A general shift to direct-to-consumer channels is having massive effects at retail for some leading footwear brands in the U.S.
Four of the top five athletic footwear brands (according to dollar rank), are their own best retailers, according to data from The NPD Group presented by senior sports industry advisor Matt Powell an industry recap on Tuesday.
In other words, brand-owned stores and websites are the largest retail channels for most of the top five leading brands. Nike, Adidas, Skechers and Vans all generated the largest percentage of their sales via their own online or brand-owned stores in 2021. Most of this DTC business was done via online channels, Powell noted.
Only Jordan, the third-largest athletic brand by dollar rank (after Nike and Adidas), generated the most sales through another retailer — Foot Locker — with its DTC arm coming in at No. 2.
For Jordan, its wide array of limited-edition drops generally requires a physical retailer with a strong consumer base to help execute that, Powell explained.
In the last two years, many apparel and footwear retailers have zeroed in on their DTC channels. Nike is set to cut ties with a variety of wholesale partners in 2022, leaving retailers such as DSW, Zappos, Dillard’s, Urban Outfitters and Shoe Show without access to products from one of the largest athletic shoe makers.
Additionally, Under Armour announced in 2020 it planned to cut ties with certain wholesale retailers and would exit around 3,000 stores in North America by the end of this year. Adidas and Crocs have also made similar moves as they look to maintain more control over brand image, distribution and pricing.
According to NPD data, the strategy is benefitting certain brands. Nike, Adidas, New Balance and Converse all saw massive growth in their DTC channels compared to 2019, with little growth in their wholesale partners. Their outlet businesses declined overall as well.
“I expect we will continue to see brands put an emphasis on DTC as we go through the next few years,” Powell said.
As brands focus on DTC channels, retailers are increasingly creating their own private labels to fill the gaps on their shelves. NPD data showed that private-label brands now represent about 30% of all activewear sold in the U.S. And while only 3% of footwear is private label, Powell expects that number to rise in the coming year.
“I think retailers are putting in private brands to try to compete with their wholesale partners who are obviously pushing very hard on the DTC side of the business,” he said.