First Research US Industry Profile

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Sporting Goods Manufacturing
SIC Codes: 3949
NAICS Codes: 339920
Last Quarterly Update: 6/3/2019
Companies in this industry manufacture sporting and athletic goods, including sports and fitness equipment. Major companies include Acushnet, BRG Sports, Callaway Golf, ICON Health & Fitness, and Russell (all based in the US), as well as Amer Sports (Finland), Decathlon (France), Head (Netherlands), and Mizuno (Japan).
Worldwide retail sales of sports equipment total about $100 billion annually. China, the US, and Germany are the largest exporters of sporting goods. Because of lower labor and production costs, many companies outsource or have manufacturing facilities in developing countries such as China and India.
The US sporting goods manufacturing industry includes about 1,700 establishments (single-location companies or units of multi-location companies) with combined annual revenue of about $10.5 billion. Manufacturing of athletic apparel and footwear, which is not included in the industry, is covered in separate industry profiles.
Competitive Landscape
Sporting goods manufacturers are retooling their distribution, sales, and marketing strategies as the sporting goods retail sector becomes increasingly volatile. Major big-box chains have gained leverage over suppliers as they acquire smaller retailers that have fallen into bankruptcy. Large sports equipment manufacturers are increasingly selling products directly to consumers through their own websites, allowing them to offer lower prices or reap higher profit margins by bypassing retailers. The industry competes with vertically integrated retailers that manufacture and sell their own products; companies may also lose business to outlets that sell used sports equipment.
Global trade policy has a significant impact on the industry, as production has increased dramatically in countries with lower wages and fewer regulations. Many US sporting goods companies outsource production and purchase materials from overseas suppliers to minimize costs. Imported sporting goods account for about 50% of the US market; China, Taiwan, Mexico, and Vietnam are the top sources of imported sports equipment. Exports, mainly to Canada, Japan, the UK, and Mexico account for about 25% of US production.
The primary demand drivers for sporting goods are consumer income and demographic trends. The profitability of individual companies is determined by efficient manufacturing and effective marketing. Large companies enjoy economies of scale in purchasing and brand promotion and often offer a wide range of products. Small companies can compete effectively by offering specialized or unique products that interest enthusiasts. The US industry is concentrated: the 50 largest companies account for about 75% of industry revenue.
Competitive Advantages:
Retail Strategy — Competition in the sporting goods manufacturing industry largely hinges on a company's ability to adjust to ongoing turmoil and consolidation in the sporting goods retail sector. Companies that supply major chains have significant advantages over those that primarily sell through small and midsize brick-and-mortar retailers, many of which are struggling to stay afloat. Direct-to-consumer e-commerce is becoming a key sales channel and profit driver for manufacturers.
R&D — Due to short product life cycles and ever-changing consumer trends, sporting goods companies must invest heavily in R&D to remain competitive. Technology advancements have streamlined the R&D process, enabling faster production of prototypes and customized athletic gear. Many companies are using new types of nanomaterials to create sports equipment that is lighter-weight but more durable than products made from conventional plastics. The industry is also responding to rising consumer demand for equipment outfitted with sensors that track biometrics and other fitness data.
Tracking Global Trends — Sporting goods manufacturers identify new sales opportunities by tracking the popularity of different sports in markets around the world. For example, global sales of baseball equipment are rising as a result of the sport's growing international profile and efforts to increase participation among younger players. Emerging markets, especially within the Asia/Pacific region, will play a key role as producers look to grow beyond the largely saturated North American market.
Companies to Watch:
Decathlon designs, manufactures, and sells athletic equipment and apparel for some 70 sports, including cycling, hiking, hunting, basketball, swimming, running, soccer, and tennis. The French company owns about 20 private-label brands and operates more than 1,000 retail stores in more than 45 countries.
Russell is a vertically integrated manufacturer that makes sports balls and equipment in addition to apparel and uniforms. Its Spalding unit boasts the official basketball of the NBA, and the company also offers gear for football, basketball, and baseball under the Bike name.
Amer Sports makes balls for tennis, golf, and team sports under the Wilson brand, as well as several lines of products for snow sports and general fitness. The Finland-based company also manufactures Precor home and commercial fitness equipment.
Products, Operations & Technology
Major product categories include gym and exercise equipment and golf equipment, each of which accounts for about 30% of US industry revenue. Another 25% ... plus:
Sales & Marketing
Finance & Regulation
Regional & International Issues
Human Resources
Also includes the following chapters:
Quarterly Industry Update
Industry Indicators
Business Challenges
Trends and Opportunities
Call Preparation Questions
Financial Information
Industry Forecast
Industry Websites
Glossary of Acronyms

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