5 Reasons So Many DTC Brands Are Into Activewear
Direct-to-consumer or DTC brands were holding onto a well-kept secret, at least until recently. That is, activewear is the future of this area of the clothing industry. But why has activewear exploded across DTC brands?
There are five reasons why DTC brands are so into activewear:
Athletic and athleisure apparel is increasingly popular
Consumer behavior has changed
Non-DTC brands have paved the way
Growth is happening fast, and other DTC brands want that for themselves
Excellent revenue opportunity
Today’s guide will explore in more detail the five reasons why apparel-focused DTC brands are becoming synonymous with activewear as well as what the future may look like. If you’re a traditional or eComm DTC brand that's considering adding activewear to your lineup, this article will help in your decision-making.
5 Reasons Why DTC Brands Have Jumped on the Activewear Trend
1. Athletic and Athleisure Apparel Is Here to Stay
If you can't lead the consumer, then follow them. And in this case, unless an apparel brand was already set up for activewear and athleisure apparel before COVID-19, then they're likely following the consumer into this new trend.
Who would have known that a global pandemic would get people more interested in health and exercise, and even as the concerns become more faded, consumers are still sticking with their fitness behaviors?
And by proxy, purchasing athletic apparel for the occasion.
But even before Covid-19, athletic apparel carved out a place for itself in the retail market, and now athleisure is joining in on the trend as well.
Athleisure, which combines the efficiency and breathability of athletic apparel with the everyday appeal of street clothes, might have seemed like nary a trend when it first emerged in the public consciousness.
In the years since Lululemon rose to popularity, this area of clothing has proved its sticking around. The athleisure market, from 2022 to 2027, has a projected compound annual growth rate or CAGR of 6.09 percent.
Just in 2022, the global athleisure industry was valued at $277.3 billion - those numbers are for athleisure alone! And while North America is the largest market, the fastest growing market lies in Asia Pacific.
And while all veins of athletic apparel (activewear, athleisure apparel, sportswear, swimwear, etc.) are US-centric in terms of demand and sales, activewear's global annual revenue is now estimated at $380.14 billion.
The more immediate forecast is good news for brands looking to add activewear to their lines.
Here's a look at Market Watch's forecast (via Statista) of activewear market size growth between 2023 and 2027:
2023: $393.82 billion
2024: $408.39 billion
2025: $423.5 billion
2026: $439.17 billion
2027: $455.42 billion
The Takeaway: Activewear is Popular and Growing
Activewear and athleisure apparel sales spiked during covid, but they will continue to rise. But it's not all sunshine for certain subcategories.
The sportswear and swimwear segments were hit hard by COVID-19, and are still missing sales numbers seen before the pandemic.
All this is to say that athletic apparel is very much a covetable area of the retail market to get into and should be for a long time to come. The projections, after all, all point upward; so this is the indicator for DTC brands who are already in apparel but a different vertical, or not in apparel, to look toward activewear as a path for product extension.
2. Consumer Behavior Has Changed
This second point on the list is closely tied to the first - after all, there wouldn't be a popular clothing brand without consumer demand. But there is one distinction that makes this point worthy of a section of its own.
And that is the shift in consumer behaviors in fitness.
Fitness, whether it be going to the gym or working out at home, has become a regular part of many people's lives - something that wasn't as popular or mainstream before.
The barriers to entry for fitness have lowered, in large part due to athleisure apparel making it more acceptable to work out in public.
Additionally, the rise of streaming services like Peloton, which provide at-home workout options that are both affordable and convenient, has given consumers more reason to sweat it out from the comfort of their own homes.
Of course, all these changes in consumer behavior have led to an uptick in demand for activewear.
But don't be tricked into thinking that consumers are only wearing their activewear or athleisure threads for fitness purposes, many just like the comfort of the materials. And choose to lounge around in them. Whether they are working in them or working out.
The Takeaway: Activewear Purchases Will Remain Even If Fitness Craze Doesn't
The above numbers prove that consumers cannot get enough athletic apparel. This opens the door for DTC brands to sell athleisure, sportswear, and other athletic apparel in one of two ways: They can rely on the direct-to-consumer market or sell their products wholesale through a partnership.
DTC Path: The DTC model positions these brands to sell activewear through a website, a retail store, or some other form of marketplace. An incredible stat is that COVID-19 pushed 46% of all activewear sales online, which played well for eCommerce DTC brands. While DTC can be done in a traditional brick-and-mortar model, because of the innate qualities of the sales channel and its reliance on influencer marketing among other digital channels, taking the DTC model online is a more seamless shopping experience for this consumer.
Wholesale Path: Wholesaling entails a retailer who acts as the middleman. The activewear producer will sell their goods to the retailer who then sells the products to consumers. DTC brands that embrace the wholesale side of operations are choosy about their partners, especially the ones that have their brands sold through wholesalers. They want to nurture that brand and ensure it goes into the right hands.
Since trends show that consumer interest in activewear is going to be on the upswing for the foreseeable future, that makes now the perfect time to enter the market for any reluctant DTC brand.
If yours is already digitally focused, it would make sense to keep that path eCommerce focused, but it doesn't mean that wholesaling is out of reach. The scale and reduced steps of a wholesale partner come with their advantages. But disadvantages as well - namely lower margin.
3. Non-DTC Brands Have Paved the Way
Of course, entering a new market sector always has its risks. This is not something that the bulk of DTC brands has turned a blind eye to - not in the slightest. Even as early as 2019, investing in retail for DTC brands was perceived as a bit of an unconventional move.
That’s not to say that DTC brands weren’t embracing activewear, but it was more like dipping one’s toes in the water rather than taking a giant leap off the diving board.
For some brands, it was better to sit back and watch what the competition was doing.
The competition didn’t disappoint. Even though they operate mostly outside of the DTC sphere, major apparel institutions like Kohl’s and Target began making major strides in activewear that would inspire DTC decision-making.
At the start of 2020, Target debuted a private-label activewear line called All in Motion, which went on to reach sales of over $1 billion in its first year.
Kohl’s followed suit and revamped its activewear, other major retailers followed, and the stars kept aligning, so to speak.
While Target's launch of All in Motion wasn't an online-only option, it's certainly reasonable to assume a large portion of sales came online. Especially since Target's online sales during its inaugural year (2020) were up by 155%, year over year.
The Takeaway: Traditional Retailers Proved Activewear Extensions Work
After 2020, many DTC brands realized with more certainty that the interest in activewear was there. Much more so, so was the demand. It all goes back to satisfying consumer demand, after all.
Some of these retailers, despite being major names, have seen widescale bricks-and-mortar store shutdowns and slumping sales. And for them, strengthening their activewear market is a way to possibly win back some lost audience sectors.
For other major retailers, activewear launches were an opportunity to diversify and appeal to a broader audience. This just catalyzed the activewear boom that is still ongoing today.
4. Growth Within the DTC Sphere Is Happening Fast, So Other DTC Brands Want That for Themselves
Once the activewear ball got rolling within the DTC sphere, it was one instance of growth after another. Here are several standouts over the past few years:
Sweaty Betty Acquisition: Wolverine World Wide, a DTC footwear brand, acquired Sweaty Betty - an athletic apparel brand that some compare to Lululemon.
Osprey Acquisition: There's also Helen of Troy, which you might know better as the company that owns Hydro Flask, purchased Osprey. Osprey is a storied brand known for its backpacks but also manufactures several popular consumer products.
Beyond Yoga Acquisition: Even Levi’s, the well-established denim retailer, grabbed Beyond Yoga, which is a popular yoga, gym wear, and activewear brand for women.
While most of these brands can be purchased in several ways today, they all started with DTC only or as their primary focus.
The Takeaway: DTC Brands Are Already Investing in Activewear
That was just the beginning - rapid acquisitions continue to this day. And between the end of 2021 and the start of 2022, there was a tremendous spike in DTC brands getting more involved with activewear.
In only six months, tracking website visitors by monthly rate, Arc’teryx had a 264 percent spike in website traffic. That’s followed by Alo Yoga at 124 percent and Tracksmith at 75 percent. Sure, you can buy Arc'teryx in numerous places, but this is further proof of consumers going straight to the source for activewear vs. retailers.
Even DTC athletic equipment makers felt the love. Retail Dive notes that Hydrow had a 151 percent uptick in traffic, Tonal 149 percent, and Mirror 105 percent.
There's certainly a wide range of brands and verticals represented above, but the primary point is that activewear in a brand's portfolio will drive sales, and make the company more appealing for acquisition.
5. It’s an Excellent Revenue Opportunity
We’ve established that activewear interest is at an all-time high and that every brand from startups to billion-dollar retailers like Target is getting in on it.
This means DTC brands need to diversify their respective corner of the market - even exploring extensions not traditionally associated with their equities. And it's not as simple as launching an athletic apparel line.
Instead, DTC brands hoping to maximize revenue while making shifts into athletic apparel are strategically differentiating themselves in a few areas, including quality and sustainability.
DTC Brand Differentiation: Quality Over Quantity
Rather than just your standard athleisure apparel, DTC brands produce upscale activewear that has more of the features consumers want such as moisture-wicking and antimicrobial properties.
Quality comes at a price; for the brand and the consumer. It’s not unheard of, for example, for consumers to come across leggings for $80 sold by some DTC brands. Rather than balk at these prices, consumers instead expect them and are willing to pay them.
Why is that? It has to do with the nature of athletic apparel.
When someone buys activewear, it’s to inspire them to get outside (or inside) and be more active, usually to lose weight. So to match their aspirational goals, the so-called aspirational price points of DTC activewear make sense to many consumers.
This puts today’s DTC brands dealing primarily with sportswear, athleisure, and athleticwear in a unique spot.
These brands are in the position of lowering prices if there was enough demand to do so, but market analysts believe that instead, DTC activewear prices will continue to climb in the future.
For DTC brands, as you know, while the cost of goods for quality will increase, the margin is significantly higher than going wholesale, which makes this a more reasonable strategy.
There is a ceiling to price creeps, of course. In the meantime, those DTC brands that are operating at the height of the activewear boom can stand to make a lot of money.
Brand Differentiation: Sustainability Over Fast Fashion
More than ever, consumers want to know the sustainability scores of their clothing, how it was made, and whether the workers who made it were treated fairly. This starts at the raw materials stage and goes all the way through to purchase.
In other words, consumers want brands of all types to make sustainable decisions throughout the clothing supply chain.
The global pandemic has only hastened this awareness, as brands that focused on speed to market at the expense of everything else have been forced to reckon with their practices.
Many activewear brands that are DTC have bucked the trend of fast fashion, and seen tremendous growth as a result - five, in particular, are dominating the space at the moment.
These brands use materials like recycled polyester and offer eco-friendly features such as digital patterns that use less fabric.
The Takeaway: Activewear's Maximum Revenue Comes from Differentiation
Whether it’s quality, sustainability, or both, DTC brands looking to make the most money in the activewear space need to focus on differentiating themselves. Noble pursuits like quality and sustainability are never bad decisions.
For ideas, start with your consumer and get to deeply know what motivates their purchase decisions within and outside of your space.
The good news is that there are many ways to do so, and the best way will be unique to each brand.
What’s important is that DTC brands continue to experiment and innovate to find the winning formula for their business.
Are You Ready to Achieve Your DTC Goals?
Now that you understand how DTC brands are differentiating themselves, it’s time to focus on your brand. How can you better reach your target consumers? How can you improve your product line? How can you create circular activewear?
There are a lot of questions that need to be asked to make this an effective step. If one of your questions is "Where do we start?" then shoot us a note.
At Sports Casuals International, we understand the apparel supply chain inside and out. We’ve been involved in this part of the industry for nearly 30 years.
Our sports apparel manufacturing and design business work with organizations, retailers, and DTC brands like yours to create apparel lines that grab attention and demand repeat business.
With our dedication to sustainability, expert knowledge of the end-to-end supply chain, and custom solutions, we could be just what your DTC brand is looking for if you’re trying to break into activewear.
Our partners include such world-class names as Reebok, NHL, Bauer, Oakley, Adidas, Under Armour, and many more. Perhaps your brand could be next!