Adapt or Die. How Athletic Shoe Companies are Pivoting in 2022

Prior to March, 2020, the athletic shoe industry enjoyed a long period of sustained growth. A stable world economy – coupled with low inflation rates – allowed most manufacturers to bring more products to market, satisfying the needs of both consumers and stakeholders. That all changed during the Covid-19 global pandemic.

Covid’s impacts on the marketplace came in waves that echoed infection rates. Few corporations remained unscathed, and only nimble businesses remained afloat. As COVID stretches into its third year and national and international industries struggle to ride the tide of economic challenges, the athletic shoe industry continues to adapt to an ever-changing marketplace.

In January of 2022, NeverWet launched a study designed to explore business concerns specific to the athletic shoe industry. Researchers surveyed thousands of professionals within the athletic shoe industry, eager to learn how companies had been impacted by challenges, including: supply chain disruptions, shipping costs and delays, and new product development. How are athletic shoe companies adapting in 2022?

While COVID loomed as the largest concern for most throughout 2021, the downstream effects in the wake of the pandemic were keenly felt by respondents. Pandemic-related supply chain disruptions were often difficult to predict. Factories pivoted to customers willing to pay more, leaving some customers (typically, smaller ones) out in the cold. Products became more difficult to find and more expensive to manufacture.

Through no fault of its own, the athletic shoe industry had to grapple with products being shipped later than intended, or canceled altogether. Further, margins for such products decreased. Often, Research & Development professionals were pulled from new product design, and instead asked to determine alternative materials that might be able to be swapped out without impacting required specifications. Just under two-thirds of survey respondents indicated they remain “somewhat” or “substantially concerned” about acquiring raw materials necessary to complete orders.

In addition to worries about securing raw materials, manufacturers had to worry about their ability to deliver goods to their consumers. Covid, along with ensuing inflation, greatly impacted shipping costs. A whopping 67.1% of survey respondents expressed “some” level of concern about shipping costs, and greater than 40% expressed “substantial concerns.”

Further, slightly more than 32% of respondents indicated that supply issues had forced manufacturers to consider changing vendors due to availability; Just under 50% of survey respondents shared they either had changed, or were considering changing suppliers due to costs.

The net-net of these decisions is profound. When respondents were asked if availability had forced them to “fundamentally change” their product offering, 28.3% moderately or strongly agreed. In other words, slightly less than 30% of the products being offered to consumers are not the products manufacturers would have sold, all things being equal!

Inventory drives revenue. Simply put, you can’t sell what you don’t have. Whereas supply previously chased demand, the equation – for now – has been flipped, and brands that have established relationships with consumers are relying on their available product to satisfy demand.

This lack of supply necessitates nimble marketing. While brands are necessarily seeking means to open up supply chains while maintaining margin, the strongest will aggressively cross-market to their consumers with available inventory. In doing so, the hope would be to increase brand affinity until the consumer has the ability to receive the product he hoped to purchase.

Read more about how athletic shoe companies are adapting to the challenges of 2022 here. Factors within the supply chain, though loosening, are likely to remain constrained for the short-term, and in a fluctuating market, knowledge is power. Decisions that drive organizational growth require both an inward focus on one’s organization, as well as a reasoned look at how competitors feel about market conditions.

Posted 06/30/2022 in news