The moats of internationally renowned sports brands are: channel construction to quickly understand and respond to changes in consumer demand; attach importance to marketing investment and improve marketing efficiency; attach importance to research and development investment, highlight the scientific and technological content and functionality of products; attach importance to fashion design and cultural connotation; focus on the main brand; supply chain management to reduce costs; and appropriate internationalization in a timely manner.
There are three opportunities for the success of civilian ANTA: Kong Linghui, who had just won the men's doubles championship of the 45th World Table Tennis Championships in 1999, as a spokesperson, and spent 3 million yuan to advertise in the golden section of CCTV; signed a contract with the CBA in 2004 and became the sponsor of "the only designated sports equipment in the CBA"; and in 2009, he acquired Feile to cover the mass market and the high-end market with a multi-brand strategy.
Li Ning experienced three strategic mistakes: the opportunity-driven business model before 2002, without focusing on sports, losing its leading position in China; in 2004, it over-focused on internationalization and ignoring the domestic market; and in 2010, the rebranding rather than the dual-brand strategy lost both old users and new users.
China's sports shoes and apparel market is a golden track, and the high prosperity is expected to continue. China's sports shoes and apparel market barriers are high, and the concentration of the industry is constantly improving, which is conducive to leading enterprises. In the short term, Anta is dominant but there are still hidden dangers, and the long-term Li Ning has greater prospects, and other companies need to seek market segments. ANTA needs to buy Korea's Philharmonic as soon as possible and use Phillip to enter the world. Li Ning's opportunity lies in focusing on sports fashion, training and badminton, stabilizing the domestic market at the same time, and surpassing ANTA by opening up the international market.
I. Introduction
1. Why study China's sports shoes and apparel market?
The most direct cause is that I recently saw an article Written by fellow villager Chenru in the circle of friends in Wu Xiaobo channel in 14 years, "What to Save You, Prince Li Ning", and based on this, I reviewed what factors were missing. At that time, many analysts, including hong Kong stock researchers at CITIC Securities, believed that Li Ning had no hope. The fundamental reason is that the sports shoes and clothing industry is different from the general brand apparel industry, because of its sports attributes and natural sports functions, it is an industry with rich scientific and technological content, which can give birth to good investment targets.
As of 19 September 2021, Li Ning has risen more than 48 times since its listing in 2004 and more than 10 times since 2019 to HK$261.786 billion (US$33.641 billion). Since its listing in 2007, ANTA Sports has risen more than 23 times to HK$423.612 billion (US$54.436 billion). Nike has risen more than 600 times since its listing in 1980 and more than 58 times since 2001 to $247.628 billion. Adidas is worth $64.748 billion, Lululemon is worth $53.15 billion, and the newly listed Swiss sports brand On is worth about $9.5 billion.
Quarterly trend chart of Li Ning's stock price
Quarterly chart of ANTA's stock price
Quarterly chart of Nike's stock price
2. The main contents of this paper are: First, from the birth and development process of internationally renowned sports brands such as Adidas, Nike, and Reebok, summarize the moat of sports shoes and apparel companies. In view of the problems that international sports shoes and apparel companies have faced, Chinese companies may also encounter, this part of the content can provide background knowledge for analyzing the development of the domestic sports shoes and apparel market, in fact, the strategy of Chinese sports shoes and apparel companies is no different from the strategic changes of other international brands. Secondly, according to the development process of China's sports shoes and apparel enterprises, the successful experience and failure of Li Ning and ANTA are summarized. Finally, investment proposals are made according to the current situation of China's sports footwear and apparel industry.
Second, the development process of internationally renowned sports brands
(1) Dassler Brothers has become a leading brand through athletics
The second half of the 19th century was the embryonic period of the modern sports industry, and most of the concepts and rules of modern sports were born in this period, including football, badminton, tennis, basketball and other sports. In the first Olympic Games in 1896, many athletics, swimming, gymnastics and so on were initially established.
In 1896, Mr. Joseph Foster created the first pair of inflatable sneakers after the NAME PUMP, and established a company specializing in sports shoes in the United Kingdom, "Fosters", and began to manufacture suitable sports shoes for those top professional athletes, which is the predecessor of the current international sports brand giant Reebok Reebok.
With the standardized development of the industry, professional sports in the 20th century entered a period of vigorous development, professional clubs and events have emerged, and the participation of mass sports has increased rapidly. Driven by the increase in the penetration rate of the sports market and the increasing requirements for the professionalism of sports shoes and apparel, the market demand for sports shoes and apparel has surged.
In 1908, Marquis Mills Converse created a manufacturer specializing in the production of sneakers in Massachusetts, USA, and named it after his surname Converse.
In 1920, German amateur track and field athlete and shoemaker Adolf Adi Dassler created the first pair of training sneakers.
In 1921, young basketball player Chuck Taylor signed with Converse as part of its business representative.
In 1923, Chuck Taylor's signature was placed at the ankle of the sneaker and became one of the features of the product, and the Converse All Star became synonymous with basketball shoes.
In 1924, Adolf and his older brother Rudolf founded the Dashler Brothers Shoe Factory, with his younger brother Adolf studying shoemaking and his older brother Rudolf in charge of sales. The Humphrey brothers founded Umbro, a football apparel manufacturer.
In 1925, Adolf developed the first sneaker with studs. While Adolf's shoes are lightweight, comfortable and in line with future sports trends, they run counter to the traditional notion that steel plates must be used to support and protect the feet. Rudolf became an equipment supplier for the German track and field team through a good relationship with the coach of the national track and field team, Joseph Weitze. With this natural advertising advantage, dasler brothers shoe factory shoes gradually gained a foothold in Germany. In 1934, Umbro appeared in the FINAL OF THE FA Cup, and both Manchester City and Portsmouth teams wore jerseys designed and manufactured by the company. In 1936, the American male track and field athlete Jesse M. Owens wore Dasler to the Berlin Olympics, winning 7 gold medals; 5 bronze medals, breaking 2 world records and 3 Olympic records. Relying on athletics, Dassler Brothers has become the world's leading sneaker brand.
(2) Screw-in staple soccer shoes help Adidas become the leader
In 1939, with the outbreak of World War II, the Dassler Brothers shoe factory was forced to produce armaments and became a Nazi military processing plant. After World War II, Rudolph was arrested and jailed for a year by the U.S. military on counter-espionage charges. His brother Rudolph suspected that his younger brother Adolf had denounced him in order to force him to quit the company, and the conflict between the two brothers intensified. In 1948, Rudolf began to set up his own portal, founded Puma, and the first pair of football shoes PUMA ATOM was born; and Adolf changed the original Dasler Brothers Shoe Factory to his name Adidas. Puma takes the marketing route, and Adidas takes the technical route. Adolf found that the three lines on the side of the shoe can make the sneaker more suitable for the athlete's foot shape, so he integrated it into the design.
In 1949, Adidas designed the first pair of sneakers with three lines, and the three-stripe logo was born, representing the sportsmanship of continuous progress and transcendence. In the same year, Kihachiro Onizuka founded onitsuka TIGER Corporation (Onitsuka Co., Ltd.), the predecessor of ASICS, in Kobe, Japan, specializing in the development and production of professional sneakers that cater to the needs of athletes, and manufactured the first pair of basketball shoes, named ONITSUKA TIGER (Onitsuka Tiger).
In 1954, Herberg, then head coach of West German football, approached Rudolf, hoping that Puma would sponsor the national team's shoes. Rudolf did not take over the business because he was not optimistic about the national team, and Herberg turned to Adolf. Adidas tailored screw-in nailed soccer shoes for the German team, which are both non-slip. On the day of the final, it happened to rain, and Adidas's sneakers helped Germany beat their opponents to win the championship. Adidas continues to strengthen its relationships with FIFA and the Olympic Committee, while Puma has invested relatively little in the international market. Relying on football, a global popular sport, Adidas has become an international manufacturer of sneakers, gradually opening up the gap with Puma.
At the 1958 Fifactian Cup in Sweden, Brazil and Sweden competed for the title in PUMA football boots, and Brazil, wearing an Umbro shirt, won the title. Foster's two grandsons, Joseph and Jeffrey, changed the brand name and trademark "Foster" to "Reebok." In 1959, Umbro Moon Adidas, which does not produce footwear, partnered to become the only distributor of Adidas in the UK and promoted it as part of a complete set of sports equipment.
At the 1962 World Cup in Chile, Adidas soccer shoes added a new design such as ankle padding, upper hem and ties on both sides, and the material of the shoes was made of calf leather, which was commonly used later. The shoes also became the lightest soccer boots of the era, only 274 grams alone! Brazil won the title again, and Pele, the king of the ball, also won the best player in the World Cup, also wearing PUMA shoes.
(III) The rise of national fitness and production globalization, Nike has become the largest sports brand in North America
In the 1960s, national fitness activities emerged in the United States, and the fastest growing market segment was jogging. At that time, Adidas had provided top-notch sports equipment in the fields of football, tennis and athletics, and built a moat that competitors could not cross. In order to protect its dominance in the competitive market, Adidas did not enter the fitness jogging market on a large scale, but believed that it was a wind that would soon pass.
University track and field team player Phil. During his MBA studies at Stanford University, Knight studied Japanese manufacturing opportunities and believed that Japanese sneakers were of high quality and low price, and had the opportunity to replace the leadership of German sneakers in the US market. In 1964, at the Tokyo Olympics, athletes wearing Tiger sneakers achieved impressive results. Phil. Nate persuaded Japan's Onizuka Co., Ltd. to obtain the distribution rights of tiger sneakers in the United States, and invested $500 each with coach Ballman to set up a sneaker company, named Le Cordon Bleu Sports. While representing Tiger, Bauerman also tried to participate in the design of Tiger. In 1966, more than 90% of athletes wore TIGER marathon shoes at major international marathon events.
In 1967, TIGER's "MARUP NYLON" series of jogging shoes sold 400,000 pairs, becoming the leader in the heyday of jogging shoes. That same year, Bauerman designed the classic jogging shoe Cortez, with a cushioned design, but the trademark was still tiger, just in time to meet the Mexican Olympics held in the summer of 1968, and by the end of 1968, Cortez had become the best-selling running shoe of the year. By 1969, Le Cordon Bleu had sold a million pairs of Tiger sneakers.
In 1970, ONITSUKA TIGER became the largest manufacturer of running shoes in the United States, when more than 70% of famous athletes wore TIGER shoes to the event. In the 1970 World Cup final, Pele asked the referee to delay the tee by a few seconds on the grounds of tying his shoelaces, so that the eyes of the world were focused on the Puma sneakers on his feet. Puma has also become a globally renowned brand, able to continue to keep pace with Adidas. At this time in the US sports shoes and apparel market, Adidas, Puma and Tiger ranked in the top three. Reebok is also ranked among the top ten best brands in the world, and is highly favored by consumers.
In 1971, Le Cordon Bleu sold $1.3 million. Onizuka sent someone to the United States to buy a 51% stake in Le Cordon Bleu and take two seats on the five directors, or else immediately stop supplying. Ballman and Knight refused the request and broke up with Onizuka.
In 1972, Le Cordon Bleu Sports changed from a sales agent to an independent brand, NIKE was formally established, signed the first contract with the Japanese side, by which to produce completely American design Nike sneakers, Waffle provides a lighter, more wear-resistant outsole for sneakers, Nike's sales reached $3.2 million, but due to the signing of some star athletes and the breakdown of cooperation with Onitsuka, the company's first net profit was negative. Japan's relatively low production costs allow Nike to invest more money in research and development and marketing, in the face of numerous competitors and new technologies, Nike will position the brand in the professional athlete market, decided to focus on helping to reduce the burden of competition athletes, hope to be known to the public through a professional image, while emulating other companies, using the way of sports star endorsement, has signed Steve. Prefontaine, John. McEnroe and other stars. The Adidas clover logo was born, representing the connection of three continental plates, symbolizing the sports power extended to the world, but also pinning its own brand on the vision of the world; FILA, a clothing brand founded in Italy in 1911, began to enter the field of sportswear.
In 1973, Perry Fangting, a record-set 2,000-meter to 10,000-meter run in the United States, became the first track and field athlete to wear NIKE sneakers; Nike sales reached $4.8 million. Fila boldly uses colorful and eye-catching patterns to make ordinary tennis sportswear glow with an intriguing artistic beauty. In 1974, Nike's sales reached $8 million.
As the yen continues to appreciate, labor costs are rising, making it more expensive to produce shoes in Japan. In 1975, Nike moved its Japanese production line to South Korea and Taiwan, where labor costs are relatively low. During this period, Nike's strategic focus was on establishing the best overseas production operation model, explaining new designs and styles for foundries, and maintaining quality standards. Nike uses an original pre-order system called "Future". Under this system, retailers can place orders for products up to 6 months in advance, and will enjoy price discounts and preferential delivery quality guarantees, and still have the right to cancel orders within 1 month after placing an order. This allows Nike to plan a lead time of at least 5 months and optimize inventory management. From a production perspective, one of the major trends of the 1970s was the global industrial shift. Adidas turned a blind eye and still kept its production base in high-cost Europe and the United States.
In 1976, Nike had sales of $14 million. In 1977, Kihachiro Onizuka invited garment factories and equipment factories with the same concept to formally form ASICS on a larger scale, with the enterprise spirit of "strong physique, healthy mind" as the enterprise spirit, and constantly breaking through shoe technology. Former aerospace engineer Frank Rudy joined NIKE after being rejected by Adidas and Onizuka Tiger and began experimenting with his unique air cushion sneakers. Air cushion technology reduces the reaction force between the ground and feet, reducing impact and sports injuries. Reebok officially launched the U.S. market, in addition to the core of sneakers also launched clothing and equipment products.
In 1978, Nike's sales reached $71 million, and NIKE International was officially established. NIKE shoes began to enter overseas markets such as Canada, Australia, Europe and South America. Adidas' partnership with Umbro is over. Umbro began producing footwear and Adidas began producing clothing.
In 1979, Nike's sales in the United States surpassed Adidas, the first Thaiwind running shoe using NIKE's patented air cushion technology was born, and the first NIKE clothing production line began to be launched to open up new growth points. In 1979, Paul Farman, an American outdoor wholesaler, discovered Reebok at the Chicago International Sneakers Trade Show and won Reebok's exclusive agency in North America. The Onizuka Tiger "MONTREAL 3" running shoe was introduced, embedded with cushioning holes in its outsole, and the series of shoes was very popular with joggers in the United States; Adidas specially designed the "Copa Mundial" soccer shoe for the 1982 World Cup.
In 1980, 25 million — 30 million Americans joined jogging , and another 10 million wore running shoes for leisure. Nike began adopting the latest warehouse management technologies, including upgrades to the warehouse management system and a new set of material handling equipment to increase throughput and inventory control capabilities. That year, Nike's sales reached $270 million, and its market share in North America exceeded 50%, becoming the largest sports brand in North America, and the company's stock was listed on the New York Stock Exchange. In the same year, NIKE began to enter China, setting up the first NIKE production liaison office in Beijing. In 1981, Reebok had sales of $1.5 million. Nike established a wholly-owned subsidiary, Nike International, officially starting the pace of internationalization.
(4) Her economy has risen, and Reebok has become the world's first sneaker brand in the consumer market segment
In 1982, when other sports brands were still focusing on the male market and ignoring her economy, Reebok focused on women's fitness and aerobics, introducing the first sneaker designed for women , Freestyle , and in terms of clothing , it created a new category , fitness wear. The FILA brothers successfully registered the FILA trademark in China; maradona, the king of the ball, made his world cup debut in PUMA boots, Amin. Dassler invented the "PUMA DUOFILEX" outsole. Converse was listed on the NASDAQ stock market as a public company. In 1983, Reebok's sales soared to $13 million.
In 1984, the "jogging fever" in the United States receded, and women's aerobic exercise rose. Strife within the Adidas family disrupted negotiations and decisions, and Adidas didn't even make any offers, and his cooperation with Jordan was lost. Nike's global sales reach more than $900 million, Nike issued Jordan a five-year contract worth $500,000 a year, and Jordan can also get Nike's annual dividends and commissions for basketball-related products. Jordan became the spokesperson for Nike Air and launched the Air Jordan series of basketball shoes. Farman acquired British company Reebok.
Reebok's sales reached $307 million in 1985, 60 percent of which came from cardio sneakers and gym shoes, and it held an initial public offering on the New York Stock Exchange that year. Adidas running shoes equipped with Aps shock absorption technology were introduced. Reebok's sales reached $919 million in 1986, surpassing Nike's in the U.S. Puma joins the stock exchanges in Munich and Frankfurt. Nike sales of $1.07 billion.
In 1987, due to the economic setback in the United States, many schools cut the size of the varsity due to tight budgets, which greatly affected Nike, which had always focused its sales on professional competitive sports. Nike's products began to expand from the professional athlete market to the amateur market, especially for teenagers. Nike began to increase advertising investment and reduce brand spokespersons. In order to get rid of the shackles of product technology and performance, and gradually find a more native and more essential common attribute in the two markets, so that women who participate in fitness sports for the first time resonate, Nike advertising began its first breakthrough in creativity, enabling a group of Americans wearing Nike to revel in fitness exercises, the music selected for the advertising film is the popular world famous band - The Beatles' "Revolution", the slogan uses just do it, highlighting the self-awareness of young people and emphasizing the movement itself. Nike's mistakes in discovering and responding to the rise of women's aerobic exercise bear striking resemblance to those made by Adidas 10 years ago when the running fever took off. Meanwhile, Adidas is still sticking to its pyramid pattern. Adidas ignored dealers' warnings about the "leisure sports" trend and saw the dealers' recommendations as a confrontation with headquarters. In addition, it still insists on producing in Europe, and the production cost is hugely different from Thatk.
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In 1987, Reebok surpassed Nike's annual sales of $880 million with $1.4 billion, becoming the world's number one sneaker brand (but Adidas remains the world's number one sports brand). In the U.S., Reebok ranked first with $991 million in sales, with a market share of 30%, while Nike came in with $597 million and 18 percent. Nike's market capitalization has been suppressed, basically running below $400 million. Adidas signed the first formal cooperation sponsorship agreement with the Chinese Football Association.
(5) Multi-brand layout Nike entered the field of leisure and fashion, and Adidas and Puma attach importance to fashion and rebirth
In 1988, the U.S. aerobic sneaker market began to saturate, and Reebok's dominant products grew weakly, forcing strategic adjustments. Adidas had sales of $2 billion, Reebok $1.8 billion, and Nike sales of $1.2 billion. In order to get rid of the dilemma of declining annual sales and expand the sales market and product range, Nike acquired the high-end fashion shoe company ColeHaan, opening the road of multi-brand layout and entering the field of casual shoes. Nike's U.S. revenue also surged 40.5 percent to $900 million, and its U.S. market share rebounded to 25 percent. Adidas has developed the original Torsion System midsole stabilization system, which allows the foot to twist freely, so as to better control the movement and avoid possible injuries.
In 1989, Adidas was on the verge of collapse, watching Nike eat away at its own market share step by step without any help. Puma is even more completely inferior in the competition with Nike and Adidas. The families of the two Dassler brothers each sold Adidas and Puma. Bernard Tarpi, a former nightclub singer, entrepreneur and Cabinet Minister in France, used a loan to buy a 78 percent stake in Adidas, after which Adidas embarked on blind diversification, offering a large number of products unrelated from the collar to the perfume. Puma was sold to a Swiss company. Reebok PUMP technology was born, introducing the first pair of inflatable basketball sneakers, which set up a composite flowing air cavity in the shoe. Nike began to pay attention to the casual fashion field that Reebok has always been good at; Reebok did not choose to continue to work hard in its own field, but began to develop professional sneakers and relax the fashion section. Nike's market value has nearly doubled 4 times compared with 1987, and PE has also increased from 10 times to 20 times, mainly because: First, the market is optimistic about new products, marketing and reform, coupled with sufficient inventory impairment provisions, the basic expectations are strong, and in 1988 it re-established the local first; second, the company actively expanded overseas channels and became an important driving force for growth; third, Nike acquired Cole Haan in 1988, which is the earliest sports company to expand multiple brands, and the market gives a valuation premium.
In 1990, Nike's sales revenue exceeded $2 billion, on par with Reebok, with overseas revenue of $480 million; net profit has surpassed Reebok.
With the improvement of young people's consumption power and more attention to the pursuit of innovation and technology, high-end shoes have become the mainstream of young people's consumption, and price is no longer the most sensitive factor, which makes Nike, which has a stronger sense of innovation and technology, take the lead.
In 1991, Jordan won the NBA for the first time, and Nike's revenue exceeded $3 billion, becoming the global sports brand leader, of which overseas revenue increased by 80% to 860 million US dollars. Reebok launches the Blacktop line of basketball shoes, achieving sales of $2.7 billion. Converse became the NBA's designated race shoe.
In 1992, Adidas' annual sales fell to $1.7 billion and an operating loss of $100 million. Nike opened its first "Nike City" store in the north Michigan neighborhood of Chicago. The retail store has 3 floors of nearly 70,000 square feet of sales space, and 18 separate sales outlets showcasing all Nike products. By expressing the dynamism of the Nike brand, the philosophy of "Just do it" and the straightforward attitude, the store conveys nike's core spirit. Nike, whose sales rose to $3.4 billion, rejected NBA star O'Neill's request for autograph shoes and increased endorsement fees, and launched aerobic fitness shoes in response to Reebok's advantage in the fitness market. Reebok is not only staying in the women's shoe market, expanding its core business from entertainment and fitness shoes to expanding into the field of men's professional sneakers, joining the scuffle with Nike and Adidas, launching The Above The Rim basketball shoe series at the same time as launching Instapump and GraphLite technology, while Reebok also copied Nike's approach of shaping product spokesperson Jordan, signing NBA star O'Neal; copying Nike's practice of naming new sneakers after Branda and other signature players, and launching a name Sneakers for "ShaqAttack".
Adidas has not formed the right strategy for sports marketing, nor has it invested enough money in advertising, because the company's management always thinks that advertising is too expensive to fit Adidas's routine. In 1993, investors, led by Robert Louis Dafford, took control of the Adidas business, shifting the company's focus from manufacturing and sales to marketing. The closure of factories in France, the transfer of production links to Asia to reduce costs; the consolidation of sponsorship of athletes and sports events; the division of product positioning by sports categories, such as football equipment market, basketball equipment market, etc., has made Adidas have a more agile market response speed; cut off unrelated products, expand the category from focusing on footwear to sportswear, and apparel products have also introduced more trend elements to distinguish them from Nike products. That year, Adidas had sales of $1.54 billion.
Puma has gradually become conservative, operating in Germany, focusing too much on a single sports shoe category, not paying attention to product shape design, and the brand image is conservative and outdated. As a result, from the mid-1980s to 1993, it has been losing money for 8 consecutive years, with debts of up to 250 million US dollars, and is on the verge of bankruptcy. Jochen Zeitz repositioned Puma, focusing on fashion rather than function, creating a style that falls somewhere between sport and fashion, restructuring global operations, increasing production shifts to reduce costs and improve financials, leading puma to recover.
In 1994, Adidas' Falcon series was launched. The shoe is revolutionary in terms of sudden turns, with rubber fins at the front tip of the upper bringing amazing adversity, super power and good control. Nike acquires ice hockey brand Bauer; during the World Cup, Nike executives persuaded Phil Knight to step up his efforts into the football industry and launch a legendary series to enter the international market. The phased cooling of the US sports and leisure trend led to a sluggish market, and the industry growth rate fell below 5% in the same period. At the same time, Nike's product series is not rich enough, and The gap between Itebok and Reebok has not been completely opened, and the market competition is fierce. Coupled with the economic downturn in Europe, Nike's negative growth in Europe expanded to double digits. As a result, Nike's market value and valuation have been greatly retraced, and PE has returned 10 times in 1994.
(6) Nike implements a globalization and multi-category strategy, and The Sharp Step attacks Nike's position unfavorably but fires in the backyard
In 1995, Nike signed a 10-year sponsorship contract with the world-famous Brazilian national team; with the expansion of the NBA's global influence, Nike's revenue reached 4.8 billion US dollars, and the international market revenue increased by 26.52% year-on-year; Adidas sales of 3.4 billion US dollars and profit of 163 million US dollars. Nike's market share reached 37%. Nike set a new strategic goal: to become a global company, not an American company with international business. The product category changed from basketball shoes to multiple categories, deeply involved in football, becoming a real clothing company, developing the fastest growing ice hockey market in North America; product positioning expanded into women's sports and fitness fields. Reebok has only 20% of the global market share, but it can still rank second in the sports consumer segment. But Reebok also began a strategic transformation, announcing that the product positioning is sport and performance, no longer fashion and fitness, and abandoning the core customer base of 11-17 years old, positioning itself in the urban youth of 18-30 years old. Adidas is listed on the German "Deutsche Börse" (Frankfurt Stock Exchange) under the ticker symbol. ADS。
According to AmericanSportsDataInc., there was an 86 percent increase in regular sports in the 1990s compared to the late 1980s, and now there are about 13 million women playing basketball and 7 million women playing soccer worldwide, with the fastest growth in the group of girls aged 6-11. In terms of market demand, since the mid-1990s, women have bought more sneakers than men, especially in 1999, when sales of women's sneakers over the counter of Department Stores increased by 29% compared with the previous year.
However, the neglect of female users has caused Reebok to lose its original female users. Insufficient accumulation of technology and design, product quality can not be guaranteed, DMX is frequently exposed to air cushion leakage and other issues, in the field of professional sneakers also lack of competitiveness. In 1996, Reebok's market share slipped from 20 percent in 1992 to 14.7 percent in 1996, introducing a new slogan, "This Is My Planet." Reebok signed NBA rising star Iverson to launch the "question" line of shoes for Iverson. Nike City stores surpassed the Art Gallery to become Chicago's hottest tourist destination, with annual traffic of more than 1 million people and sales of $25 million. Nike's product retail stores, located in Nike City in a large city, supply all of Nike's products, with a focus on selling the latest models. The factory's store retail stores sell mostly second-hand goods and inventory. Nike's international market revenue increased by 13.58% year-on-year, accounting for 32.1% of the global sneaker market; it stole Umbro's wealth - the Brazilian national team clothing sponsorship rights with $200 million. Adidas has launched a sports fashion trend, re-activated the clover logo, and applied it specifically to its traditional classic series of Adidas, which is tailored for middle and high-class sports enthusiasts and shoe fans that distinguish it from the sports performance series. He successfully signed Kobe Bryant on a 6-year, $48 million contract, and formed a new "gemini" with Maddy to compete for the youth consumer group. Turning some of the franchisees and distributors into subsidiaries of the Group. Without compromising customer service levels, Adidas outsourced the distribution of garments in the United States to UPS Global Logistics.
(VII) Nike fell into a period of stagnation, and Adidas returned to the second place in the industry through mergers and acquisitions
In 1997, the Asian financial crisis broke out, and many utility companies were hit hard. Jordan stormed his sixth title, and Nike became the deserved king of basketball shoes. That year, Nike's sales revenue had reached $9.2 billion, controlling 40% of the U.S. footwear market. Sales of sneakers in the international market rose another 42 percent to $3.48 billion, or 38 percent of Nike's total revenue. Sportswear sales grew 67 percent. But Nike has failed to notice a decline in U.S. consumer demand for more than $100 running shoes, and accusations have been made of the company's sweatshops in Asia, which led to a period of stagnation. Adidas outsourced the distribution of sneakers manufactured at its U.S. factory to CALLBER. In December, it acquired French winter sports equipment manufacturer Solomon for $1.4 billion through debt. The company mainly produces high-end ski equipment and "Taylor" golf clubs, has a 22% market share of ski equipment in the world, and has a good sales network in the United States. Started to enter the Chinese market. That year, Adidas sales reached $3.77 billion, returning to second place in the world. Reebok has remained at around $3 billion for six consecutive years. FILA's sales in the U.S. peaked at $687 million. Puma increased its product development expenses from 2% to 4% of sales and from 10% to 15% of sales. Dragged down by huge sponsorship expenses, Umbro's performance hit rock bottom, with annual sales of just $600 million and an annual marketing budget of $100 million. Subsequently, Umbro's factory was sold to free up funds, while licensing agreements were reached with local companies in distant markets such as Japan, and Umbro retained management rights only in three major markets: the United Kingdom, France and Germany.
In 1998, with Jordan retiring and premium brands K-swiss and Newbalance joining the market, Nike sales revenue grew 4 percent, but operating profit fell 50 percent. Nike's global inventory is high, profitability is much lower than expected, began to lay off employees; after the private investigation, Nike's slogan was changed to I CAN; its own sub-brand Nike Golf; launched the Assassin series of football shoes. Adidas established a wholly owned subsidiary in Japan to take over the distribution of apparel and footwear products in the region. In that year, Adidas sales revenue increased by 26%, sales revenue in North America increased by 109.2%, back to North America second; profit increased by 15%. Puma entered Hollywood, using low-cost implantable marketing to promote Puma's fashion avant-garde brand image around the world. In addition to Rockport, which was acquired in 1986, others such as Avia, which was acquired in 1987, Ellese, which was acquired in 1988, and Boston Wheeler, which was acquired in 1989, did not bring profit contributions and value gains to Reebok, and were eventually sold at a discount. Lulu Lemon was founded in Vancouver, Canada, featuring yoga clothes.
In 1999, Nike launched low-priced sports clothing and various sneakers of 100 yuan to 400 yuan in China, which not only did not expand the target consumer group, but also faced the danger of losing the original high-level consumer group. Many sellers and fierce market feedback show that Chinese Nike is the pursuit of high-priced fashion, high prices become low prices, Chinese consumers will think that it is a denial of their own brand, that is, the failure of marketing strategies. For the year, Nike's sales revenue fell to $8.777 billion, gross profit of $3.283 billion and net profit of $451 million. Adidas began working with the Japanese soccer team, and sales revenue rose by nearly 500 million marks from 9.91 billion marks in 1998, of which sales revenue in the Asian region was 1.28 billion marks, an increase of nearly 80% over 1997.
(8) Nike strengthens supply chain management, and Adidas reconstructs the brand series
In 2000, Nike's sales revenue fell to $8.995 billion, gross profit of $3.591 billion, net profit of $451 million, began to carry out global supply chain information reform, in its e-commerce website www. Direct-to-consumer product sales on nike.com, while expanding the ability to provide product details and store location. In order to find a way to transform into the women's market, Nike has set up a new department responsible for women's sportswear and sneaker projects, the Global Women's Shoe Department. Adidas shouted the "impossible is nothing" slogan and successfully created new topics of popularity; sales rose 9% to 5.8 billion euros, and net profits were 182 million euros. Reebok signed a 10-year licensing agreement with the National Football League (NFL). Lululemon owned his first brick-and-mortar store on West 4th Avenue, Kitsilano Beach, Vancouver, in the heart of the city, but not a street shop, no visibility, no large customer base. Stores enrich their products by purchasing other sports brands, while observing consumer preferences, thus providing a reference for lululemon's future product optimization. Wilson, the only yoga instructor in town, offered to transform Lululemon's store into a yoga practice venue, with rollers at the bottom of the hanger, which could be pushed to the side in the morning and evening, and the middle area was vacated for Fiona to take students to yoga classes. This also laid the foundation for the brand's community marketing strategy, going deep into the local sports community, meeting local yoga teachers, fitness instructors, athletes, etc., and making them Lululemon brand ambassadors. Use their influence to build consumer awareness of the brand and promote their own products and brand culture concepts. Through the brand ambassador's network and social circles, lululemon found an extremely low-cost and efficient channel of influence. Lululemon connects dozens, if not hundreds, of yoga enthusiasts around the world by hosting yoga events of varying sizes around the world to form a true word-of-mouth community.
In 2001, Nike's sales revenue rose to $9.489 billion, gross profit of $3.704 billion, and net profit of $590 million. Converse, a more than 90-year-old sneaker maker, was robbed of much of its market by Nike and filed for bankruptcy protection in a debt crisis. Adidas partnered with Yamamoto to pioneer the Adidas Style. In that year, Adidas sales revenue was $5.39 billion. Reebok partnered with the NBA to become the exclusive manufacturer of NBA sportswear, providing jerseys to 29 NBA teams and 16 WNBA teams, and selling accessories such as official jerseys.
Comparison of Nike and Adidas' operating income over the years
Remarks: Among them, Nike's fiscal year 2021 is 20.5.31-11.5.31, corresponding to Adidas is the natural year of 2020.
In 2002, Adidas launched the "a3" series of running shoes. Due to design flaws, this series of products has led to the "recall" occurring in footwear products for the first time. Adidas has made a new construction of its two major brand series, which are divided into sports performance series and sports classic series, which are positioned for different groups of people. The former continues to emphasize improving the athletic performance of professional athletes, while the latter has become a brand that integrates sports elements into the trendy lifestyle. Adidas opened a partnership with Kenzo Takada's Y-3 business and established an image in fashion. Adidas not only brought the Y-3 to New York Fashion Week, but also opened it in a high-end department store and opened its own retail store. In terms of brand spokespersons, Adidas signed a lifetime contract with Maddy and terminated his contract with Kobe Bryant in advance. Nike acquires outdoor sports brand Hurley. Puma strengthens its brand positioning and strives to become a leader in sports lifestyles.
In 2003, in view of the century-old brand value of Converse, It can fill the gap of Nike's mid-range sneakers and fashion casual shoes, making Nike's product line more comprehensive and extensive. At the same time, Nike can use its strong marketing team and sales network around the world to revitalize the Converse brand. Nike bought all of the nearly century-old Converse shares for $305 million and will pay off some of its debts. At that time, Converse's annual sales were only $205 million. Little Emperor James entered the league and eventually signed nike. Nike took li Ning's position as the boss of the Chinese market, and Adidas ranked third. Adidas has established a "mass customization" system, which can design special shoes according to the different conditions, personal preferences and requirements of customers' feet. Reebok signed Rockets player Yao Ming, who is only 23 years old. Lululemon embarked on a globalization strategy and entered the California market. The failure of many investments and the intensification of market competition led to the decline of FILA, and the US hedge fund Cerberus Capital Management took the opportunity to buy the FILA brand from Italy for $351 million.
In 2004, Adidas launched the "adidas 1" computer chip smart running shoes; surpassing Li Ning to become the second in the Chinese market. Nike acquired Starter, a trend sports brand founded in 1971 by David Beckerman, a former national basketball "star"; took over Converse's players and channel resources, and used Converse to sign young players as spokespersons, and when these young players developed into mature stars, they would be shipped to Nike. After Converse was weakened by basketball advantages and athletic attributes, Nike transformed it into a casual fashion brand, strengthening the connotation of retro and trend. At the Athens Olympics, Reebok sponsored more than 400 athletes and sports teams from around the world.
In 2005, Philae acquired a US$1.3 billion stake in Philae in Italy's parent company, becoming an independent franchise company that pays for headquarters.
In 2006, Adidas acquired the sports brand Reebok for 3.1 billion euros, a deal that included CCM, a hockey brand wholly owned by Reebok in 2004, and Rockport, a running shoe brand acquired in 1986. Subsequently, the Adidas-GROUP Group was established, which owns adidas, taylormade, and reebok. Adidas targets prospective athletes with excellent product performance; although Reebok has diversified products, its target consumers are mostly women, young people and other mass people with fitness needs, and women's shoes will continue to be the largest sales of products in the US footwear market. The endorsement and sponsorship contract in Reebok's hands was the most needed resource for Adidas at that time. Yao Ming is an important weight in resisting The Nike who signed Liu Xiang and opening up the Asian market, especially the Chinese market. That year, Adidas' revenue surged 52% from the previous year. In addition, Reebok has awarded a valuable sponsorship contract to the Adidas Group.
In 2006, Mark Parker, known as the "product maniac," began as CEO of Nike, and he was faced with how to find new growth points for the highly successful, established company. Given that NIKE operates in approximately 190 countries and involves 13 sports categories, Parker has taken overhaul nike's operations since taking office, changing the brand from a previous sub-brand and product-based structure to seven "customer-oriented" product categories: running, basketball, women's training, etc., to ensure the company's professionalism in each market segment, and the organization is no longer huge and bloated.
From 2001 to 2006, Puma's sales increased from 460 million euros to 2.37 billion euros, with an average annual growth rate of 69.25%. In 2007, Kering Group, which was interested in entering the lifestyle sector, acquired Puma. Nike acquires Umbro. Reebok's sales account for a quarter of Adidas Group's total revenue, or about $2 billion. But then Reebok fell into a long period of confusion. How to maintain market positioning, how to find new development perspectives, how to maintain their independence, these problems have become the development problems that confuse the management team of Reebok.
In 2007, FILA positioned the brand as a fashion-led, sport-inspired athleisure brand, hoping to target young people aged 18-34 at the heart of urban life. Belle International Holdings Limited, as the largest footwear fashion brand and sports brand retailer in China at that time, established a joint venture with FILA Group at a ratio of 85:15, which acquired the trademark ownership of the FILA brand in Chinese mainland, Hong Kong and Macau, and established Feile Sports Co., Ltd. in Shanghai on January 1, 2008, with overall responsibility for the planning, brand promotion and marketing operation of the Chinese mainland, Hong Kong and Macau. Philale Korea acquired Philale Head Office for US$400 million, making Philale a Korean company. Lululemon is listed on the NASDAQ.
In 2008, the global financial crisis broke out, and Adidas's investment in the Beijing Olympic Games was almost lost. Nike adjusted its strategy, refocused on the main brand Nike, sold Starter and Bauer, and integrated advantageous resources through brand slimming. Adidas launched the sports fashion series neo, the brand positioning young people: born active, unlimited youth, fresh, personality affinity, explore, enjoy the moment. In 2009, adidas launched a new fashion brand, SLVR, that promotes minimalism and uses eco-friendly materials such as organic cotton, soy fiber, bamboo and waterproof nylon. Adidas and Disney jointly announced that they will jointly launch a new series of baby and children's wear products. Reebok is embroiled in a false advertising dispute that "wearing sneakers can sculpt" ANTA Group acquired all of FILA's trademark use rights and franchise rights in China from Belle International for a total consideration of approximately HK$600 million, and was responsible for the promotion and distribution of FILA trademarked products in Chinese mainland, Hong Kong, China and Macau.
In 2010, the turnover of Adidas Group did not rise but fell, and the net profit fell sharply. Adidas sponsored the FIFA World Cup south Africa and launched the "Road to 2015" strategy, on the basis of 2010, sales in 2015 (excluding currency factors) increased by 45%-50%, and increased by high single digits every year. Reebok lost its NFL sponsorship contract and signed a sponsorship contract with CrossFit to make fitness equipment the main direction of the future to attract female consumers. Given the apparent lag in understanding of younger consumers, digitalization quickly became Nike's corporate strategic direction, not just a marketing strategy. Nike has separated the digital business under the marketing department, and the digital department has been upgraded to the same level as the core departments such as research and development and marketing.
In 2011, the U.S. golf industry showed signs of contraction, with a 1% year-on-year decline in total output value. In 2012, Europe's golf population suffered its first decline in 20 years due to an aging population and lack of favor among young people.
In 2012, China's sports footwear industry suffered a serious inventory crisis, with orders falling, inventory high, and profits falling, and all sports brands fell into the same predicament. Nike launches DTC retail system in China. Cut print and TV advertising spending by 40 percent, then put the money into digital marketing, building e-commerce, offline stores, and a range of digital services to use new means to reach consumers directly. Adidas began to apply Boost technology to the field of running shoes, which quickly caused market repercussions. Reebok's "cheating on girlfriend" advertising slogan has caused great dissatisfaction among consumers. In that year, Nike's revenue growth rate decreased from 15.95% in fiscal 2012 to 8.49% in fiscal 2013, and gross profit margin increased by 0.1 percentage points to 43.6%. However, Converse's revenue rose to $1.449 billion from $1.324 billion. Adidas' euro revenue growth rate decreased to 11.7% from 11.3% in the previous year, and gross profit margin increased by 0.2 percentage points to 47.7%.
(IX) Adidas was dragged down by the European market, and revenue growth stagnated
Between 2013 and 2014, Adidas revenue stagnated. In euros, it rose from 14,883 million euros to 14,534 million euros, a decrease of 2.35%, while in dollar terms it fell from only 18.87 billion euros to 18.78 billion dollars, an increase of 1.24%. In the 2014-2015 fiscal year, Nike's revenue increased by 16.47%.
In 2013, Nike sold Umbro and Cole Haan to cut costs and focus on its core product line. After the divestiture, Nike focused on nike, Jordan Brand, Converse and Hurley, focusing on comprehensive sports, professional basketball, sports trends and outdoor sports. From the perspective of price band, nike brand covers a wide range of high-end markets, the higher the technology content, the higher the price; the higher the price of the Jordan series, mainly the star effect and the premium brought by design technology; the Converse brand focuses on fashion, and the product price is related to design and limited joint branding. Adidas has developed the Boost series of running shoes with excellent elasticity and shock absorption characteristics using BASF's new foam microsphere Infinergy. Infinergy is mainly made of foamed thermoplastic polyurethane (E-TPU), which, after pressurized heating pretreatment, allows the original 5 mm particles to expand like popcorn. In this process, the volume of the oval microspheres containing the miniature closed bubbles will increase by a factor of 10. These airtight bubbles give the foamed microspheres excellent elasticity and the desired rebound. Each Adidas running shoe contains 2500 foam microspheres, which can be combined to provide more powerful elasticity and cushioning. Puma carried out in-depth brand reform from the three dimensions of "sports stars + entertainment stars double matrix", "designer joint name" and "street pop culture penetration". Lululemon officially entered the Chinese market and took the lead in contacting domestic consumers in the form of "Show Room" in Shanghai and Beijing. Adidas euro revenue decreased 2.6% and gross margin improved by 1.5 percentage points to 49.3%. Due to the continued sluggish sales performance in the UK, Italy and Spain, the Adidas Group's sales revenue in Western Europe decreased by 6% in 2013, while in emerging markets in Europe and North America, it achieved growth rates of 4% and 2%, respectively. In fiscal 2014, Nike's revenue increased by 9.84% and gross profit margin was 44.8%.
In 2014, Nike merged China's official mall, NIKEiD, and Nike+ into one, and the goods, services, and membership data originally scattered across the three platforms were connected, becoming the Nike.com now. Adidas, which won the NBA jersey sponsorship rights, also failed to narrow the gap with Nike, and was even surpassed by the sudden Under Armour to fall to the third place in North America. Adidas signed carrier star Kanye West from Nike for $10 million and promised a generous return on dividends, and soon launched the Yeezy Boost line. At the Berlin Marathon, Kenya's Dennis Kimeto broke the men's marathon world record with a time of 2 hours, 2 minutes and 57 seconds, making him the first marathon runner in history to score 2 hours and 3 minutes. And he was wearing Adidas adizero adios Boost 2 running shoes on his feet. Puma chose pop singer Rihanna as the brand's womenswear design director and global brand ambassador, Fenty by Puma quickly became a must-have for fashion trend lovers, and sales figures soared. In that year, TaylorMade's global sales plunged 28% from the previous year, Adidas Euro revenue increased by 2.3%, gross margin decreased by 1.7 percentage points to 47.6%, and full-year net profit also fell 27% year-on-year, and the stock price fell by 38%. In 2014, fiscal year 2015, Nike's revenue increased by 10.07% and gross profit margin was 46.0%.
(10) Nike launched the DTC strategy, and the growth rate of Adidas rebounded
In 2015, Nike was a world leader in a number of sneaker categories, especially running shoes, basketball shoes and soccer shoes. The market share of sneakers in the United States is as high as 62%. In the sneaker resale market, which directly reflects the popularity of shoes, Nike's Jordan Brand occupies 96% of the sneaker resale market, and Adidas has less than 1%. At the same time, Nike snatched the NBA's official jersey sponsorship contract from major rival Adidas for $1 billion in 8 years. Nike officially proposed DTC (Direct to Consumer) direct business as a corporate strategy. Adidas has developed a new strategic plan with the theme of "Lixin", with the goal of becoming the "best sports brand" in the world by 2020. The program focuses on the five driving areas of football, running, women's, children's and sports classics, strengthening key categories and shaping brand influence by improving supply chains, actively expanding key markets and accelerating the layout of online business. Adidas changed its sponsorship strategy, abandoning future cooperation with the NBA in favor of strengthening cooperation with NBA stars. At the same time, the 30-year cooperation with the Chinese Football Association was ended and a three-year cooperation was signed with the Chinese Ministry of Education to accelerate the development of chinese campus football. In addition to the need for functional sports products, these young people also need trendy and fashionable products, which will be the backbone of future trendy product consumption and meet the development needs of Adidas's professional and fashion lines. Adidas sold its business and leisure brand Rockport for $280 million and bought Austrian mobile fitness app developer Runtastic for 220 million euros from German newspaper group Axel Springer and other shareholders. Runtastic had about 70 million registered users at the time and offered more than 20 apps covering a variety of endurance, health and fitness activities. In that year, Nike's revenue increased by 5.82% and gross profit margin was 46.2%. Adidas euro revenue rose 16.4% and gross margin improved by 0.6 percentage points to 48.3%, but the golf business caused a loss of nearly 100 million euros to Adidas.
In 2016, with the rise of global sports trends, VANS, PUMA and other sports brands strongly conquered the market, and similar products on the market increased sharply. Adidas spun off the American sports brand Mitchell Ness, a whirlwind in the sports and leisure market, the NMD series comprehensively crushed Nike and Jordan Brand, and the Yeezy Boost with Kanye West is still selling well. Adidas is trying to improve production efficiency through Industry 4.0 factories, relying on technologies such as intelligent robots and 3D printing to replace real people, and investing in the opening of the first smart factory in Germany. Converse sales, which relied too heavily on classic canvas shoes Chuck Taylor, slipped. Nike's Futures orders in the North American market have slowed down for four consecutive quarters, and a large inventory backlog and poor sales of new products have become a problem that plagues Nike. Nike acquired Virgin MEGA, a digital design studio based in New York, and launched the shopping application SNKRS with Virgin MEGA's technology to boost online sales. Lululemon officially opened its physical stores to China, opening three stores in Shanghai Pudong International Financial Center, Shanghai Jing'an Kerry Center, and Beijing Sanlitun. In that year, Nike's revenue increased by 6.08%, and Adidas's revenue increased by 14%.
In 2017, Adidas accounted for 45% of the sneaker resale market; sold TaylorMade to KPS Capital in New York for $425 million; at the same time, officially stopped manufacturing wearable products and shifted to mobile applications; established a second smart factory in the United States with an annual output of about 500,000 pairs, and set a goal of replacing 50% of the original factory with smart factories in 2020. Nike released the ZoomX midsole series running shoes with nylon elastomer PEBAX foam, surpassing the Adidas Boost series. Nike announced that it will adjust its group structure to reduce the number of vice presidents from 2% to about 1,400 employees, and the regional structure will be simplified from the original 6 to 4 business units, namely North America, Europe, Middle East and Africa, Greater China, and Asia Pacific and Latin America. It will reduce the style of footwear by 1/4, focusing on core brands such as ZoomX, Air VaporMax and Nike React. Concentrated in 12 major cities in 10 countries, 80% of sales growth is expected to come from these 12 cities by 2020, including New York, London, Shanghai, Paris and Los Angeles. Nike proposed the CDO (Consumer Direct Offense) initiative, which is a continuation strategy of the DTC model, which aims to drive internal organizational operations to improve resource efficiency. The CDO plan can be summarized by "3X2", that is, to accelerate product development, production delivery and promotion and sales at double speed, to ensure that the product development process is completed within 90 days, the production cycle is compressed to 20 days, double the closeness to consumers, understand consumer needs, and achieve two-way interaction and precision marketing. To accelerate its digital transformation, Nike acquired Zodiac, a consumer data analytics company, to boost online sales. Acquired Israel-based computer vision company Invertex to enhance Nike's digital technology. Through Invertex's technology, Nike launched the Nike Fit APP, which can recommend the corresponding sizes of different shoes for consumers. Lululemon partnered with high-end sneaker brand APL to launch sneakers that sell for more than $150 each. In that year, Nike's revenue increased by 5.97%, and Adidas' euro revenue increased by 14.8%. Under Armour continues to expand its categories and expand beyond North America. However, the aggressive expansion strategy led to internal management disorder, highlighting the lack of inventory supply and store operations, and fell into losses. Lululemon's global revenue increased 24% year-over-year to $3.29 billion, its full-year net profit was $484 million, and its e-commerce revenue increased by 46%.
In 2018, Adidas achieved revenue of 21.915 billion euros, an increase of 3%, and direct sales revenue increased by 36% to more than 2 billion euros. Revenue in asia-Pacific was €7,141 million, up 15% year-on-year; European market was €5,885 million, essentially unchanged from 2017; North America was €4,689 million, up 15% year-on-year; Russia was €595 million, up 1% year-on-year; Latin America was €1,634 million, up 6%; Developing markets were €1,144 million, down 3% year-on-year; and Other businesses were €829 million, up 15% year-on-year. In fiscal 2019, Nike's revenue reached $39.117 billion, an increase of 7.47%, the e-commerce business increased by 42% year-on-year, and DTC revenue accounted for 30% of Nike's total revenue. Revenue in North America increased 3.6% year-over-year to $4.29 billion, revenue in the EMEA region increased 6.4% year-over-year to $2.77 billion, and revenue in Greater China increased 27% to $1.68 billion.
In 2019, Nike announced the acquisition of Boston-based predictive analytics firm Celect to refine the DTC model. Celect's technology will be integrated into Nike's mobile apps and websites to more accurately predict what style of shoes consumers like, when the probability of placing an order is high, and on what channel they like to place an order, thus providing a more personalized service. Adidas announced it will close two high-tech robotics factories, Speedfactory, in Atlanta, USA, and Ansbach, Germany, by April 2020. Nike revenue fell 4.4%, and Adidas euro revenue increased by 7.87%.
In 2020, Nike's revenue increased by 19.1% to $44.538 billion, and Adidas' euro revenue decreased by 16.1% to 19.85 billion euros. Total PUMA sales of EUR 5,234 million decreased by 1.4% year-on-year.
In August 2021, Adidas announced a definitive agreement with Autoentic Brands Group (ABG) to sell Reebok to ABG for a consideration of €2.1 billion . Nike decided to terminate its partnership with seven offline retail terminals, including DSW, Urban Outfitters and Macy's, in October 2021, while planning to open another 200 highly personalized Nike live offline small stores.
(11) The moat of internationally renowned sports brands
1. Channel construction to quickly understand and respond to changes in consumer demand. New entrants cut into the sneaker and apparel space from the market segment, avoiding strong competitors. Nike cuts in from jogging shoes, Reebok cuts in from women's sneakers, and Lululemon cuts in from yoga clothes. Corresponding in-place enterprises need to establish DTC, strengthen channel control, improve customer shopping experience, expand product categories according to consumer demand, do not give potential competitors room for development, and at the same time reduce demand to form the impact of high inventory on enterprises and enhance operational soundness. Nike successfully responded to the decline in demand caused by the economic crisis through channel management. When dealing with competitor challenges, you first need to consolidate the market with competitive advantage, and then consider hitting the market that the other side is good at.
2. Attach importance to marketing investment and improve marketing efficiency. Sponsor top events and traffic stars to promote brands, select professional athletes, especially rising stars, to maintain professionalism, lead fashion and public sports life through advertising and community marketing, and improve marketing efficiency through implantable marketing. Adidas and Nike are promoting brand influence by sponsoring top events such as the World Cup and the NBA and top players such as Pele and Jordan, and rapidly expanding sales.
3. Attach importance to R&D investment, highlight the scientific and technological content and functionality of products. Marketing can quickly expand sales in the short term, but getting consumer support in the long term requires product quality support. Sports brands cannot be like luxury brands, only the appearance of the trend without functional innovation as a support, otherwise they will fall into the fierce competition in the field of pure fashion and be quickly replaced. When the accumulation of technology is insufficient, do not risk competing head-on with the leader and detract from your brand image. Reebok lost its lead precisely because it had a declining emphasis on the female market and its lack of technical competitiveness in the professional field.
4. Attach importance to fashion design and cultural connotation. The market space in the professional sports field is small, and fashion is more valuable to ordinary customers than to the improvement of functions. And sports is not only the movement itself, but also a way of life and culture. Just as when buying a car, in addition to the price, it will also consider the appearance and dynamics, comfort, brand culture, and the purchase of sneakers and clothing will also consider fashion, functionality, comfort and cultural connotations.
5. Focus on the main brand. When consumers choose sneakers and clothing, they first choose the category, and then choose the brand and style (professional or fashionable), and the price is an important symbol of the brand. Multi-brand strategies can occupy different price bands, but low-priced brands are prone to fierce market competition and low gross profit margins. Suitable for growth markets, establish a fashionable or high-end image by creating or acquiring new brands. A single-brand strategy can focus on mid-to-high-end products, deepen the moat, and improve corporate profitability. Excessive diversification can certainly diversify business risks and reduce the core competitiveness of enterprises.
6. Supply chain management reduces costs. After all, sneakers and clothing are not luxury goods, and they are still more sensitive to cost changes. It is necessary to reduce costs through global production, establish a logistics system to improve distribution efficiency, improve the timeliness and synergy of all links in the supply chain through informatization, and reduce inventory. Nike has gained a cost advantage over Adidas by establishing production bases in Asia.
7. Appropriate internationalization in a timely manner. Movement knows no borders, and although there will be preferences, the love of peoples for sports is common. The influence of top events and top athletes is across borders. Domestic enterprises have local advantages, but if they do not internationalize, it not only limits their own development space, but also competitors can concentrate the profits obtained from multiple sports shoes and apparel markets to compete for the market. If you over-internationalize beyond your own strength and seize the resources used in the local market, you may lose the local market.