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Why Running Insiders Are Confident the Sport Is Recession Resistant

This fall has already been a blockbuster marathon season, with events in London, Berlin and Chicago. And it will be capped off by this weekend’s TCS New York City Marathon, which will be back at full capacity with 50,000 runners.

Riding the wave of the pandemic boom, the running industry has been capitalizing on the return of in-person events over the past year and sees more big opportunities in the coming seasons. Brooks CEO Jim Weber told FN that running is “trend-right for the challenging and dynamic world we all live in” and is confident participation can double in size by 2030.

And other insiders believe there’s still plenty of room for the industry to grow.

For instance, Inov-8 CEO Mike Snell said he is excited for people to keep discovering the joys of trail running. Saucony president Anne Cavassa is looking forward to the industry doing what it arguably does best: connecting at a community level. And both Fleet Feet CEO Joey Pointer and On’s GM of North America, Britt Olsen, believe there’s more work to be done to address diversity in the sport.

But challenges persist. Despite the opportunities, there are inevitable headwinds, most notably the looming recession that will likely impact consumer behavior.

What’s more, the Sports & Fitness Industry Association (SFIA) recorded a decline in running participation in 2021, with 49 million participants last year, down from 50.7 million in 2020. However, SFIA stated that some people who ran outside during the pandemic have shifted back to treadmills, suggesting there’s simply been a change in location for runners. There were 53.6 million treadmill users in 2021, up from 49.8 million the year prior.

As the industry prepares to gather in Austin, Texas, at The Running Event, leaders in run discuss expectations and strategies for 2023.

THE WHITE SPACES FOR BRANDS

Altra Via Olympus
Altra Via Olympus.
CREDIT: Courtesy of Altra

Catering to the runner’s needs is at the center of every brand’s strategy, but their plans to excite athletes in 2023 couldn’t be more different.

For On, Olsen said its priority for the year is apparel. “People know us for performance running shoes, but in 2023, we’ll focus our energy around apparel and being a true sportswear brand, highlighting the power of a complete running kit from head-to-toe,” she said. “You’ll see many pop-up experiences and spaces where On can meet new and existing fans with a full expression of our essentials collection.”

What’s more, Olsen said the brand will keep community at the forefront via its Right to Run program. This social impact effort supports the work communities are doing to drive change. Olsen said it will grow the program in hopes of increasing access, awareness, inclusion and safety globally.

Cavassa, too, believes a more inclusive run community is emerging, bolstered by the return to events such as 5Ks and family fun runs. While continuing to build an exclusive running community will be one of the brand’s primary focuses, the exec also said it will celebrate a major milestone throughout the year.

“Saucony will be 125 years old next year. It’s the original running brand at the forefront of a lot of firsts, so we will celebrate this throughout the year through product, community and the power of running culture,” Cavassa said.

The focus of Brooks, according to Weber, will be staying ahead of the evolving needs of the runner and delivering products that cater to their biomechanical needs — what the brand calls their Run Signature.

“In 2023 and beyond, success will be driven by our long-term focus on building the best per- formance running gear for runners, executing with excellence and increasing runner demand by continuing to invest in mining human and science-based insights to engineer unparalleled fit, feel and ride for the many types of runners,” Weber explained.

Technologies at the forefront, Weber said, will include its nitrogen-infused DNA Loft V3 midsoles, GTS GuideRails technology and the new StealthFit design that offers a closer-to-foot fit. These will be featured in key product releases such as the Glycerin 20, as well as a new trail collection including the Caldera 6.

Altra will also lean heavily into delivering top-tier footwear, but president Todd Dalhausser explained much of the focus will center around how it will come to market.

“What the market is going to see from us in 2023 is a strategic approach around our product evolution and how we’re organizing our products. It will be organized in four concepts, with Connected and Speed as the book ends, and in the middle will be Cushioned and Flow. We’re excited about how we’ve engineered the product to fit into these four pillars,” Dalhausser said.

THE ECONOMIC UNCERTAINTIES

With a potential recession looming, retailers and brands alike are wary of what’s in store.

“There’s a lot of doomsaying going on. I’m concerned about how the economy is going to feel in a year, but we’re buying for growth,” said Dan Fitzgerald, co-owner of Heartbreak Hill Running Co. in Boston and Chicago. “In downtimes, running can be an enlivening and enriching thing that isn’t too cost prohibitive, so I think running will be strong — but I am a little nervous at the same time.”

Others are also feeling cautiously optimistic.

“We expect runners, like everyone else, to be more considerate in their purchasing in 2023. But running is good for relieving stress, so hopefully as more people participate in the sport, that will mitigate some of the market pressures,” said Snell.

Weber acknowledged people’s resiliency in recent years and is confident running shoes will be included in consumers’ budgets.

“The U.S. Federal Reserve has triggered an intense focus on inflation by hiking interest rates while tightening the money supply. Currencies are fluctuating and energy costs are up all around the world, creating risk of stagnation and pullback in consumer spending,” Weber explained. “We know from historical recessions, including the Great Recession of 2007-2009, that while many will think twice about larger discretionary purchases, a new pair of running shoes will likely make the cut.”

Pointer agrees. “I’ve been doing this for almost two decades now, and what I have found over time is that running is pretty recession resistant. We’re not recession proof, but we’re fairly resistant,” he said.

Although she is similarly optimistic, Olsen said On is taking steps to mitigate potential losses if consumers opt not to purchase with the same fervor as in recent years.

“Consumer spending is starting to slow after a period of hypergrowth throughout the pandemic. We anticipate that this trend will continue,” Olsen said. “That being said, we are not currently seeing slowing demand. We will proactively make decisions that allow us to meet the economy wherever it lands. Fortunately, the running industry typically fares well in times of downturns, and we still see many new runners that were born out of pandemic years.”

THE BIGGEST INDUSTRY ISSUE

While economic uncertainty is enough to keep brand and retail execs on their toes, there is arguably an even greater concern weighing on the industry: excess inventory.

“I worry more about the amount of product that’s in the marketplace,” said Fleet Feet’s Pointer. “Product is stacking up with vendors at their distribution centers, product is stacking up at other retailers. How we, especially as retailers, move through this product in a way that doesn’t fully erode profit margins while allowing innovation to happen and new products to flow in and flourish, that’s going to be our biggest challenge.”

Dalhausser said this has been top of mind for most of the year.

“Supply chain caught up about the middle of this calendar year, around July, and an enormous amount of inventory flooded in the market,” he explained. “Prior to July, we had scarcity of inventory and no promotions. Now, there are some of the greatest promotions across the industry that we’ve ever seen.”

Cavassa predicted the inventory issues and promotional environment will last around nine months, and said the companies that will come out on top are the ones with balance.

“Brands will be balancing the need to compete on price while maintaining their brand value. That’s going to be a delicate balance for most out there,” Cavassa said. “From a planning perspective, there aren’t reliable benchmarks from the last couple of years to base inventory buys on. Without reliable data, brands and retailers need to resist that urge to swing the pendulum on the inventory buying side of things. We all need to stay as close to our consumer as possible and make inventory decisions based on demand signals and the strength in product offering. Brands with strong merchants and a long-term perspective are going to navigate nicely.”

Dalhausser said Altra has been proactive in its planning. “We saw this coming and we cancelled orders to the factory to make sure we were going to put ourselves in a good position. We’re going to get hyper focused in a couple of key areas of the business and do them incredibly well,” he said.

From a retail perspective, too much inventory and promotions is antithetical to what the specialty run channel represents, said Genie Beaver, owner of West Stride in Atlanta.

“We prefer to play in the new. We’re not able to move lots of discounted product through one door — and that’s not my schtick,” she said. “We’re about service and understanding the product and getting the right shoe on somebody’s foot for somebody’s body, for somebody’s drive. The discounting doesn’t fit with our mission.”

For Bekah Metzdorff, co-owner of Minnesota-based Mill City Running and Saint City Running, promotions aren’t ideal, but they’re not disastrous either. “We try to stick to premium products and price point — but there is an opportunity in this,” Metzdorff said. “Maybe we can connect that product to people who might not have access to as much money.

“We’re trying to find a middle ground and work with brands to help them get rid of that product and offer it on sale,” she added. “It’s a bit operationally challenging because we haven’t done a lot of sales and with some of the brands it’s harder to get their sale or outlet product at a better margin than what we usually buy it at. This will take some work partnering with the brands.”

THE BRIGHT SPOTS FOR RETAILERS

Saucony Triumph 20
Saucony Triumph 20.
CREDIT: Courtesy of Saucony

Inspite of challenges, run specialty stores do have reason to be excited. Following the COVID running boom, several players in the market have stepped their game up when it comes to product.

“There’s a lot of great products across the board. It’s pretty amazing,” Pointer said.

Although retailers told FN they were bullish on several brands, two in particular stood out for Fleet Feet, West Stride and Mill City/Saint City — Hoka and On.

“If you went back 10 years, Hoka and On were just emerging. Now, they’re going be two of our top three brands in 2023,” Pointer said. “Customers are coming in, asking for them, they want to try the brands out. They’re probably our most sought-after by name.”

After Hoka and On, Pointer said Asics, Brooks and Saucony are taking strong steps — as well as New Balance. “I spent
two weeks in Boston and saw The Track, their sports research lab, and it’s an incredible facility,” he said. “It is going to be
interesting to see if New Balance turns that into product innovation.”

And in terms of smaller brands with potential, he lists Altra and Kahru. “They’re still small from a market share standpoint, but Hoka and On were challenger brands 10 years ago, so can they make that jump from 2% market share to 10% market share?”

As for Beaver at West Stride, she was high on Saucony and Altra, and also Brooks.

And Metzdorff, like Pointer, is bullish on Asics. “For us, Asics has been making a come- back,” she said. “They’ve been making good product and delivering it, and they have a couple of things coming up that will be fun to launch and see the reactions.”

Fitzgerald, who said he, too, has been impressed with On, is also confident in the year ahead for Nike.

“I’ve been privy to some Nike conversations as they make moves. There is a real renewed focus on running there and when they decide to do something, the market feels it,” he said.

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