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North Carolina Upstart Takes on Lululemon

Experts says there is lots of potential for growth, given that sporting goods in general is a hot category, says Marshal Cohen, chief retail analyst at The NPD Group. Cohen notes that growth in women's fitness wear is outpacing the overall women's apparel business.

"When you can find an opportunity to bring a hot category that has passion, innovation and success into a market that is relatively underserved, it's a good combination," Cohen says.

"The luxury market is the area that's really driving a lot of the growth and the incubator for the entire industry," given the added expense need to engineer improved apparel products, including the use of better fabric, Cohen says.

It's these "technologically advanced products" that are driving the growth in the market, Cohen says.

More importantly, women will pay for quality activewear products because they believe the apparel will do one, if not all of the following: help them work out better, lose weight, look good or, most importantly, be comfortable.

"It's no different than the way that women buy intimate apparel," Cohen says.

Women aren't just wearing the clothes to work out. It's essentially becoming multipurpose apparel worn all day long, he says.

Cohen believes niche retailers such as ActivewearUSA will have to eventually expand its market to men to keep up with competitors.

While Woolman plans to add more brands to the site's selection, she emphasizes that she won't just put up any fitness apparel maker, nor does she plan to expand the store's demographic.

"We turn down 95% of brands because the performance aspect of the clothing is not there," she says. "Our challenge is to have all the price points" that customers are looking for available to them.

"The bottom line is we want to have a niche," she says. "Even though activewear is starting to not be a niche anymore."

-- Written by Laurie Kulikowski in New York.

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.
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