Athleisure Sales Are Surging & ‘E-Tailers’ Are Reaping The Benefits

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  • Having permanently closed its two physical retail stores at the end of Q1 2020, The Sports Edit report May 2020 revenue up 305% on 2019
  • The London-based company is halfway through its third funding round, having raised £702k in the first week on Crowdcube
  • 2019 records suggested a slump in women’s activewear sales in the US compared with men’s sales, while 2020 market research suggests the global women’s activewear market is growing impressively at a CAGR of 7.7% 

LONDON, United Kingdom — The Sports Edit, one of Europe’s leading premium activewear e-tailers, has reported its best-ever year, growing 145% in 2020, as the company seeks to raise capital ahead of international expansion. 

The London-based business, which stocks brands such as Varley, Alo Yoga, adidas and P.E Nation, is halfway through its third funding round, having raised £702K in the first week on Crowdcube, quickly exceeding its £650K target for 16.01% equity. 

It marks a remarkable turnaround of fortunes for the retail sector and The Sports Edit (TSE) in particular, which was forced to shut its two physical stores in March due to the Covid-19 pandemic. 

TSE’s previous funding round in 2018 — which secured £1m from new backers including former Sainsbury’s CEO Justin King and Lyle & Scott owner Sue Watson — enabled the brand to launch its flagship store in Coal Drops Yard in London’s King’s Cross. 

However, in April this year, the company took the decision to close its physical stores permanently to focus on scaling up its e-commerce business, supplemented by partnerships with a select number of leading gyms and boutique studios in the UK such as Core Collective.

Digital first
As the supply chains in several markets choked under lockdown restrictions, the move paid off for TSE, founder Nick Paulson-Ellis explains to Welltodo. Online revenues grew +258% in April 2020 vs. April 2019 and +305% in May 2020 vs. May 2019. 

“The demand patterns over lockdown have varied enormously, with some product sectors seeing extraordinary sales growth and others in decline,” says Paulson-Ellis. 

“Online clothing overall has actually declined 6.5% year-on-year in the six months to June, with the focus moving away from personal fashion. But fitness/wellness has been growing rapidly throughout,” he adds. 

“We’ve been up 200-300% over the different months of lockdown, but even a business of the scale of Lululemon has been up 125% online.” 

The lockdown has presented huge challenges for activewear retailers, with many battling to get enough stock to meet customer demand. 

And although Paulson-Ellis expects procurement to remain an issue for the rest of 2020, he believes it has also accelerated two trends that were starting to transform the sector before Covid-19 took hold. 

“The current crisis is likely to materially accelerate two trends: the shift to e-commerce from physical retail, and physical and mental wellbeing becoming even more central to consumer lifestyles,” says Paulson-Ellis. 

“Both these trends have and will continue to allow us to grow our business faster, but we also see opportunities for increased engagement with customers, such as through digital fitness.” 

Since closing its physical stores, TSE has been consolidating its presence online, running three IG Live exercise classes each week, led by influencer partners such as Korin Nolan and Charlotte Holmes. 

“We’ve prioritised just being genuinely useful to our customers at this extraordinary time, from relevant blog content to free IGTV fitness classes. This has seen sales, traffic and engagement all significantly increase, despite the outbreak,” says Amie Trewin, marketing manager. 

2019 slump in women’s activewear
While TSE has prospered since the UK went into lockdown in March, at the same time, Yahoo was reporting a slump in women’s activewear sales in the US. 

Sales remained flat in 2019, underperforming the men’s market for the third consecutive year, which grew by 2%, according to market research from The NPD Group. 

In 2019, older millennials (aged between 25 and 34), typically the largest proportion of women’s activewear customers, saw the sharpest decline of any age group. 

The research also found that, globally, China was the second behind the US as the largest activewear market, with women’s sales increasing by 8%, compared with 11% for men’s. 

Across the 14 global activewear markets tracked by NPD, the fastest-growing countries for women’s sales in 2019 were Turkey, Russia, South Korea, and China, Yahoo reported. 

Nevertheless, in October, the Global Wellness Institute, which valued the global physical activity economy at $828.2 billion, predicted the combined sector of apparel and footwear would continue to grow at an impressive rate of 6.4% to 2023. 

The report found that North America was by far the largest market, followed by Asia-Pacific and Europe, with these regions making up 87% of the global market, while the US comprises over one-third on its own. 

A more recent report from Allied Market Research has suggested that the global women’s activewear market is growing at a CAGR of 7.7% (2018-25) and is expected to reach $216,868 million by 2025. 

At-home fitness opportunity
Among the brands bucking the trend in women’s activewear is British athleisure brand Varley, which recently revealed in an upcoming episode of The Business of Wellness Podcast, that it continues to see its e-commerce rise by 100% year-on-year, with 60-70% of year-on-year growth overall. E-commerce giant ASOS has also seen its activewear sales double over the four months through to June 30th, in comparison to the same period last year.

Elsewhere, a report by NPD Group also highlights growth for Athleta, adidas and lululemon — the latter of which has continued to make headlines for the right reasons since the pandemic took hold. 

In June, the Canadian athleisure powerhouse confirmed it was set to acquire at-home fitness startup Mirror in a deal worth $500 million.

Read More: Lululemon To Acquire At-Home Fitness Pioneer Mirror For $500M

So should we expect more activewear retailers partnering with fit-tech companies and jumping on the at-home workout bandwagon? 

Quite possibly, says Paulson-Ellis. “Retail businesses and digital fitness companies have very high customer overlap, evidenced by 50% of Mirror users also being Lululemon customers,” he says. 

“At-home fitness creates new category opportunities for us, with accessories. It enables us to build content partnerships, and I think in future there will be opportunities with digital at-home fitness companies.” 

Although he wouldn’t reveal any concrete plans for now, Paulson-Ellis suggested TSE would be exploring opportunities and partnerships in at-home fitness after its funding round closes, as well as building on its own “digital content creation”. 

The Sports Edit own-brand
Having already exceeded its £650K target, The Sports Edit is looking to use the funding to launch a mobile app, accelerate customer acquisition in the UK and internationally, and invest in new key brands, in particular Nike, which is due to launch on its site this summer. 

“If we sufficiently overfund,” says founder Nick Paulson-Ellis. “We plan to launch our own brand in 2021, providing us with a great opportunity to respond to our customer demands and further expand margins.” 

According to its pitch, TSE turned over £2m between June 2019 to May 2020 and has been trading profitably since April. With 14 days to go, TSE has raised £781,812 from 234 investors. 

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