Reebok 2007 Annual Report Download - page 118

114
GROUP MANAGEMENT REPORT – OUR FINANCIAL YEAR - Risk and Opportunity Report ANNUAL REPORT 2007 --- adidas Group
E
XTERNAL AND INDUSTRY OPPORTUNITIE
S
FAVORABLE MACROECONOMIC AND FISCAL POLICY
CHANGES As a consumer goods company, consumer con-
fi dence and spending can impact our sales development.
Therefore, better than initially forecasted macroeconomic
developments and fi scal policy changes which support private
consumption can have a positive impact on our sales and prof-
itability. In addition, legislative changes, e. g. with regard to
the taxation of corporate profi ts, can positively impact Group
profi tability.
SPORTS PARTICIPATION ON THE RISE Governments increas-
ingly promote living an active lifestyle to fi ght obesity and
cardio vascular disease. According to the World Health
Organization, around 400 million people were considered
obese in 2005. Another 1.6 billion more were estimated to
be overweight. These numbers are projected to increase to
700 million and 2.3 billion respectively by 2015. Once consid-
ered a problem only in affl uent nations, obesity is also
becoming an issue in countries with low per capita income.
This development has serious health consequences and a
dramatic effect on health care expenditures. As a result,
governments and non-governmental organizations are
increasing their efforts to promote a healthy lifestyle and
encourage sports participation. Given our strong market
position, in particular in categories con sidered suitable for
weight loss such as training, running and swimming, we
expect to benefi t from this trend.
INCREASING CONSUMER DEMAND FOR FUNCTIONAL
APPAREL Consumer demand for functional apparel has
increased signifi cantly in recent years as consumers realize
the benefi ts of functional apparel over traditional cotton
sportswear. Improved moisture management, superior ease
of motion, and increased comfort are all factors encouraging
consumers to switch to high-performance gear. The design
and development of functional apparel requires signifi cantly
more expertise, product and material research as well as pro-
duction know-how compared to low-tech apparel. Therefore,
only a few companies are able to supply high-end functional
apparel. Our resources and our positioning as a sports perfor-
mance leader enable us to constantly develop innovative prod-
ucts and capitalize on them. For example, adidas is strongly
growing in compression apparel. Due to our attractive
TECHFIT™ offering, we achieved strong growth in this category
in 2007 and expect to double sales in 2008.
FAST-GROWING WOMEN’S SEGMENT The women’s sports
market is one of the most attractive segments in the sporting
goods industry with women accounting for almost half of total
spending on athletic footwear. In addition, women also make
over 80 % of the purchase decisions for sports apparel for men,
women and children. As our Group generates the majority of
its revenue in the men’s segment, the women’s category offers
potential for further growth. adidas, Reebok and TaylorMade-
adidas Golf each address the female consumer in their own
distinctive way. With targeted product offerings in both perfor-
mance and lifestyle, such as the adilibria, Fuse and Clima 365
collections at adidas, the Avon Pink Ribbon collection at
Reebok and the Women’s r7® CGB MAX at TaylorMade, all of
our brands are well-positioned in the women’s category. Going
forward, we will extend and broaden our women’s offering –
emphasizing individuality, authenticity and style.
ONGOING FUSION OF SPORT AND LIFESTYLE The border
between pure athletics and lifestyle continues to blur as sport
becomes a more integral part in the lives of more and more
consumers. People want to be fashionable when engaging in
sporting activities without compromising on quality or the
latest technological advances. At the same time, performance
features and styles are fi nding their way into products meant
for more leisure-oriented use. As the global sports lifestyle
market is roughly three times larger than the performance
market, this development opens up additional opportunities for
our Group and our brands – which already enjoy strong posi-
tions in this market. adidas has an authentic sports lifestyle
offering and the adidas Sport Style division is targeted to grow
over proportionately until at least 2010.  see adidas Strategy, p. 046
Lifestyle pro d ucts are also an important pillar in Reebok’s
brand strategy. We have augmented Reebok’s Classics and
music-inspired business with new celebrity partnerships to
upgrade and emotionalize the brand’s lifestyle offering. In 2008
and beyond, we will launch new initiatives in this category to
capitalize on Reebok’s lifestyle credibility.
External and Industry Opportunities
Favorable macroeconomic and fi scal developments
Sports participation on the rise
Increasing demand for functional apparel
Fast-growing women’s segment
Ongoing fusion of sport and lifestyle
Emerging markets as long-term growth drivers
Growing popularity of “green“ products
Strategic and Operational Opportunitie
s
Strong market positions worldwide
Multi-brand approach
Personalization and customization replacing mass wear
Breaking new ground in distribution
Taking control of distribution rights
Cost optimization to drive profi tability improvements
Financial
Opp
ortunities
Favorable fi nancial markets changes
CORPORATE OPPORTUNITIES OVERVIEW