Sports Insight

sportsinsightmag.com January/February 2019 Sports Insight • 19 The Tariff Issue "First coming into 2019 for us is tariffs. The China tariff issue is just looming large. We have been working closely on it. There's a lot of uncertainty. Most of us want to have an answer one way or another. There's going to be some answers at the beginning of the year. My sense then is it will evolve and there'll be some back and forth and it'll be resolved at some point. But it makes it difficult for our folks to plan. "Two things with tariffs quickly is whether they're going to be 10 percent or 25 percent and whether they will be extended into footwear, apparel, and basically all equipment, which is what's on the table as a possibility. That's number one, for what we do, but also as it affects the industry and as it relates to what other people are doing. There's a lot of effort to move production out of China … a lot of our folks are going to be spending time on that decision and supply chain and sourcing. "There's a lot of effort to move pro- duction out of China or to shift products [made in China] that are going into the U.S. into different areas of the world instead." Challenges and Opportunities for Brands and Retailers "Our sense is that the DTC (direct-to- consumer) focus is just going to continue to be such an urgency for everyone. It's already well entrenched, but it's clearly where there's investment being made on technology and on consumer connection. "We do see some stabilization in some markets in 2019. For example, the baseball bat market, which is a very profitable and healthy business, has seen a lot of ups and downs. 2017 was a bad year because they had new bat standards. 2018 was a huge year. So now there should be some stabilization in that. "We see the safety category continuing to sell product and not just in the tradi- tional sports like football, but almost any sport, both men's and women's sports. Internationally, the issues around Anta buying Amer Sports and the idea of some serious investment in the United States by international retailers like Sports Direct and maybe Decathlon — there's some energy around that." Cautious Optimism "Going into 2019 we're cautiously optimistic. We think that there's a lot of positives. The issues around tariffs and some other things add tremendous tension because of the uncertainty. But the overall market dynamics are basically healthy, not massively growing but basi- cally healthy and providing opportunities for industry. Small but steady growth. "The PHIT ACT … that's huge. We'll make a significant difference to promot- ing physical activity. It hasn't passed, but we're going to be back at it in 2019 and all in again. Most of the major profes- sional sports leagues are really investing in growing participation in their own sport. But we still have a serious problem in this country with inactivity. We're seeing more and more people play less. We're concerned about that. Again, we've been saying for years the foundation is going to have to be some kind of physical education in schools where we're going to build up an active lifestyle from the beginning. "The biggest issue that we're concerned about on this is the disparity between those with money who are active and those without money who are inactive. That is growing. So that's a big problem. We should be focusing on providing sports and fitness opportunities for all and particularly creating opportunities for folks who seem to be leaning towards more inactivity. Families of lower incomes really have an alarming inactivity rate. So that's a problem we all need to address." n THE SPORTS & FITNESS INDUSTRY W H O W E T A L K E D T O Tom Cove President and CEO, Sports & Fitness Industry Association (SFIA) The issues around tariffs and some other things add tremendous tension because of the uncertainty. But the overall market dynamics are basically healthy.

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