Reebok 2013 Annual Report Download - page 180

adidas Group
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2013 Annual Report
Group Management Report – Financial Review
176
2013
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03.5
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Risk and Opportunity Report
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Strategic and Operational Opportunities
Moreover, continued growth in the global population, which is estimated
to exceed nine billion by 2050, will over time lead to increasing sports
participation and also expand the global consumer base for sports
and sports lifestyle products. Most of this growth will be in emerging
markets, which already play an important role in our growth strategy
and where our brands are already well positioned. This could give an
additional boost to the Group’s sales performance.
Also, we expect sports participation rates to increase over time, with
increasing leisure time, investment in infrastructure and a broadening
of awareness of the benefits of sport. This is particularly so in countries
such as China or India, where sports participation is lower than in
industrialised countries. In addition, European and North American
sporting goods brands are often seen as highly desirable, easily
accessible, affordable quasi-luxury goods in emerging markets, which
presents an additional growth opportunity.
As most of these developments are long-term structural opportunities
for the Group’s top- and bottom-line performance, we still assess the
short-term impact as moderate. Given our ambitious goals, however,
we continue to regard the likelihood of such short-term opportunities
materialising as unlikely.
Organic growth opportunities
Controlled space: The sporting goods retail environment is changing
constantly. We therefore continue to adapt our distribution strategy
to cater for this change and have made controlled space initiatives a
strategic priority. This includes retail space management with key retail
partners as well as the introduction of new own-retail store formats.
In our wholesale channels, we continue to pilot our latest shop-in-shop
concepts globally and have also further invested in unique point-of-sale
activation. For example, we have begun to roll out the Reebok FitHub
shop-in-shop concept globally. We also continued our test phase of the
NEO own-retail store concept in Germany and further expanded our
store base in lower-tier cities in China. Successful results from these
initiatives and further expansion could enable us to accelerate top- and
bottom-line growth.
Fashion trends: Trends can rapidly change in our industry as certain
styles, looks and colourways fall in and out of relevance for the consumer.
Given our broad product offering, additional sales opportunities may
arise when our products are more on-trend than those of our major
competitors. Further establishing a premium price positioning could
strengthen consumers’ perception of our brands, particularly in fashion
categories, and open up additional margin opportunities.
Women’s: Our Group still generates the majority of its revenues in men’s
and unisex categories. However, with women accounting for more than
a third of total spending on athletic footwear, we believe the women’s
sports market is one of the most attractive segments in the sporting
goods industry. The adidas Group is therefore investing in developing
women-specific product offerings in both performance and lifestyle that
emphasise female individuality, authenticity and style. Higher traction
from our various initiatives with adidas and Reebok such as specific
adidas campaigns like #mygirls or Reebok’s expansion into studio-
based fitness activities could lead to additional sales opportunities for
the Group.
New activities and categories: Exploiting the potential of emerging,
fast-growing sports categories is another organic growth opportunity
for our brands. Our brand teams conduct market research and engage
in trend marketing to detect changes in lifestyle and consumer needs
of our target audience as early as possible. Changes in lifestyle, habits
and attitudes can potentially result in the emergence of new consumer
needs that are not addressed by current product offerings. For example,
we see a growing trend in the move by athletes and sports enthusiasts
towards more minimalistic products that promote natural body
movement. In order to tap into this opportunity, we are expanding our
efforts to bring to market more lightweight and flexible products that
support the athlete’s natural course of motion. In addition, we continue
to see new exciting fitness concepts spring up such as CrossFit and
obstacle racing. Similarly, we see tremendous growth potential in the
outdoor and action sports categories and intend to become a leading
player in these categories over the next few years. In this respect, under
the adidas Originals banner, we launched our very first snowboard
collection, featuring three distinct snowboarding boots and roughly 60
articles of snowboarding apparel. Depending on how long it takes to
build the needed credibility with the target consumers, the outdoor and
action sports categories may perform better than currently assumed in
our projections.
Customisation and personalisation: 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. For example, the adidas,
Reebok and TaylorMade brands all offer different personalisation
and customisation platforms reflecting each brand’s strategy. With
mi adidas and YourReebok, consumers can design and order completely
customised adidas and Reebok footwear online, thereby creating their
own unique style. This is a particularly relevant opportunity in the kids’
segment. In addition, TaylorMade-adidas Golf’s Centres of Excellence
provide customised fitting sessions for golfers 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, which might support additional sales growth for the
Group.