reported they were “very or somewhat uncomfortable” with the state of their inventory. The report projects that equilibrium on this issue is not likely to be resolved until at least the third quarter of this year.
Despite the macro-economic issues, profitability improved for a majority of firms last year, with 55.2 percent saying they increased their profits last year — the second best showing since 2015 — although a significant 28.4 percent reported profitability levels below pre-pandemic levels.
By category, the rising popularity of pickleball helped participation in racquet sports to increase last year for the first time in seven years. In fact, over the past three years the sport has grown by a whopping 158.6 percent, the SFIA said.
In addition, outdoor sports, the second most popular category, increased by 1.1 percent. This category includes trail running, hiking, bicycling and camping. Golf also maintained its strong showing, rising 9.7 percent last year.
In terms of income, participation from all levels has grown, with the $25,000 to $49,999 group increasing the most last year to 71.8 percent of the total from 65.3 percent. The under $25,000-a-year group also increased, rising to 60.6 percent last year from 55.4 percent in 2017. Higher income levels held steady for the most part.
Turning to distribution, 61.1 percent of respondents said sales on their own websites increased last year while 62.2 percent said sales in their own stores stayed basically the same as the prior year. Sales at specialty retailers increased 54.3 percent last year, indicating companies were “putting more emphasis on their digital channel and wholesale partners,” the report said.
In conclusion, the report said the outlook for the sports and fitness industry “remains strong,” and the demand for “new, innovative products remains high. But there is work to be done.” The industry needs to “reenergize its commitment” to team sports, the running industry must continue to introduce new products and technologies, and the fitness segment must “shift to allow participants to work out wherever and whenever they want.”
Key to growth in 2023, the SFIA believes, is building relevant brands, highlighting sustainability, embracing nearshoring, or sourcing closer to home, and continuing to court private investors to support expansion.
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