The surge of direct-to-consumer (DTC) companies leaning towards activewear production.

In the dynamic world of fashion, activewear has emerged as a dominant trend, with consumers increasingly seeking versatile, durable, and stylish options for their athletic pursuits. This shift is evident in the rise of numerous Direct-to-Consumer (DTC) activewear brands, each vying for a piece of the growing market.

January 2020 saw Target launch its own activewear private label, joining the ranks of established players like Lululemon, Vuori, and Outdoor Voices. These brands, along with newer entrants, offer leggings that can cost upwards of $80 a pair, reflecting the growing demand for quality and durability.

Vuori, a California-based company, has expanded its offerings to include dress pants made from comfortable apparel materials and commute and travel-specific products. Meanwhile, Sweaty Betty and Beyond Yoga have been acquired by Wolverine World Wide and Levi's, respectively, signalling a recognition of the potential in the activewear market.

On and Hydrow, two brands that have experienced a shift in consumers adopting their products in their everyday lives, have seen significant growth. Over the last six months, Hydrow's average monthly visits increased by 151%, while Tonal, Alo Yoga, and Vuori all reported growth of over 100%.

Sweaty Betty, however, has faced challenges, much like Outdoor Voices, another DTC brand that gained rapid popularity but has encountered operational problems. Kossow believes that consumers will not want to go back to less expensive activewear in the future, but cautions against DTC brands moving too fast to expand into new categories, as the stakes are high if a company puts out a poor product and loses some of the consumer's trust.

Norwest Venture Partners finds Vuori compelling because a customer could be drawn in by activewear and eventually move into other categories. As a result, Vuori raised $400 million and plans to build out 100 U.S. stores and enter international markets.

Lululemon, despite trading at a $50 billion market cap, despite having around 10 times revenue, remains a major player in the market. The brand made $1.5 billion in revenue in its latest quarter and is still growing 25% to 30% a year. DTC brands like Lulu and Athleta, Title Nine, and Sweaty Betty have a strong foothold on the women's side of the business.

J.C. Penney has revamped its activewear line in a bid to strengthen its merchandise assortment, while Thinx, a period brand, and ThirdLove, known for bras, have entered the activewear market.

The largest athletic brands, like Nike, Adidas, and Under Armour, have a smaller percentage of sales in women's activewear compared to men's. This gap presents opportunities for DTC brands to capitalise on, as the women's activewear market could represent a 50% increase in overall sales.

Despite the challenges faced by some DTC activewear brands, the athletics space still holds big opportunities for new entrants. As shoppers continue to aspire to be healthy, the demand for high-quality, versatile activewear is expected to remain strong.