Athleisure gears up: concerns for market players

Wearing athletic clothes outside of the gym has never looked more fashionable. Indeed, when you walk around cities, it’s difficult not to notice the rise of the post-workout look. Whether you are going for brunch, to a yoga class, into the office or out for drinks, you are likely doing it in “athleisure” clothes.

“Athleisure,” defined as a category of athletic looking clothes with no technical function, has become the defining fashion trend of the 21st century. This already major trend flourished in the pandemic, as boundaries between work, home and exercise were dissolved and a hybrid style of living grew.

While the retail M&A landscape comprised of purchases of distressed assets during the pandemic, the sector is bouncing back and retailers are trying to get a slice of the trendy athleisure market. American footwear group Wolverine recently acquired athleisure brand Sweaty Betty for USD410 million, Levi Strauss & Co. entered the athleisure market through its proposed acquisition of lifestyle apparel brand Beyond Yoga. The rise of retail M&A activity is also visible in investments in emerging growth companies through the use of corporate venture capital. The athleisure brand Vuori Inc. recently announced a USD400 million investment from SoftBank Vision Fund 2. This investment, which is one of the largest investments ever in a private apparel company and will drive international expansion through Europe and Asia Pacific.

While the athleisure trend is encouraging a slate of new players to enter the market, it does raise a number of issues that companies and investors will need to pay close attention to. Here are two key concerns:

• Innovation: Athleisure is appealing as a driver of profit – however, it has become a highly competitive and saturated market with low differentiation between products. Companies looking to enter the athleisure market may want to explore niche ideas to thrive against their competition. For example, Altor Fund V has acquired a majority stake in the legal entity owning Oceansapart, which is a uniquely positioned activewear brand that targets mainly female Gen Y and Gen Z customers.
• Sustainability: The modern informed consumer market has become increasingly aware of the environmental impact associated with purchasing new clothes. Companies may look towards brands that are not only aware of their carbon footprint but have developed sustainable production methods that reduce their water footprint and waste. New brands Tala and Rockay focus on using upcycled waste materials and natural fibers in their clothes to lower their environmental impact.