WOMEN PROVE LUCRATIVE
Nike to turn women’s fitness into $11B biz,
Adrienne Lofton, Under Armour
Last month, during an investor conference here, Nike said it expects revenue in its woman’s category to rise from $5.7 billion to more than $11 billion in the next five years. It will use that growth to fuel an even loftier goal: $50 billion in overall sales by 2020.
Nike had $30.6 billion in revenue in fiscal 2015.
The women’s business has proved lucrative for Nike, growing 20% in the fiscal year ended May 31. That’s twice the rate of its men’s business, which grew 9% to hit revenue of $14.7 billion.
“Nike women’s continues to be one of our biggest opportunities,” says Jayme Martin, vice president of global categories for Nike.
The kind of growth Nike has experienced reflects a “tectonic shift” in the way women are increasingly embracing both athletic pursuits and athletic clothing, says Christiana Shi, head of Nike’s direct-to-consumer division. “We’re seeing women across age groups, across demographics, across income bands, across very different cultures and they’re all interested in fitness.”
Sales of women’s fitness apparel has soared in recent years and continues to outpace the overall fitness apparel industry. In the 12 months ended June 15, sales of women’s athletic apparel grew 9%, compared with 6.8% for the category overall, according to research firm NPD Group. Total sales of active wear for men and women reached $37.1 billion in September, up 18% from the 12 months ended September 2014.
The women’s apparel market is now a competitive field with major retailers vying to grab market share. That’s thanks in large part to the rise in women who dress in athleisure, wearing workout clothes for exercise, as well as in the office, at happy hour gatherings and for running errands.
Retailers such as Lululemon and Athleta already have a dedicated customer base snapping up stylish leggings and colorful sports bras. And the women’s fitness movement has gotten so big that it’s enticed everyone from fast-fashion retailers such as H&M to lingerie queen Victoria’s Secret to designer Tory Burch to launch sport lines in recent years.
Major Nike rival Under Armour aims to make its women’s business at least as big or bigger than its men’s business in the next few years, says Adrienne Lofton, senior vice president of global brand marketing. Its women’s business is on track to hit more than $1 billion in sales this year. Currently about 30% of its overall apparel business is in women’s.
“Health and fitness has never been bigger than today,” Lofton says. “How women dressed yesterday was denim. How women dress today is yoga pants ... whether they’re sweating or not.”
Retailers that sell multiple brands are experimenting with new stores that cater to these fitness-focused women. Dick’s Sporting Goods’ Chelsea Collective sells leggings, sports bras and athletic shoes, as well as stylish sweatpants and T-shirts. Foot Locker is testing women’s-only fitness stores under the name “six:02,” selling not just shoes but apparel, fitness equipment and accessories.
Despite the competition, Nike is holding its own. It’s the largest women’s fitness brand in the world, says Jeanne Jackson, Nike’s president of product and merchandising. But that doesn’t mean it dominates the market in the same way it rules men’s fitness.
“While yes, they are the largest brand, they aren’t nearly the largest by the same margin as they are in men’s,” says Matt Powell, a NPD Group sports industry analyst. “There is no national retailer for women’s sports apparel.”
That’s the title Nike wants to hold, and its track record of focusing on premium design, highly technical products and appealing
“How women dressed yesterday was denim. How women dress today is yoga pants ... whether they’re sweating or not.”
merchandising in stores may very well help it clinch the throne, says Bob Drbul, retail equity analyst with financial firm Nomura.
“This company is a machine,” he says. “They think, eat, drink and sleep the women’s opportunity.”
In previous attempts to attract the female buyer, many apparel sellers took products designed for men and made them smaller and more colorful for women, a strategy dubbed “shrink it and pink it.” But in the past decade or so, companies have become more sophisticated in how they court female customers, both in terms of designing products for women as well as using more targeted marketing messages.
In April, Nike launched its largest-ever campaign aimed at female athletes. The #betterforitthemed advertising encourages women to share their fitness goals and other athletic pursuits on social media.
Under Armour has a big marketing push as well. It has a campaign featuring ballet dancer Misty Copeland, skier Lindsey Vonn and model Gisele Bundchen. Those efforts come as looking — and dressing — like an athletic woman have become fashionable. Physically fit public figures such as Beyonce and Michelle Obama have made it cool to be active and strong, says Marie Purvis, a Nike master trainer.
While many women wear exercise clothes for non-exercise activities, Nike executives are quick to say that its focus is on athletes, not just those lounging in workout wear.
“Everything we do starts with the athlete and performance first,” says Amy Montagne, head of Nike’s women’s business.
One of the newer innovations Nike plans to roll out in the spring is a sports bra that uses a technology it developed called Flywire, which was originally made to make more supportive shoes. Now it’s being used for a more supportive sports bra.
The company is also opening more women-only stores, working with retail partners such as Macy’s and Foot Locker to create dedicated store space for women’s products and expanding its group training opportunities that are aimed at women.
It has opened four stores exclusively for women since May 2014 in San Francisco, Newport Beach, Calif., Shanghai and London, where customers can get fitted for sports bras, do a running gait analysis or participate in weekly running clubs and fitness classes.
While the company hasn’t gone into detail yet, it also wants to expand its storied Air Jordan brand, known as a men’s basketball cultural icon, to other consumer segments.
Nike’s women’s race series, which started in San Francisco in 2004, has also grown — this year it included races in 19 cities. While open to both men and women, it cater to female runners and has perks such as a raceday hairstyle bar at a 10K in London this year and custom necklaces for participants.
The company also brings its Nike+ Training Club app, an experience developed with women in mind but used by both men and women, to life through live fitness-focused events hosted by Nike trainers. More than half a million women participated in Nike training events worldwide in 2015, the company says.
Nike master trainer Purvis has traveled to locations such as Tokyo and Dubai to encourage women to take up a more active lifestyle. She’s often in areas where women don’t typically exercise or wear athletic clothing, but even that has started to change, she says.
“When I first went to Japan, I had girls asking me, ‘do guys think it looks good that you have muscles on your arms?’ And now when I go back there it’s like classes are sold out, all the girls are participating. Their culture has really shifted. It’s becoming more accepted to have women who are strong and working out and training as a lifestyle.”