Reebok 2008 Annual Report Download - page 51

adidas Group Annual Report 2008 047
Leading through innovation and design
We are determined to address every consumer in a specifi c and
unique way – with product and communication initiatives that
generate trade and consumer interest. As a result, we believe
that technological innovation and cutting-edge design are
essential to sustainable leadership in our industry.
Innovation plays a signifi cant role in differentiating our product
offering in the minds of consumers. By leveraging the extensive
R&D expertise within our Group, we continuously challenge
the boundaries of functionality and performance. It is our
objective to launch at least one major new technology or tech-
nological evolution per year see Research and Development,
p. 074.
Through design partnerships and collaborations with Stella
McCartney, Yohji Yamamoto, Porsche Design and Jean-Michel
Basquiat we are widening our design reach and imbuing our
products with the excitement consumers demand. By continu-
ally expanding our capabilities in R&D and design, we are able
to introduce new products at premium price points, thus con-
tributing to Group margin improvement.
Customising distribution
Our Group will drive future success by engaging consumers
with unique interactive product approaches and rewarding
point-of-sale experiences. Our brands must be competitive in
this environment where consumers make their fi nal purchase
decisions based on availability, convenience and breadth of
product offering. As a result, we are continuously refi ning our
distribution proposition, concentrating on two areas: expanding
controlled space and improving retail relationships.
Controlled space includes:
— Our own-retail business including e-commerce
— Mono-branded stores run by retail partners
— Shop-in-shops that we establish with our key accounts
— Joint ventures with retail partners
— Co-branded stores with sports organisations or other
brands
These formats provide us with a high level of brand control, as
we either manage the stores ourselves (i.e. own retail) or we
work closely with our partners (mono-branded stores, shop-
in-shops, joint ventures, co-branded stores) to ensure the
appropriate product offering and presentation at the point-
of-sale. Brand control helps us drive sales and profi tability
increases and expand our market position. We intend to gener-
ate at least 35% of our Group’s revenues through controlled
space in the coming years.
Going forward, we will also further differentiate and segment
our product offering to align our distribution more closely with
a given retailer’s customer base. In addition, we are partnering
with retailers to increase the level and quality of sell-through
information we receive. This creates a mutually benefi cial rela-
tionship that will help us become a more valuable and reliable
business partner to our retailers.
Creating shareholder value
Sustainable revenue and operating profi t growth are critical
to our success. Creating value for our shareholders through
signifi cant free cash fl ow generation drives our overall
decision-making process see Internal Group Management
System, p. 058. For each of our brands, we pursue the most
value-enhancing avenues for growth, with particular empha-
sis on continuously improving profi tability. In addition, rigor-
ously managing working capital and optimising fi nancial lever-
age remain key priorities for us. As always, we are committed
to increasing returns to shareholders with above- industry-
average share price performance and dividends.