Reebok 2009 Annual Report Download - page 158

154 GROUP MANAGEMENT REPORT – FINANCIAL REVIEW Risk and Opportunity Report
Increasing consumer demand for
functional apparel
Consumer demand for functional apparel
has increased significantly in recent
years as consumers realise the benefits
of functional apparel over traditional cot-
ton sportswear. Improved moisture man-
agement, superior ease of motion and
increased comfort are all factors encour-
aging consumers to switch to high-
performance gear. The design and devel-
opment of functional apparel requires
significantly more expertise, product and
material research as well as production
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 performance leader enable us to
constantly develop innovative products
and capitalise on them.
Growing popularity of “green” products
Today’s consumers are increasingly con-
cerned about the impact their consump-
tion has on the environment. Therefore,
they demand more and more products
that are environmentally benign. Over
the past two years, we have accelerated
our efforts to create meaningful product
platforms to drive growth in this area. For
example, in 2009, the first products from
the adidas ”Better Place” programme
were introduced globally. Products
and packaging in the programme are
designed taking sustainability principles
into account, such as broadening the use
of recycled materials and monitoring
energy use in material and product prep-
aration. With all adidas performance cat-
egories participating in the programme,
we are moving forward with ambitious
plans in the build-up to the London 2012
Olympic Games see Sustainability, p. 102.
Reebok has also been steadily introduc-
ing eco-friendly products. In 2010, for
example, Reebok will launch the Kid’s
Green Easy Collection utilising recycled
raw materials. Our efforts to use envi-
ronmentally friendly materials in our
products are of course not exclusive
to these specific programmes and are
also used in other categories, albeit to a
lesser extent.
Strategic and Operational
Opportunities
Strong market positions worldwide
The adidas Group is the market leader
in numerous countries around the world.
This strong competitive position offers
us many advantages in terms of global
brand visibility, market power and the
ability to effectively expand our position
in emerging markets. As a result of our
strong partnership portfolio and market-
ing efforts, consumers around the globe
are highly aware of our brands and are
receptive to our brand messaging. This
makes demand for our products more
stable compared to smaller competitors.
Hence, many retailers consider our prod-
ucts as core to their offering. The adidas
Group can therefore compete more effec-
tively for shelf space.
Multi-brand approach
We believe there is a natural limit to the
audience size a single brand can appeal
to, given the diverse tastes and expecta-
tions of a highly fragmented consumer
market. Our multi-brand approach
provides us with the opportunity to lever-
age the power of our brands in a more
precise and meaningful way see Group
Strategy, p. 52. We are able to utilise the
combined strengths of each brand to
compete for a higher percentage of the
total market – covering a greater number
of demographics, consumer needs and
price points.
Personalisation and customisation
replacing mass wear
Today’s consumers are looking for choice
and variety that go beyond choosing
from a wide selection of products. We
engage in developing unique and relevant
products that fit specific functional and
aesthetic requirements see Group
Strategy, p. 52. For example, the adidas,
Reebok and TaylorMade brands all offer
different personalisation and customisa-
tion platforms reflecting each brand’s
strategy. Key concepts at adidas include
mi Performance, mi Originals and
mi Team. In 2009, Reebok launched the
“Your Reebok” iPhone application, which
enables consumers to design and order
personalised footwear with their mobile
phones. At TaylorMade-adidas Golf, the
myTPball online platform offers custom-
ers the opportunity to create and order
their own golf balls and our Centers of
Excellence™ provide customised fitting
sessions for consumers with expert
fitters and technicians. We expect the
market for personalised and customised
footwear, apparel and hardware to grow
strongly and evolve further in the coming
years and will therefore continue to invest
in the space. For example, in February
2009, we acquired Bones in Motion, Inc.,
a specialist in developing, manufacturing
and selling sports- and fitness-specific
location-aware software applications
and web-based services. This strategic
move extended our innovation capabili-
ties to further exploit the growing market
of interactive, personalised training
systems.