Is the activewear bubble about to burst? Between a booming general trend toward fitness and healthy living, and a clothing trend called athleisure (wherein people dress like they’re going to the gym to do pretty much anything) sneakers and stretchy leggings have become so popular that some are starting to wonder how long activewear’s vertiginous rise in the apparel industry can continue.
Not likely, says Morgan Stanley. In a note to investors on Oct. 12, the financial firm assured those with their money invested in activewear brands that there’s still huge potential for growth—and financial returns—in activewear over the next five years. The bank estimates that the activewear industry could add $83 billion in sales by 2020.
The bullish conclusion stems from an analysis of cultural factors, such as global participation in sports.
Two of the regions driving this growth are the US, already the world’s largest activewear market, and China. In both nations, popular interest in fitness and health are on the rise. In China, for instance, the share of the population aged six to 69 that exercises at least three times a week rose from about 28% in 2007 to over about 31% in 2014. Active people like to buy activewear, the note points out, and many more Chinese are expected to become habitual exercisers in the coming years.
It doesn’t hurt that Chinese consumption is booming, either. The country now has the world’s largest middle class, and rising incomes, the report notes, tend to result in more participation in sports and higher discretionary spending.
And then there’s this factor: “We think the athleisure trend is becoming a global phenomenon,” the report states. More people around the world are wearing activewear, whether they’re working out in it or not, and it’s stealing market share from non-athletic apparel.
Rather than getting stale, the authors believe athleisure has tapped into a coolness feedback loop where new designs and technology keep driving new interest. It’s just really comfortable, they say, and so long as it’s socially acceptable to wear it, people will.
Even factoring in economic slowdowns in various parts of the world, such as Latin America and Asia, the authors expect sales to grow steadily as a consequence of all these factors.
The company that stands to benefit most is Nike—the note calls it a “must-own” stock. Nike outspends all its competitors combined on research and development, according to company data and Morgan Stanley’s estimates. It’s been rewarded by tremendous growth in China recently and domination of the US activewear market.
Nike’s CEO, Mark Parker, seems to agree. “We think active apparel, and sport- and performance-based apparel, will be here to stay for years to come,” he recently said in an interview. “I think we’re going to take some market share out there as a lifestyle shift takes place in countries around the world.”