The huge loyalty opportunity for sports retailers
It is not only Nike that has successfully designed a brand that means something. Sporting goods retailers have clearly shifted from product focus to a focus on lifestyle and identity, setting the foundation to extraordinary opportunities for customer loyalty.
In this article, you will learn:
- Global sporting goods stats & trends
- Why loyalty is good for sports retailers
- What factors drive brand loyalty in sports / how sports brands achieve unparalleled loyalty
- What makes sports loyalty programs different (and successful)
- A close look at the big (and not so big) sports brands in the world and influential sports loyalty programs
Global sporting goods stats & trends
When discussing sporting goods, consumers often think of sports apparel, athletic footwear and licensed sports merchandise. However, the term also encompasses equipment and gear such as weights, yoga mats, home cycling machines, treadmills and more.
- CAGR of 3.4% over 2015-2020 due to reasons such as enhanced disposable income, governments promoting sports activities and encouraging sports participation, the rising number of health-conscious people.
- In 2017, sportswear was the apparel category with the highest level of global market growth: It grew by 6.8% that year.
- The sporting goods market is a billion-dollar industry. Sporting goods store sales in the United States alone amount to roughly 45 billion U.S. dollars each year. And as such, the U.S. is the key market in the sports apparel and footwear industry holding the lion’s share of the market with over 30%
- Over the years, the European sporting goods industry has done well for itself: in Germany, for instance, net revenues of the sporting goods retail sector have more than tripled since 2003. Similar trends have likewise been recorded for other large countries in Europe, including, but not limited to Italy, Spain, and the United Kingdom (UK).
- The sporting goods market in China grew 16.5% a year (CAGR) from 2015 to 2019.
- The outbreak of Coronavirus disease (COVID-19) acted as a massive restraint on the sports market in 2020 as governments globally imposed lockdowns. However, it is expected that the sports market will recover from the shock across the forecast period as it is a ‘black swan’ event and not related to ongoing or fundamental weaknesses in the market.
- In 2021, about 75% of consumers in the United Kingdom owned a home fitness product (such as weights, treadmills, yoga gear, etc), while for Germany , this was the case for about 80% of consumers.
- In recent years, eHealth trackers and smart watches, which can help users along their healthier lifestyle journey, have also become very popular. In fact, about 30% of consumers in Sweden said they used wearables in 2021. Given this craze, many companies and brands such as Fitbit, Garmin, Apple and Samsung, have tried to dominate said market.
- The mHealth apps market was valued at $47.7 billion in 2021 and projected to grow to $149 billion by 2028, with a year-over-year growth of 17-18%. The leading health and fitness apps worldwide in 2021, by number of downloads, where Flo Ovulation and Period Tracker, Mi Fit and Home Workout, with over 30 million downloads each.
- The global sports market is expected to grow from $354.96 billion in 2021 to $501.43 billion in 2022 at a compound annual growth rate (CAGR) of 41.3%
- Sustainability has become a primary consumer priority, and sports retailers have responded by introducing more sustainable products.
- Athleisure is a megatrend in the industry, especially after the pandemic. By 2024, for instance, the global sports apparel market is expected generate over 200 billion U.S. dollars’ worth of annual revenue.
Why is good for sports retailers
Sports marketing is a $700bn a year industry across the globe, and it is expected to keep growing. To be a successful sports retail marketer, it helps to study the most successful brands in sports – both performance and apparel – and how they use the fundamentals of marketing and psychology to stay on top. In this area, loyalty programs shine with unprecedented importance.
Let’s take a look at why Loyalty presents a huge opportunity for sports retailers
Loyalty helps sports retailers understand their customers and predict their needs and wants
Loyalty programs partially exist to reward repeat purchasers and brand loyalists, but they also are important zero- and first-party data sources for brands. Customer data offers sports retailers the ability to peep into the behaviors and preferences of their customers.
Using data points like age, gender, location or purchase history, sports retailers can better plan their campaigns and target their consumers with better messaging and marketing.
Loyalty helps sports retailers with decreasing margins
Most sports retailers have manufactured their goods in China and Taiwan for decades, due to the lower labor costs. But allegations of forced labor and concerns about human rights in the supply chain in March 2021, together with local businesses creating knockoff products have had a huge political and economic implication. Consumers have become more attuned to who makes their clothes and put pressure on sports retailers, that have obviously reassessed their relationship with manufacturers.
On the other hand, inflation, supply-chain issues, rising material costs and ascending warehousing and store costs are all eroding profit margins.
As loyalty programs result in customers buying more and more frequently from a specific brand, it ups the customer retention rate.
In fact, a 2% increase in customer retention has the same effect as decreasing cost by 10%.
A 5% increase in customer retention increases profit by 25 to 95%.
These numbers show the direct correlation between loyalty programs for sports retailers and their financial health.
Loyalty helps sports retailers mitigate the seasonality of products
Unlike CPGs, the demand of sporting goods isn’t constant throughout the year. For instance, in the spring, demand for outdoor apparel and equipment soars; in the fall, indoor team sports gather more demand.
Through customer data collected directly from loyalty programs, sports retailers can monitor the exact demand of a particular product in a particular season and better forecast their sales. Because of this they are saved from dead inventory (that would previously get sold for peanuts) or from losing sales due to lack of inventory.
Loyalty helps sports retailers boost engagement that drives retail revenue
Having a loyalty program allows sports retailers to interact with customers in a variety of ways. From sharing relevant news, events, polls and promotions, to displaying real-time loyalty points balance, offer attractive rewards and incentives or send timely calls-to-action, omnichannel experience are both affordable and profitable for sports retail brands.
How can sports retailers achieve unparalleled loyalty
Now, let’s take a look at what factors drive brand loyalty in sports.
Consumer Loyalty is generally considered to be one of the ways in which consumers express their satisfaction with a product or service. It is a long-term willingness to buy products from the same brand with which they have had a positive experience in the past. A loyal consumer appreciates and is inclined to repurchase the same brand and not to try competing brands.
“90% OF ALL PURCHASING DECISIONS ARE MADE SUBCONSCIOUSLY. THEY’RE BASED ON THE EMOTIONS AND FEELINGS A PERSON HAS TOWARDS A PARTICULAR BRAND” Martin Lindstrom, Time Magazine
Companies need to understand the factors influencing consumer behaviour, not only to keep existing customers but to attract new ones, as well as to gain competitive advantage in the marketplace.
This is done by collecting, unifying and analyzing customer data, that basically holds the secrets to the hearts and minds of sports retail customers.
By identifying and understanding the factors that influence their decision, brands then can successfully develop a strategy, unique value proposition and promotional campaigns that will cater to their customers’ preferences and increase sales.
What makes sports loyalty programs different from loyalty schemes in other markets
As you know, there are many industries that work well with loyalty programs, specially those that sell directly to consumers, such as restaurants, airlines, cosmetics, supermarkets and apparel.
Sports retailers have a tremendous advantage over other markets in terms of loyalty, and that is simply because consumers are passionate about a sport, team or healthy lifestyle in a way that they will never be about about other things.
Here are some of the ways how sports retailers can excel.
1. Mobile is a MUST
Let your customers engage with your everywhere so you can become their new workout partner.
2. Foster team spirit or competition
Whether it is though personal or group goals, leaderboards or other interactive elements, create an active community within your loyalty program.
3. Encapsulate their lifestyle
Offer more than products, be part of your customers lives and show you understand their lifestyles. Ensure your brand values are at the centre of the experience you are offering.
4. Coherent expectations
Use every touchpoint physical and digital, to provide a coherent experience no matter the interaction. There is an expectation from today’s consumers that no matter where you are, it’s clear who you are.
5. Innovative experiences
Talk about the interesting happenings in the world of sports. You can have a tie up with a reputed sports magazine. Apart from avoiding the fall of interest levels, it makes the whole loyalty program highly desirable.
A close look at the big (and not so big) sports loyalty programs
- Turnover – $37 Billion
- Loyalty programs: Nike Run Club, Nike Training Club and SNKRS reached the 100 million member mark in 2017.
- Turnover – $25.9 Billion
- Loyalty program: The Creators Club, launched in 2018
- Turnover – $500 Million
- Loyalty program: 9W Rewards offers many ways to earn points
Dick’s Sporting Goods
- Turnover – $12,3 Billion
- Loyalty program: The ScoreCard, with 20 million members, of which 20% are Gold status customers who spend $500 per calendar year
- Turnover: $2 billion
- Loyalty program: VIP experiences, training and wellness programs, partner rewards, and much more.
The North Face
- Turnover: $3.2 billion
- Loyalty program: XPLR Pass (EXPLORE PASS), rebranded in 2021 from VIPeak
- Turnover: $5.2 Billion
- Loyalty program: The Armour Card, since 2014
Forum Sport (Europe)
- Turnover: €159 Million
- Loyalty program: FORUM SPORT CLUB, since 2009
In our article 6 types of loyalty programs for retailers, you can find out some of the most loyalty techniques retailers use to keep customers engaged.
If you’re a sport retailer and you’d like to talk about any of the loyalty strategies outlined in this article in more detail, then get in touch with one of our team – we’ll be happy to show you examples or talk through your brand’s unique challenges.
Many thanks to Luca Tateo, Enterprise Executive Senior & VP Sales at Loyal Guru, who contributed to the post of this article.