Reebok 2006 Annual Report Download - page 107

Macro- and Socioeconomic Opportunities
Macro-Environment and Fiscal Policy Changes
Interest rate changes, tax reforms and currency exchange
rate developments regularly provide opportunities for opti-
mization. Our central Group Treasury and Tax departments
constantly monitor these developments to identify potential
opportunities to reduce our non-operating expenses.
Emerging Markets as Long-Term Growth Drivers
Emerging economies in Asia, Europe and Latin America offer
significant potential to our Group. Of particular importance
to our Group are China, Russia and India. Given the positive
market signals and our future plans for distribution roll-out
in these regions, we expect sales from emerging markets
to grow to more than 30% over the next five to ten years
(2006: 19%). Above-average GDP growth, rising real incomes
and employment rates as well as positive demographic trends
and an increasing middle class continue to fuel these econo-
mies and subsequently our industry. The adidas Group, in par-
ticular the adidas brand, is well positioned to exploit growth
in these regions due to our leading positions, excellent spon-
soring partnerships and our extensive distribution network.
To exploit these opportunities further, we continue to utilize
and grow our own-retail activities to capture growth where
traditional distribution channels remain underdeveloped. At
brand Reebok, we have taken several important steps during
the first year of integration, most notably acquiring the dis-
tribution rights to the brand in several of these markets such
as China, Russia, Czech Republic, Slovakia and Turkey. For
TaylorMade-adidas Golf, the emerging markets of Asia also
present the largest growth opportunities, due to the relatively
low participation rates in golf at present. As accessibility to
the game grows, the popularity of golf continues to rise,
spurring increased demand for golf products.
Increasing Sports Participation Rates in Mature Markets
In mature markets such as Western Europe and North
America, an ageing population and increasing obesity rates
are having a significant effect on health care costs. Govern-
ment and non-profit organization involvement is steadily
rising on this issue, with initiatives such as P.H.I.T. (Personal
Health Investment Today) being reintroduced to US congress
in January 2007. The already high awareness in the media and
among the general public is expected to increase further in
the medium term. As society is encouraged to live healthier,
sports participation is projected to increase providing a growth
opportunity for our industry. Given our strong position across
a wide range of performance sports disciplines, we believe
this will help our Group outperform industry growth in these
countries over the medium term.
Macro- and Socioeconomic Opportunities
Macro-environment and fiscal policy changes
Emerging markets as long-term growth drivers
Increasing sports participation rates in mature markets
Industry Opportunities
Fast-growing women’s segment
Increasing focus on kids
Building market share in high-growth sports categories
Running category to grow further
Technology to drive growth of customized products
Strategic Opportunities
Multi-brand approach provides competitive advantage
Greater connection to the consumer at point-of-sale
Promotion partnerships bring authenticity
Realizing synergies from Reebok integration
Cost optimization to improve profitability
Corporate Opportunities Overview
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