Just how “hot” is the outdoor sports industry? Take a look at the official data.
The China Outdoor Products Market 2012 Survey Report, recently released by the Outdoor Products Branch of the China Textile Commerce Association, shows that domestic outdoor product sales reached 14.52 billion yuan in 2012, a year-on-year increase of 34.94%. Moreover, as many as 106 new brands emerged on the market within just one year.
Dry statistics are too abstract—let’s look at some examples below.
Sports brands struggling with inventory have successively ventured into the outdoor market. Among them, Li-Ning has taken especially bold steps, recently launching an independent outdoor sub-brand, “Li-Ning Adventure.” The product design was entirely handled by a U.S. team, and the brand also established dedicated outdoor stores to differentiate them from traditional retail outlets. Anta, meanwhile, designed a unique logo for its outdoor product line and downplayed its classic branding on the products. Products such as windbreakers and outdoor shoes became the main offerings of last winter.
In addition to footwear and apparel companies actively participating, some businesses that seem completely unrelated are also trying to get a piece of the pie. The most typical example is JD.com. The high profit margins of outdoor products have caught the eye of cash-burning JD, which has now launched a small number of its own branded outdoor accessories. Insiders have also clearly stated that JD intends to further expand its own branded outdoor apparel in the future. Beyond JD, there are reports that YHD.com is also getting ready to make a move.
However, as various “players” rush in one after another, the outlook for the outdoor industry is becoming increasingly uncertain. Although the surface still looks rosy, many problems are lurking beneath, and there are already numerous signs indicating that the bubble in the outdoor industry is growing bigger and bigger.
According to industry insiders, some brands have already encountered inventory issues last year. “We did expect (the industry) to undergo some adjustments, but we didn’t think it would come so quickly.” In fact, many practitioners are beginning to complain that although the industry appears prosperous, profits have suddenly dried up.
The survey data from the Textile Association also confirms this: last year’s 34.94% industry growth rate may seem good, but it’s worth noting that from 2000 to 2011, the industry’s average annual growth rate was close to 50%. The overall growth rate of the outdoor market has clearly slowed down.
Currently, the biggest problem in the outdoor industry is that it is still imitating traditional sports brands by relying on store expansion to drive growth, but this model is not suitable for the outdoor industry. Because traditional sports products and outdoor gear have different product attributes. Outdoor gear is not a fast-moving consumer good—a single windbreaker can cost thousands of yuan, and consumers may only replace it every two or three years. Therefore, the land-grabbing model only creates a false sense of prosperity and is not sustainable in the long run.
Not only that, the issue of “homogenization” in outdoor products is becoming increasingly prominent. Many brands’ windbreakers are almost indistinguishable from one another once their logos are covered. The only way out in the future may be price wars. Additionally, since local outdoor brands have long neglected the mass market, many opportunists have found their chance. Some new entrants are only looking to make a quick buck under the guise of the outdoor trend, lacking solid foundations in design and R&D. Their products are therefore unlikely to gain true market recognition.
If adjustments are not made in time, the “tragedy” of traditional sports brands may soon be replayed in the outdoor industry.