Systemic Decline in Outdoor Sports Retail: Navigating Risks and Opportunities in a Consolidating Market

The outdoor sports retail sector, once a bastion of growth and discretionary spending, is now grappling with a systemic decline marked by bankruptcies, store closures, and aggressive market consolidation. From 2023 to 2025, the industry has faced a perfect storm of economic headwinds, shifting consumer behavior, and digital disruption. For investors, this environment demands a recalibration of strategies, prioritizing resilience in e-commerce and niche brands over traditional brick-and-mortar bets.

A Sector in Retreat: Bankruptcies and Store Closures

The past three years have seen a wave of store closures and bankruptcies that signal a structural shift. Orvis, a 169-year-old outdoor brand, announced plans to shutter 31 full-price stores and five outlets by early 2026, reducing its footprint to just 33 locations. Similarly, Moosejaw, acquired by Dick's Sporting Goods in 2023, abruptly closed all its stores and its website by August 2024. REI, a long-standing industry leader, has also downsized, closing flagship locations in New York and Boston as part of a broader strategy to adapt to market realities.

These moves reflect broader trends: the Outdoor Industry Association's 2024 report noted a 3% decline in total outdoor retail sales to $27.5 billion, with independent specialty retailers bearing the brunt of the downturn. By mid-2025, over 6,000 retail closures had been recorded, far outpacing new store openings. The data paints a sector struggling to reconcile legacy business models with modern economic pressures.

Economic Pressures and Consumer Behavior Shifts

The decline is not merely cyclical but rooted in structural challenges. Tariffs, rising operating costs, and inflation have eroded profit margins while squeezing consumer budgets. According to a 2025 report by Shop Eat Surf Outdoor, 38% of consumers cut back on spending due to tariffs, with 16% specifically reducing purchases of sports and outdoor equipment. Discretionary spending has shifted toward essentials, leaving little room for non-urgent purchases like hiking gear or camping equipment.

Simultaneously, consumer preferences are evolving. The rise of "casual adventurers"-individuals seeking outdoor experiences without the commitment of core enthusiasts-is reshaping demand. A record 176 million Americans participated in outdoor activities in 2023, but many prioritize products that blend functionality with everyday use, such as stylish insulated drinkware or versatile outdoor apparel. This shift has created opportunities for brands like Cotopaxi and Hoka, which cater to lifestyle-driven consumers with colorful, accessible designs.

Digital Disruption: E-Commerce as a Lifeline

While traditional retail falters, e-commerce has emerged as a critical lifeline. By October 2025, over half of U.S. sports equipment sales occurred online, driven by platforms like Amazon, Dick's, REI, and Backcountry. The convenience of "same-day" and "next-day" delivery, coupled with omnichannel strategies that integrate social media discovery with mobile purchasing, has redefined consumer expectations.

However, e-commerce success requires more than just digital infrastructure. The "endless aisle" phenomenon-where consumers compare prices and availability across multiple retailers-has intensified competition. Brands must also leverage innovations like AR/VR for virtual try-ons and AI-powered personalization to reduce purchase uncertainty. For investors, this underscores the importance of backing companies with robust digital ecosystems and agile supply chains.

Strategic Opportunities in Niche and Resilient Brands

The sector's challenges have also created openings for niche players. While the overall sports equipment market declined by 1% in 2025, segments like running/walking apparel and team sports showed resilience. Brands that align with health and wellness trends-such as home fitness equipment or rucking gear-are also gaining traction.

Moreover, social commerce has become a dominant force, particularly among Gen Z and Millennials. Sixty-nine percent of Gen Z consumers discover products through social media influencers, making platforms like TikTok and Instagram critical for brand visibility. Investors should prioritize companies with strong social media engagement and influencer partnerships.

Conclusion: A Call for Strategic Reallocation

The systemic decline in the outdoor sports retail sector is undeniable, but it is not without opportunity. Investors must move beyond traditional retail models and focus on e-commerce platforms and niche brands that align with evolving consumer behavior. Companies that embrace digital innovation, cater to casual adventurers, and leverage social commerce are best positioned to thrive in this consolidating market. As the sector continues to restructure, agility-not scale-will define long-term success.