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With trouble bursting at the seams in the apparel industry — store closings, over-stocked inventories and outright bankruptcies — retailers big and small continue to look to tap into a market that has often been dubbed "hotter" than the rest: athleisure.
"True Religion declared bankruptcy, 's stock is falling. ... J.Crew is facing challenges," Manik Aryapadi, a principal in consulting firm A.T. Kearney's retail practice, told CNBC. "Athleisure is actually growing. ... It's growing at the expense of denim and traditional women's wear."
But with that growth, albeit exciting for some retailers, comes speculation that the market is becoming overcrowded and that too many players are now vying for a piece of it.
"The problem with the athleisure market isn't so much that demand is dropping off a cliff, it's more that supply is excessive and demand is not quite what it once was," GlobalData Retail Managing Director Neil Saunders said in an interview.
"These two dynamics make for unhappy bedfellows and are the reason there is so much pressure on existing players, and why some are exiting the market," Saunders said.
When Dick's Sporting Goods announced earlier this week that its gamble on the women's athleisure market is coming to an end, it sounded somewhat of an alarm across the industry.
Two years ago, Dick's announced the launch of Chelsea Collective, a boutique that aimed to fuse fitness and fashion with athleisure styles and beauty brands. The first two — and only — Chelsea Collective locations were rolled out in Virginia and Pittsburgh. On Monday, the Pittsburgh Post-Gazette reported that the stores will be closing in early August.
Around the brand's inception, Dick's said Chelsea Collective would curate popular brands such as Brooks, Hunter Boots, Pure Vida, Nike and philosophy. However, the concept may have shown up on the scene too late.
"Pioneers and innovative retailers like Lululemon continue to do well, even if the edge has come off growth," Saunders said. "However, a proposition like Chelsea Collective ... is feeling the pain."
It appears the safer bets in the space are made on those players who have managed to build a loyal following and a respected brand, especially with key categories of shoppers like millennials. Newcomers should take notice.
Dick's said it opened its Chelsea Collective stores as a "lab" to better understand the women's athletic apparel and accessories business.
"As the leases at both [Chelsea Collective] locations are expiring soon, we have concluded the very successful experiment," Dick's told CNBC. "We have learned a great deal from Chelsea Collective and the valuable insights will be transferred ... to better serve our female customers."
In shuttering Chelsea Collective, Dick's should be turning its focus back to growing online, Oppenheimer & Co. analyst Brian Nagel told CNBC in an interview. Looking at the "pure" sporting-goods superstores, Dick's is really shaping up to be the "last man standing," he said.
Further, Dick's can and will continue to sell women's athleisure apparel through the company's existing stores — what was probably the retailer's plan to begin with, said Nathan Yates, director of research at consulting firm Forward View.
"Chelsea Collective simply isn't necessary, especially with the rise of e-commerce. ... [Dick's] has mainly focused on the women's athleisure market with the company's CALIA private-label brand, created in conjunction with Carrie Underwood."
On Thursday, Dick's said it was adding to its private-label business, by expanding its training apparel line, called Second Skin, demonstrating how the retailer is still experimenting in other "hot" areas. Where Chelsea Collective looked to compete with an established brand like Lululemon, Second Skin takes aim at Under Armour.
The high-performance gear for both men and women, in a larger product lineup, will be available in more than 350 Dick's stores on July 28, the company said.
When it comes to athleisure, the selling point for female shoppers has long been that the clothes look good and feel good, whether one is hitting the gym or hitting the grocery store. It's all about versatility.
In fact, the athleisure market in the U.S. is one area where America sits ahead of the rest of the world — Europeans, for example, have yet to catch on to the trend, A.T. Kearney's Aryapadi said.
"Don't expect to see major [athleisure] collections in either Milan or Paris Fashion weeks."
Athleisure was almost a $46 billion market in the U.S. in 2016, A.T. Kearney found, based on data compiled by market research firm The NPD Group. The market is expected to double, reaching $83 billion, by 2020, Aryapadi said. Globally, by then, athleisure should be a $350 billion market, he predicted.
Compare those numbers to a fading apparel category, like denim, which only represented a $15.6 billion market in the U.S. last year.
But the list might be too long. And that's something new entrants should consider, including Target, which has plans to roll out a more "fashion forward" athleisure brand in the fall, called Joy Lab.
"There will likely be more consolidation and pain in the athleisure market over the next few years as the weaker players drop out and as the stronger players compete more heavily," GlobalData Retail's Saunders said, adding that Amazon could become a "stronger player."
Then there's Lululemon, which has no doubt seen highs and lows. Known to be a competitive force in the industry today, Lululemon keeps its product assortment "fresh" with new launches and is growing its store fleet with a "multi-concept approach," Deutsche Bank analyst Paul Trussell wrote in a recent note to clients.
"Despite a challenging retail environment, LULU commands strong brand loyalty, high full-price selling, and positive comp stores sales (including within brick & mortar)," Trussell said.
It's true, Lululemon is continuing to innovate, as evidenced by the retailer's Fifth Avenue pop-up shop opening Friday. The store location will have a short-term, one-year lease, Lululemon said. It's an opportunity for the retailer to experiment in the midst of an iconic shopping destination.
"[Lululemon] has rebounded," Aryapadi said. "They probably need to do a little bit more cost management," he added, to please financial folks.
That said, Wall Street was upbeat about Lululemon's latest earnings results. Shares of Lululemon's stock climbed about 15 percent after the company reported better-than-expected earnings and sales for the first quarter, with plans to restructure some of its business.
Lululemon said that Ivivva, its activewear brand for girls, will soon become a primarily online-only business, and it will begin to close most of those stores. The retailer is aware of the so-called bricks-to-clicks trend and thus operates a leaner real-estate portfolio than many of its peers.
Looking to international opportunities, Lululemon has been hosting events in China to acquaint more people with the athleisure brand, suggesting shoppers participate in a yoga class. Lululemon has been holding "showrooms" across China and is also selling items on Tmall, an shopping site.
Then there remains the million-dollar question, with everyone wondering what impact Amazon might have on the future of fashion and more specifically the future of athleisure. Apparel could be the internet giant's next target, following grocery, many analysts have predicted.
"You can't paint a broad brush and say apparel is important for Amazon, so they're going to buy Gap," Maxim Group Managing Director Tom Forte told CNBC. But a Lululemon deal starts to make sense for Jeff Bezos and his team because it checks boxes such as apparel, physical stores, being a lifestyle category — all things that Amazon wants to accomplish in a takeover, Forte said.
Nonetheless, a "fatigue" could still hit the now-hot market before the next decade is over, Aryapadi warned.
"In 10 years, people may be dumping Lululemon leggings into the trash," Forward View's Yates said.