A new report from McKinsey & Co is warning the sporting goods industry growth outlook is about to soften by 6% a year between 2024 and 2029.

According to the latest McKinsey report on the Sporting Goods Industry persistent inflation, softer growth prospects and a cautious consumer did not bode well for the sportswear sector in 2024 but despite this, it managed to sustain a growth rate of 7% a year from 2021 to 2024.

However, growth rates are looking more modest in the years to 2029, driven by a slowdown in the Asia–Pacific, Western Europe, and Latin America regions.

What’s causing the slowdown and how can companies mitigate the impact?

• Tariffs

84% of sportswear executives expressed concern about the impact of the geopolitical environment on their business. Potential tariff increases this year could have a significant effect on the sporting goods sector, particularly in terms of pricing and supply chain management. Additionally, consumer spending may be further affected, especially in discretionary categories such as sportswear. 

Companies can prepare by accelerating efforts to derisk and diversify their supply chains. For example, they could review their supply chain footprints and inventory management practices as well as boost efficiency through increased automation and digitalisation.

• Shifting ESG priorities

Environmental, social, and governance (ESG) and sustainability remain priorities for sporting goods companies, but external factors and business considerations are forcing executives to make difficult trade-offs, leading to a decreased priority compared with last year. For 2025, half of surveyed sporting goods executives stated that sustainability is a priority for their company — down from approximately two-thirds the previous year.

Supply chain diversification is key to mitigating risks linked to ESG.

• People are not moving in the way they used to

Around the time of the pandemic there was a spike in physical activity. But this has since dipped.

In 2022, globally, physical inactivity increased 5 percentage points. By 2030, the prevalence of physical inactivity is expected to reach 35% from a 26% baseline in 2010.

“Physical inactivity also presents an existential risk to the sporting goods industry. If levels continue to rise or even remain constant for younger generations, the market related to physical activity will decline,” the report reads.

“However, converting physically inactive segments is the biggest potential opportunity for the sporting goods industry. The good news is that sporting goods companies have an opportunity to take targeted action to empower sedentary consumers to increase their physical activity levels. They could seek to remove barriers to physical activity for more sedentary segments, including via product innovation, marketing campaigns to raise awareness, and enhanced youth engagement. For example, Adidas’s Stay in Play product line and Nike’s modest wear line aim to address specific consumer barriers, while initiatives such as New Balance’s Run Your Way campaign and ASICS’s The Desk Break campaign raise awareness and promote physical activity. Shimano is collaborating with school bicycle clubs to teach children how to ride a bike and raise awareness about cycling.”

Opportunities in the sportswear segment

The report indicates there is a segment of consumers that take sports and physical activity very seriously.

“For those already engaged in activity, exercise has evolved from a casual pursuit into a linchpin of health regimens and a defining element of personal identity. This shift stretches beyond the decade-long athleisure trend, heralding a deeper transformation in which an active lifestyle has become a central touchstone for a growing share of consumers.”

It adds for these consumers physical activity and fitness have become so culturally relevant they are a “core part of many active consumers’ identities”.

“This trend presents an opportunity for sporting goods brands to develop products that meet the emotional and functional needs of active consumers and foster long-term loyalty. Understanding the deeper motivations behind consumer choices allows brands to create offerings that resonate on a personal level, enhancing product design and marketing strategies.”

What will become of challenger brands?

There has been a proliferation of new entrants in the sportswear category over the last decade, whether that is specialised sportswear firms or apparel brands expanding portfolios to include activewear.

“Coupled with declining barriers to entry, this specialisation has fuelled the rise of challenger brands. In a telling sign of industry realignment, these contenders have eclipsed large incumbents Adidas and Nike in revenue growth and hence market share gains. From 2019 to 2024, publicly traded challenger brands expanded at a faster rate than major incumbents; the two largest players ceded three percentage points of market share during this period.”

New brands have focused on pursuing specific pockets of growth and expanding their reach in several ways: crafting a sharper value proposition, delivering visible innovation with platform potential, tapping into cultural marketing, and harnessing wholesale and selective retail.

“Sporting goods brands with a winning value proposition and a strong emotional connection have proliferated. This dynamic raises a dilemma for ambitious brands: how best to continue their growth journey and increase market share while retaining the attributes that distinguished them in the marketplace. To maintain their competitiveness, sporting goods executives would need to objectively assess their strengths and extend their reach.”

The report adds the past year has marked a “period of recalibration for the sporting goods industry with uneven recoveries and persistent challenges.”

“Looking ahead, we believe the most successful brands will innovate to address shifting consumer demands, manage supply chain complexity, and streamline operations.”