Given the amount of exercise clothing that people seem to be wearing these days, it's hard to believe that a third of the U.S. adult population is obese. Instead of being a reflection on how much we're exercising, workout clothes have become fashion in their own right. Companies such as lululemon athletica (NASDAQ:LULU) and Under Armour (NYSE:UAA) have worked hard to take clothes out of the gym and put them on the street.
Analysts estimate that the U.S. athletic apparel market could grow by 50% in the next six years, hitting $100 billion in annual sales. The trend is being blamed for a decline in denim sales, which fell 6% in 2013.
The growth of the market has helped lead non-sporting good businesses into athletic clothing retail as well. Urban Outfitters (NASDAQ:URBN), for instance, has launched its own sporty line called Without Borders.
How did we get here?
The whole thing can be traced back to 100 different "firsts," but the one that's easiest to see from here is the popularization of jogging in the 1970s. Bill Bowerman and Phil Knight formed Nike (NYSE:NKE) on the back of a new style of running shoe, and used the popularity of the shoe to build the foundation for a business that now sells $27.8 billion in products annually.
As Nike took off, Americans began to work out more and attach more social capital to exercise. That turned exercise clothing from something seen only in the gym to something that made a statement when worn on the street.
Just as Americans started to appreciate exercise in a new way, another major brand was also taking flight. The NBA took off in the early 1980s, rising on the popularity of players such as Magic Johnson and Larry Bird. The NBA just happened to be the one major U.S. sport featuring street-compatible clothing -- try wearing cleats to lunch sometime -- and suddenly basketball shoes were everywhere. Then, as Johnson and Bird faded out, a new face appeared to change the world of footwear forever.
The magic of celebrity
Michael Jordan joined the NBA in 1984, and Nike released the first pair of Air Jordans one year later. The company's revenue jumped 13% over the course of the year. According to Nike, the U.S. athletic-shoe segment grew 22% between 1984 and 1986, and 70% from 1981 to 1986.
It was a short jump from Jordan's shoes to Jordan's everything. Shirts, shorts, socks -- everything needed a spokesman. That bridged the gap for many Americans, connecting them directly to a professional athlete they loved.
Even as basketball's popularity fell off after Jordan's second departure in the mid-1990s, a new force came in. Hip-hop artists like Dr. Dre and Snoop Dogg reached the national consciousness, wearing baseball hats, hockey shirts, and football jerseys in promotional shoots. The shoe industry continued to thrive and sports apparel continued to make its way into the mainstream.
For five or 10 years, sporting as fashion existed in a sort of standstill. We were wearing shirts and shoes touting players and teams, but running shorts and sports bras remained confined to the gym. Then, in 2001, Juicy Couture designed its first velour tracksuit, getting Madonna on board and starting a new trend. Suddenly, gear that looked at home in the gym was cropping up on streets across America. More and more singers and celebrities hopped on the trend, and many Americans followed.
By 2006, America had fallen in love with yoga, and the Juicy fad made an easy transition to the yoga fad championed by high-end Lululemon. At the time, The New York Times spotted the value in the business, noting that yoga-based clothing lines appealed to women in their 20s with spare time and cash -- a lucrative business opportunity.
Since then, the market has only grown. Fueled by Lululemon's success, Under Armour and Nike have promoted lines of women's and men's clothing that reach out of the gym and into everyday life.
The future of athletic fashion
For the business behind the fashions, the sky seems to be the limit. Just as the T-shirt has replaced the button up, these companies can see a world in which there are no cardigans, only hoodies or half zips made of moisture-wicking synthetics. T-shirts could be replaced by similar lines, form fitting or loose, but all based on the pull of athleticism.
Manufacturers now also see women's and youth clothing as huge growth markets over the next few years. Under Armour has said it believes women's apparel can generate 50% of its revenue, and Trevor Edwards, the president of Nike brands, has said that "going forward [it's] very bullish about the young athletes business, because it just continues to grow, not only in North America but really around the world."
In short, if you don't like seeing workout clothing on the streets, it's going to be a difficult future for you. Nike, Under Armour, Lululemon, and others are all pushing the trend even further; given its trajectory, there seems to be no clear upper limit. Time to get on the treadmill and get ready for the next big thing.
Andrew Marder has no position in any stocks mentioned. The Motley Fool recommends Apple, Lululemon Athletica, Nike, Under Armour, and Urban Outfitters. The Motley Fool owns shares of Apple, Nike, and Under Armour. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.