Sportswear brands demand more retail space in Shanghai

China's growing sportswear market drives retail leasing demand in Shanghai.

June 27, 2023
China sportswear demonstrates a steady expansion trend

Sports and physical exercises have become increasingly important for Chinese consumers in recent years. Meanwhile, sportswear has evolved to encompass a broader range of fashion styles for young consumers. According to Euromonitor, China’s sportswear market is expected to grow at a 8.7% CAGR to reach RMB 551 billion (approx. USD 78 billion) by 2027.

Growing market size fuels demand for retail space, especially prime shopping malls and high streets in core areas. Compared to 2017, the proportion of total GFA for sportswear brands has now almost doubled in 35 prime shopping malls in Shanghai. The expansion of sportswear stores stimulates the retail leasing demand and the overall growth of sportswear consumption.

Figure 1: Proportion of total GFA of sportswear tenants in fashion stores

Source: JLL Research
Note: Based on tenants of 35 shopping malls in Shanghai

Tapping into China's expanding sportswear industry, we observed several interesting trends:

Trend 1: More brands specialising in certain types of sports

From frisbee and pickleball to land surfing and flag football, previously niche sports and leisure activities are trending among young customers. China’s sportswear market has seen more emerging brands specialising in certain sports to cater to diversified sports scenarios. For instance, Lululemon focuses on yoga and fitness apparel, HOKA and On specialises in professional running shoes, and BURTON is a professional ski equipment brand.

Consequently, the growing leasing demand for niche sportswear brands creates more opportunities for Shanghai’s retail market.

Figure 2: Leading brands that target at specific sports

Source: JLL Research

Trend 2: Domestic sports brands become more popular

With the fad of Chinese fashion style being popular among the younger generation, China's homegrown sportswear industry has been rocketing, led by top companies, including Anta, Lining, Xtep, and 361 Degrees. Anta's full-year revenue rose 8.8% year-on-year to RMB 53.65 billion (approx. USD 7.6 billion), surpassing Nike and ranking top in China for the first time. The combined market share of the four major domestic sportswear companies has increased from 16.1% in 2017 to nearly 30% in 2022, and the number of stores is also growing steadily, increasing leasing demand for retail properties.

Figure 3: Number of stores and market share of leading domestic sports group

Source: Group financial statements; Euromonitor; JLL Research
Note: Store numbers include all brands under the group worldwide (Incl. Kids)

Moreover, leading Chinese sports groups stepped up their acquisition of foreign brands to reach a broader range of customers. For example, by embracing an all-round brand portfolio, including ANTA, FILA, DESCENTE, KOLON SPORT, Arc’teryx, Salomon, Wilson, Peak Performance, Atomic, etc., ANTA Sports has unlocked the potential of both the mass and high-end niche sportswear markets. Those high-end niche sports brands are punching their way into the market, supported by their unique brand image, professional design and high product quality. Their growth momentum continues to drive China’s retail property leasing market.

Trend 3: Sportswear brands integrate experiential retail

An increasing number of brands have realised the importance of in-store experience to build stronger, long-lasting customer relationships. As such, sportswear brands have been actively building large flagship stores in China's top-tier cities over the past few years. Shanghai’s average GFA of sports brands increased from 184 sqm in 2017 to 210 sqm in 2023. Stores are acquiring larger spaces to display products, introduce brand culture, and hold diverse customer experiences such as community fitness classes. In particular, Kolon Sport opened a three-storey flagship in Shangsheng Xinsuo. The first floor included a café in addition to retail space, with the rooftop renovated into a camping and leisure space.

Supported by the evolution and emergence of brands, the sportswear market has potential for both brand expansion and retail leasing. Emerging high-end professional sports brands have become the favourite tenants of many prime shopping malls. In addition, retail property operators are more willing to provide venues for brands to hold community activities to increase customer loyalty and encourage repeat visits.