The recovering economy and rising health consciousness will stimulate industry demand.
New York, NY (PRWEB) January 26, 2014
During the past five years, the Athletic and Sporting Goods Manufacturing industry coached itself to success, albeit at a slow pace, due to favorable growth in the sports participation rate. According to IBISWorld Industry Analyst Sarah Turk, “As the sports participation rate rose at an annualized rate of 0.9% during the five years to 2014, more individuals required sporting goods.” Demand from downstream markets, such as the Sporting Goods Stores industry (IBISWorld report 45111) and the Department Stores industry (IBISWorld report 45211), buoyed industry revenue growth over the period. For example, as wholesaler bypass became more common, sporting goods manufacturers were able to sell products directly to retailers, which cut costs and bolstered profit from fewer wholesaler middlemen. Nevertheless, competition intensified as industry operators struggled to generate sales volumes due to the influx of low-cost imports from global manufacturers.
While many sporting goods manufacturers rely on global producers for input commodities, which does not hamper industry revenue, industry imports are slowly comprising a larger share of domestic demand. In response, many operators will conduct specialized manufacturing processes in the United States, such as sporting goods that require innovative technologies and materials and standardized goods with global facilities. During the five years to 2014, industry revenue is anticipated to grow at an annualized rate of 0.6% to $9.1 billion, including 2.2% revenue growth in 2014. Profit is expected to slightly decline, as cost savings from industry consolidation do not offset the trend of import penetration, which lowered product prices as operators struggled to remain competitive.
During the five years to 2019, consumers will become more health conscious, which will stimulate demand for athletic equipment. Further, the implementation of technology, such as radio frequency identification, which monitors inventory levels, will be increasingly used for marketing strategies to determine consumer purchasing behavior. “As a result, industry revenue will increase, as operators benefit from strong demand from downstream markets, including sporting goods stores,” says Turk. In addition, high rates of obesity translate to high healthcare expenditures, so the government will likely invest in schools' physical education programs to promote healthy lifestyle choices, which benefits the industry.
The Athletic and Sporting Goods Manufacturing industry is highly fragmented and typified by a high level of competition. Although few sporting goods manufacturers have vertically integrated operations, which includes the manufacturing, designing, marketing and retailing process in operations, vertically-integrated operations allow operators to dominate the industry. For example, major player Nike can use its retail establishments to modify pricing and examine consumer trends to implement new technologies and invest in research and development. Other companies, like Callaway Golf, rely on favorable supply-side contracts, which may be difficult to secure if downstream industries consolidate or control a large market share.
For more information, visit IBISWorld’s Athletic and Sporting Goods Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
Industry operators change motor oil, lubricate the chassis of automotive vehicles and provide other automotive repair and maintenance services, such as tire rotations and liquid flushes. Unlike auto mechanics, companies in this industry do not provide mechanical and electrical repair and maintenance. Industry operators are also not involved in body, paint, interior and glass repair. Companies that provide car wash services are also not included.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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