SPORTS APPAREL AND FOOTWEAR - BRAND LANDSCAPE MARCH 2019 - caytoo

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SPORTS APPAREL AND FOOTWEAR - BRAND LANDSCAPE MARCH 2019 - caytoo
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SPORTS APPAREL
AND FOOTWEAR
  BRAND LANDSCAPE MARCH 2019
SPORTS APPAREL AND FOOTWEAR - BRAND LANDSCAPE MARCH 2019 - caytoo
EXECUTIVE SUMMARY
                                                                                                                           2

The sports apparel and footwear market is competitive
and continually evolving, but its landscape has
been carved by a collection of key players.
Nike, Adidas, Puma, Reebok, New Balance and Under Armour have all forged global footprints with majority
strongholds in North America and Europe. However, the emergence of new markets where sports participation is
high and populations are large, including China and APAC, are becoming increasingly appealing targets.

The big six also have new ‘disruptor brands’ to contend with, more aligned with contemporary culture and providing
market competition in previously dominated areas. With the help of digital platforms, sport is essentially limitless. It
is a unique channel through which brands can celebrate culture, engage with socio-political issues and the identity of
their target consumer groups. In order to keep up, the big six have had to diversify.

Contemporary audiences increasingly engage with brands they can trust, wanting relationships based more on
shared values that profit-driven motives. Industry leaders have needed to change tack, realigning their marketing
and CSR objectives to relate with these demands and engage with issues of modern society.

As part of this, the big six have turned to creative campaigns and content marketing collaborations to help
rejuvenate their image. Digital channels are a common tool brands utilise to target millennial consumers. Where
these audiences are concerned, content is currency and collaborations are a tried-and-tested means to success. But
whilst digital content remains critical to audience engagement, the big six continue to invest in flagship physical
stores in strategic urban centres. The rise of eSports is also posing interesting investment opportunities for sports
apparel brands

Trend-wise, all have also shown a greater proclivity towards prioritising corporate social responsibility strategies,
investing in women’s sports, becoming provocative trend-setters and being seen to give back, all to improve their
appeal within consumer minds.
SPORTS APPAREL AND FOOTWEAR - BRAND LANDSCAPE MARCH 2019 - caytoo
KEY PLAYERS
                                                                                                                                                                                                                                                                                        3

                        Nike Inc.                                            Adidas Group                                                    Puma                                                Under Armour                                           New Balance
        Founded: Was branded as Nike in 1971.                      Global Bases: Amsterdam, Portland,                                   Founded: 1948                                            Founded: 1996                                         Founded: 1906
    Global Bases: US headquarters (Oregon), EU                   Boston, Shanghai, Hong Kong & Panama                Global Bases: Herzogenaurach, Germany; Boston,             Global Bases: Baltimore, North America; Panama,           Headquarters: Boston, North America;
     headquarters (Netherlands, Hilversum), Asia                   Market Capacity: 42.9 billion Euros                   US; Hong Kong; Ho Chi Minh City, Vietnam.               Latin America; Amsterdam, Europe; Shanghai                      Cheshire, United Kingdom
           Headquarters (China, Shanghai).                       History: Formerly acquired TaylorMade,                      Market Capacity: 7.49 billion Euros                             & Sydney, Asia Pacific.                        Market Capacity: Private company
      Market Capacity: 108.03 billion US Dollars                        Ashworth & Adam’s Golf.                                                                                     Market Capacity: 9.34 billion US Dollars
      History: Formerly acquired Bauer Hockey,
                Cole Haan and Umbro

                                                                 Founded: 1949              Acquired: 2006               Acquired: 2012               Acquired: 2010
                    Acquired: 2003                               Headquarters:          Headquarters: Boston, US       Headquarters: The         Headquarters: California, US             Developing software to create a                              Acquired: 2004
                Headquarters: Boston, US                    Herzogenaurach, Germany                                        Netherlands                                                 fitness community through a number                         Headquarters: Michigan, US
                                                                                                                   Partner of global A-brands                                             of app services. Offering calorie                       Manufacturer of lacrosse, Ice
                                                                                                                   to design, produce and sell                                         counting tools, heart rate monitoring,                    Hockey and Soccer equipment
                                                                                                                   their socks and underwear                                                    sleep monitoring etc.
                                                                                                                           collections

      Founded: 1984                 Acquired: 2002                                                                                                                                                                                    Acquired: 2001                   Acquired: 2006
Headquarters: Oregon, US        Headquarters: California,                                                                                                                                                                         Headquarters: Boston, US              Headquarters:
 A subsidiary in the Nike       US. Manufacturer of surf                                                                                                                                                                          Manufacturer of lifestyle /         Massachusetts, US
  Inc. Originally trainers      apparel and accessories.                                                                                                                                                                               fashion shoes                Manufacturer of lacrosse
   exclusively made for                                                                                                                                                                                                                                                   equipment
  Michael Jordan in 1984
 they were later released
to the public and is now a
      apparel brand.
SPORTS APPAREL AND FOOTWEAR - BRAND LANDSCAPE MARCH 2019 - caytoo
SPORTS MARKETING BEHAVIOUR
                                                                                                     4

                                                     This overview provides insight regarding sports
                                             Total
                                                     the listed apparel brands are active in. Traditional
                  Equestrian                   0     sports like football, rugby, tennis, golf and
                  Archery                      0
                  Fencing                      0
                                                     athletics make up the majority of the sponsorship
TRADITIONAL

                  Golf                         4     activity however more non-traditional sport
                  Tennis                       4
                  Horse Racing                 0     partnerships are starting to become more
                  Football                     5
                                                     frequent. Due to the rising popularity of eSports,
                  Rugby                        5
                  Gaelic Football              0     four of the six listed sports apparel brands have
                  Cricket                      4
                  Badminton                    0     recently partnered with leagues, teams and
                  Sailing/Yacht                0     players. Water sports such as surfing, rowing and
                  Rowing                       0
                  Baseball                     3     sailing have no affiliation with any of the listed
                  Field Hockey                 1
                  Cycling                      1
                                                     sports apparel brands.
                  Multi-Sport                  5
                  Swimming                     3
                  Squash                       0
                  Table Tennis                 0
                  Gymnastics                   2
                  Figure Skating               0
                  Athletics                    4
                  Running                      0
                  Triathlons                   1
                  Basketball                   6
                  Netball                      2
                  Australian Rules             2
                  American Football            4
                  Skiing                       0
                  Motorsports                  3
                  Beach Volleyball             0
                  Diving                       0
                  Ice Hockey                   2
                  Combat                       3
                  Surfing                      0
                  Snowboarding                 2
                  Bobsleigh                    0
                  Skateboarding                3
NON-TRADITIONAL

                  Paddle Boarding              0
                  Wrestling                    0
                  Freeski                      0
                  Alpine Skiing                1
                  Speed Skating                1
                  Sled Hockey                  0
                  Crossfit                     2
                  Drone Racing                 0
                  Bike - Extreme               0
                  Extreme Multi-Sport          0
                  Adventure /Expedition        0
                  Skydiving                    0
                  Freeriding /Base Jumping     0
                  Esports                      4
SPORTS APPAREL AND FOOTWEAR - BRAND LANDSCAPE MARCH 2019 - caytoo
KEY SPORTS MARKETING ACTIVITY
                                                                                                                                                                                                                   5

Examples of key sports marketing activity provides insight to the types of rights holders                                     Puma and Under Armour partner predominantly with clubs and athletes and do not
sports apparel brands partner with. Adidas and Nike dominate football as shown by                                             appear to be associated with any major global competitions. Along with investing in
partnerships with FIFA, the English Premier League and arguably two of the biggest                                            traditional sports, these brands use celebrity ambassadors to drive awareness in order to
football clubs in the world, Manchester United and Barcelona. Nike are very well                                              reach their target audiences. Adidas and Under Armour ambassadors Kylie Jenner and
established in basketball as major sponsors of FIBA and the NBA.                                                              Dwayne ‘The Rock’ Johnson have two of the top ten most followed Instagram accounts in
                                                                                                                              the world with 129 million and 134 million followers respectively.

               Brand                                  Major Global         Regional Events           Governance Body                     Clubs                Athlete Ambassadors            Other Ambassadors
                                                      Competition

                                               2019 FIBA Basketball
                                                                        English Premier League               NBA                     Barcelona FC                 Serena Williams              Colin Kaepernick*
                                                    World Cup

                                                                                  MLS
                                               2018 FIFA World Cup                                           FIFA                 Manchester United                 Lionel Messi                  Kylie Jenner
                                                                         (Major League Soccer)

                                                                               WNBA
                                                                          (Women’s National            Jamaica Olympic
                                                                                                                                    Ferrari F1 Team                  Usain Bolt                     Rihanna
                                                                        Basketball Association)          Committee

                                                                       VTB United League All Star
                                                                       Game (Russian Basketball                                     UCLA Bruins
                                                                                                     Welsh Rugby Union                                            Anthony Joshua          Dwayne ‘The Rock’ Johnson
                                                                                League)                                           (College Football)

                                                                                                              ECB
                                                 New York Marathon         London Marathon                                           Liverpool FC                 Kawhi Leonard                 Anton Krupicka
                                                                                                    (English Cricket Board)

                                                       2019 Reebok         Australian Crossfit      UFC (Ultimate Fighting
                                                                                                                                                                 Conor McGregor                    Gal Gadot
                                                      Crossfit Games        Championships              Championships)

* ATHLETE NOT COMPETING AT TIME OF DATA COLLECTION.
SPORTS APPAREL AND FOOTWEAR - BRAND LANDSCAPE MARCH 2019 - caytoo
RIGHTSHOLDER BRANDED SPORTS PRODUCTS
                                                                                                                                                                                     6

Sports apparel brands sell official branded rights holder merchandise to relevant fans.
This can be in the form of team wear, official match equipment or athlete inspired
footwear and apparel collections.

                       NBA Apparel Sponsor                                            Official match ball of the 2018 FIFA World Cup   Motorsport: Scuderia Ferrari F1 merchandise

                 Basketball: Steph Curry collection                                             Liverpool F.C Kit Sponsor                             UFC Apparel
SPORTS APPAREL AND FOOTWEAR - BRAND LANDSCAPE MARCH 2019 - caytoo
SPONSORSHIP - RECENT MAJOR ANNOUNCEMENTS
                                                                                                                                                                                                                                                 7

Nike bolstered its support of women’s sport announcing its new partnership with
England Netball in 2018. Japan’s up and coming tennis star Naomi Osaka’s impressive
season saw her sign Adidas’ largest ever ambassadorship offered to a female athlete.
Finally Reebok announced Gal Gadot (Wonder Woman) as an ambassador to help inspire
women into sport.
                                                                                         • Announced extension of deal to be the official NFL uniform sponsor        • 2018 FIFA World Cup
                                                                                          for a further 8 years (2020-2028)                                          • 10 year extension agreed with Real Madrid worth US$1.25b from 2020-2030
eSports attracted a number of sports apparel brands in 2018, including Nike which        • Dream Crazy campaign featuring NFL quarterback Colin Kaepernick           • Announced five-year Arsenal kit deal worth £300m beginning July 2019
announced their sponsorship of the League of Legends Pro League in China, along          • Signed first ever eSports League of Legends player Jian ‘Uzi’ Zihao       • Announced partnership with the Lawn Tennis Association
with signing their first ever eSports League of Legends player, Jian ‘Uzi’ Zihao. Puma   • Signed multi-year partnership with Chinese League of Legends Pro League   • Partnered with MLB star Aaron Judge after he left Under Armour

partnered with high profile eSports team Cloud 9 and New Balance were the presenting     • Announced a multi-year partnership with England Netball                   • Signed tennis player Naomi Osaka, the largest deal the brand has ever
                                                                                         • Official match ball supplier for UEFA Women’s Football                     offered a female athlete according to Business Insider
partner of the 2018 Formula 1 eSports Series.

Alongside partnerships with high profile football clubs including Manchester City, AC
Milan and the City Football Group (Exc New York City). Puma’s comeback in basketball
was cemented by becoming the official footwear partner of the WNBA and signing four
of the top 15 2018 NBA draft picks. Under Armour and New Balance also signed NBA
footwear deals.                                                                          • Signed four of the top 15 2018 NBA Draft picks including #1 Draft Pick    • Partnered with NBA all star Joel Embiid
                                                                                          Deandre Ayton to pave the way for the brand’s future in basketball         • Signed a deal to supply high performance footwear to the Canadian
                                                                                         • Partnered with high profile eSports team Cloud 9                           Olympic team
                                                                                         • Official footwear partner of the WNBA                                     • Designed US Speed Skating suits for 2018 Winter Olympics
                                                                                         • Announced kit deal with Manchester City and the entire City Football      • Partnership with Virgin Galactic
                                                                                          Group (excluding NY City) commencing 2019/20 season
                                                                                         • Announced David Silva, Romelu Lukaku and Luis Suarez as ambassadors
                                                                                         • Announced as AC Milan’s new kit supplier beginning 2019/20 season

                                                                                         • Signed NBA Superstar Kawhi Leonard to a multi-year deal (rejected         • Renewed contract with Conor McGregor
                                                                                          Jordan offer)                                                              • Announced Gal Gadot (Wonder Woman) as a brand ambassador to
                                                                                         • Made FIFA World Cup debut as kit sponsors of Costa Rica and Panama         help inspire women to embrace fitness as a means to become the best
                                                                                         • Presenting partner of F1 eSports Series                                    version of themselves
                                                                                         • Official footwear and apparel partner of the New York Mets and their      • Announced Cardi B as an ambassador
                                                                                          Citi Field ballpark
                                                                                         • Announced Liverpool player Sadio Mane as an ambassador
SPORTS APPAREL AND FOOTWEAR - BRAND LANDSCAPE MARCH 2019 - caytoo
SOCIAL MEDIA - INSTAGRAM AND FACEBOOK
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   Brands focus their social media efforts on visually engaging platforms - YouTube,                                         Most brands have multiple accounts within each social platform to enable targeting
   Instagram and Facebook - enabling product and content marketing to be showcased                                           of specific audiences. Nike dominates in terms of overall social following, followed by
   most effectively. Nike lead the way in overall follower numbers (considering primary                                      Adidas. Puma lags behind on following and use of different post types.
   brand accounts only) with 117.6m followers on Instagram and Facebook, though this
   doesn’t consider the many millions more followers they have across their sports specific
   handles i.e. Jumpman and Nike Basketball. Adidas came in second on overall following
   with Puma third.

                                           Brand Total Social Following
                                             (Instagram & Facebook)
                                                                                              FACEBOOK

                                                                                              INSTAGRAM

                       125   32
                                                                                                                                  @nike              @adidas              @puma             @underarmour         @newbalance          @reebok
                                                                                                            Main Brand
                                                                                                                                  85.6m               23.3m                9.3m                 7m                  3.1m               2.2m

                       100
                                                                                                                             @nikesportswear     @adidasoriginals    @pumasportstyle                                               @reebokclassics
                                                                                                          Major Sub Brand
                                                                                                                                  6.8m               32.5m               1.3m                                                           1.4m
                             85.6
                                                                                                                                                                                           @underarmouruk       @newbalanceuk
                                                                                                                                                                     @pumasouthafrica
                                                                                                                                                @adidasrussia 464k                              264k                 115k         @reebokuk 49.1k
FOLLOWERS (MILLIONS)

                                                                                                          Market Specific                                                64.3k
                        75                                                                                                                       @adidassar 576k
                                                                                                                                                                     @pumaturkiye 11.1k
                                                                                                                                                                                          @underarmourbrasil   @newbalanceindia   @reebokindia 192k
                                                                                                                                                                                                260k                14.9k

                                    35                                                                                       @nikelondon 745k    @adidasldn 1.5m
                                                                                                           City Specific      @nikenyc 587k      @adidasnyc 154k
                                                                                                                             @niketokyo 31.8k    @adidasasia 13.5k

                       50                                                                                                                                                                                                          @reebokwomen
                                                                                                                                                  @adidaswomen         @pumawomen         @underarmourwomen                            522k
                                                                                                          Gender Specific    @nikewomen 7.6m                                                                   @nbwomen 155k
                                                                                                                                                      2.9m                938k                   759k                             @reebokwomenuk
                                                                                                                                                                                                                                       30.1k
                                             20
                                                                                                                             @nikebasketball     @adidasfootball
                                    23.3                     10                                                                  10.5m               27.7m           @pumahoops 333k                           @nbhoops 22.6k
                        25                                                                                Sports Specific
                                                                                                                              @nikefootball      @adidashoops        @pumafootball 3m                          @nbbaseball 418k

                                             9.3                          9.2           7.9                                      36.9m               2.9m

                                                             7
                                                                          2.2           3.1               Product Specific
                                                                                                                                @jumpman          @adidasterrex
                                                                                                                                                                                                               @nbrunning 126k
                                                                                                                                  17.2m              230k

                        0

                                                    BRANDS                                                                   sample of brand instagram handles gather 14.03.19
SPORTS APPAREL AND FOOTWEAR - BRAND LANDSCAPE MARCH 2019 - caytoo
SOCIAL MEDIA - YOUTUBE
                                                                                                                                                                                                               9

YouTube is a key channel utilised by apparel brands, with Adidas’ 2018 See Creativity                                  Of the top 10 most viewed videos by brands on YouTube, Nike and Adidas triumph
campaign video leading with 49 million views. Sports rights holders should consider how                                with 114m and 91m views respectively. Puma, whilst having 57.3m views of its top
their sport can contribute engaging video content in collaboration with apparel brands.                                10 videos relies on content produced recently over the last few years - its numbers
                                                                                                                       are not driven in entirety by 2018 content. Under Armour deserves recognition for a
                                                                                                                       strong YouTube strategy - 48m views of its top 10 most viewed videos, all in 2018.

                                                                                                  Youtube Views
                                                                                  (Top 10 Most Viewed and Highest Ever Viewed)                                  TOP 10 MOST VIEWED VIDEOS

                                           28m                                                                                                                   HIGHEST EVER VIEWED VIDEO

                                                                    49m
                         150

                                         DREAM CRAZY

                                                                 SEE CREATIVITY

                         100
                                                                                             9.1m
                                                                                                                        10m
      VIEWS (MILLIONS)

                                                                                                                                                     6.9m
                                                                                                                                                                                               9m
                                                                                           PUMA IGNITE
                         50
                                                                                                                  WELCOME TO YOUR NEW
                                                                                                                   RUNNING EXPERIENCE

                                                                                                                                               TAKE A DIFFERENT PATH

                                                                                                                                                                                      FEARLESSLY INDEPENDANT

                          0

                                                                                                         BRANDS
SPORTS APPAREL AND FOOTWEAR - BRAND LANDSCAPE MARCH 2019 - caytoo
EXAMPLES OF CONTENT MARKETING
                                                                                                                                                                                                             10

                          Dream Crazy                                              Adidas: Creativity is the Answer                                                 #Runthestreets

In its most recent campaigns, Nike has explored the theme of        Adidas’ 2018 campaign has creativity at its core, visually exploring   Puma’s #Runthestreets campaign celebrates urban communities
inspiration, celebrating individualism, resilience and people’s     how it transcends boundaries, inspires and unites individuals from     through cultural mash-ups, where passion and inspiration meet
quest to be the best.                                               all areas and backgrounds.                                             the streets.

The ‘Nothing Beats a Londoner’ campaign looked to inspire           The campaign brings together artists, musicians, sponsored             The London edition features Vibbar, a diverse creative collective
and celebrate London’s city culture along with the character        athletes and brand ambassadors to represent an empowered               who ‘inspire, shape and finesse the streets’ against a bleak urban
and identity of its population, each united through their love of   global community of creatives, linked by the Adidas brand. Their       backdrop. The themes of owning your success and pioneering a
sport.                                                              environmental campaign, Run For the Oceans, also features.             way forward which buck cultural norms are stark.

More recently, Dream Crazy has captured the spirit of female                                                                               In one other edition it brings together influential faces of street
empowerment in sport, marking the start of Nike’s celebration of                                                                           culture and art from India and Eastern Europe. Together with
women ahead of the Fifa World Cup this year and putting game-                                                                              Puma, they are limitless.
changing female athletes in the spotlight.
EXAMPLES OF CONTENT MARKETING
                                                                                                                                                                                                    11

                 All Day Hustle. Project Rock.                                       Fearlessly Independent                                                Storm The Court

‘We break ourselves down so we can build ourselves back up even   New Balance’s most recent campaign was all about independence.   The Adidas-owned brand has unveiled its largest global campaign
stronger.’                                                                                                                         in five years, bringing together its three product areas, performance
                                                                  ‘declare your style’                                             and lifestyle under one brand campaign for the first time.
Under Armour’s campaign with Dwayne ‘The Rock’ Johnson            ‘declare your drive’
centres around not taking shortcuts. It delivers the messages     ‘declare your future’                                            ‘Storm The Court’ was designed to help Reebok reclaim its voice
that progress only comes through pain and that training leads     ‘declare your path’                                              and grab the attention of younger consumers by celebrating
to success, meeting Under Armour’s continuing drive to bring      ‘declare your victory’                                           being daring and different. Through a street basketball match, it
training to the masses, not just elite athletes.                  ‘declare your craft’                                             encourages people to be the thing no-one sees coming.
                                                                  ‘declare your independence’

                                                                  All about owning you, your successes and what makes you great.
VALUE POSITIONING
                                                                                                                                                                                     12

Brands values provide an insight into the brands personality, DNA & strategic objectives.
In these diagrams, brand values have been groupe and scored enabling ease of
comparison between brands from a quantitive perspective.

             High Performance & Innovation                                                  High Performance & Innovation                         High Performance & Innovation

Attitude                                     Altruism                            Attitude                                   Altruism   Attitude                                   Altruism

                Everyday Accessibility                                                         Everyday Accessibility                                Everyday Accessibility

             High Performance & Innovation                                                  High Performance & Innovation                         High Performance & Innovation

Attitude                                     Altruism                            Attitude                                   Altruism   Attitude                                   Altruism

                Everyday Accessibility                                                         Everyday Accessibility                                Everyday Accessibility
SALES PERFORMANCE
                                                                                                                                                                                                                                13

A look at the 2018 financial performance of the featured brands on a global level. With                          In their attempts to conquer new, frontier markets and in the hunt for revenues and
brands competing to sell their products in traditional mature markets as well as new                             mass appeal, China and the Asia Pacific region represent the new territory where
untapped regions.                                                                                                brands are channeling efforts to attract new audiences. Perhaps more interestingly,
                                                                                                                 from this set of data, is how the biggest brands, Nike and Adidas, are flat in their
                                                                                                                 respective domestic markets compared to their rivals.

                                                            Europe/Middle     North          South     Latin      Asia Pacific
       Description              Brand           Europe                                                                            Asia Pacific   China                                   Analysis
                                                             East/Africa     America        America   America   / Latin America

                                                                                                                                                           • Q4 revenues for Nike brand were +14% led by Consumer Direct
                                                                                                                                                             Offense / digital push.
                                                                                                                                                           • Nike & Converse sales in America accounted for 42% of total group
  Full year 2018 revenues                                       +9%            -2%                                  +10%                         +18%        revenues.
                                                                                                                                                           • Jordan Brand in Europe has been a phenomenal success in Europe,
                                                                                                                                                             but has dragged perfmance in North America.

                                                                                                                                                           • Adidas have doubled the size of its business in North America in
                                                                                                                                                             the last three years.
                                                                                                                                                           • CEO says the brand relied too much on short term trends for
  Full year 2018 net sales                                                                                                                                   fashion shoes, not enough on sports performance gear.
                                                                                                                                                           • Reported strong growth in "sport inspired styles" but steep
                                                                                                                                                             decline in football.
                                                                                                                                                           • E-commerce revenues grew 36% to over EUR 2bn in 2018.
                                                 -0.4%                        +14.9%                  +5.6%                         +14.9%
                                                                                                                                                           • Reebok returned to profitability in 2018.
                                                                                                                                                           • In 2018 the group closed 35 of its Reebok-branded stores in the
                                                                                                                                                             US, roughly halving the brand’s retail footprint.
                                                                                                                                                           • Brand sales were down 3% versus 2017.

                                                                                                                                                           •   EMEA strength from France, Spain and UK.
                                                                                                                                                           •   APAC sales driven by China and Korea.
  Full year 2018 net sales                                     +11.4%                  +16.9%                                       +28.8%                 •   Net sales rose in 2018 by 17.6%.
                                                                                                                                                           •   Apparel the main driver of sales growth.
                                                                                                                                                           •   Footwear exceeded sales of EUR 2 billion for the first time.

                                                                                                                                                           • International revenues increased 4% in 2018.
                                                                                                                                                           • Direct to consumer revenue represented 41% of total.
                                                                                                                                                           • Promotional activity in North America was down roughly one third
       Q4 Revenues                                              +32%           -6%                    -15%                           +39%                    in 2018 versus 2017.
                                                                                                                                                           • They now have over 660 locations in APAC with the majority in
                                                                                                                                                             mainland China.

     Private Company                                                                                            not available
NIKE STRATEGIC FOCUSES
                                                                                             14

Nike’s current strategy aims to broaden the brand’s appeal to women. CEO Mark Parker
described 2019 as the “true tipping point” for women’s wear, adding that Nike have
doubled its investment in innovation, “aggressively shifting” resources towards the
women’s business.

The strong theme running throughout the brand’s strategy is female empowerment through
sport. This is highlighted by their “Dream Crazy” campaign, narrated by 23-time Grand Slam
champion Serena Williams and designed to promote exceptional female athletes.

The advertisement includes the US Women’s national football team, chiming with the
recent announcement of their three-year partnership with UEFA to supply the official
match ball for the Women’s Champions League and Women’s Euro championships.

Another innovative first was the unveiling of the Nike Pro Hijab, a campaign spearheaded
by Zeina Nassar, a German Muslim boxer. Nike’s association with Nassar, who played
a major role in overturning the International Boxing Association (AIBA) guidelines
on allowing female boxers to wear hijabs, sees the brand maintaining an unflinching
presence in potentially sensitive areas of sport.
ADIDAS STRATEGIC FOCUSES
                                                                                               15

Adidas has concentrated its global marketing drive on six major cities: New York,
London, Paris, Tokyo, Los Angeles and Shanghai.

Sales Director Roland Auschel explained that Adidas sees trends being born in
metropolitan centres and if the brand is successful in these cities, it will be sought after
worldwide. Within these locations Adidas looks to create sporting communities, launch
large sporting events and attract athletes to join and compete within them.

Another key element of the strategy is what they describe as their “open source
approach”. In leading up to 2020 the brand has forged successful partnerships with
key figures from the world of music, including Pharrell Williams, Kanye West and
Rita Ora. These artists have no relevance to the sports industry but are perceived as
strong influencers for the younger generation and therefore a way Adidas can target a
contemporary consumer group.

In addition, Adidas has shown an element of collaborative retrospective in its strategy of
pairing up ground-breaking music artists with key historical characters and their
products lines, an example being the icon Stan Smith featured in a shot with Pharrell
Williams.

Adidas have also identified North America as the single biggest growth opportunity for
their brand, whilst improving digital interactions remains an additional internal focus, to
become faster, better and more efficient in all parts of their organisation.
PUMA STRATEGIC FOCUSES
                                                                                            16

Since 2013, Puma’s mission has been to be the “Fastest Brand in the World”, a statement
extending to all areas of the business including spotting new trends, increasing speed
within their business and the improvement of their product ranges: Brave, Confident,
Determined and Joyful.

Puma has five brand priorities:

Brand Heat: Connect with trendsetters and fashion icons such as Selena Gomez & Cara
Delevingne.
Product: Keep Innovation at the heart of their product design, which are developing with
eye-catching designs and styles.
Women’s: Use the foundations of Puma’s fashion ethos: “Where the gym meets the runway”
Distribution: To strengthen partnerships with retailers and maximise Puma’s contribution.
Organization: Ensure greater efficiencies within the business infrastructure.

Puma have also recently re-entered the North American basketball scene with a footwear
collaboration with rapper and music producer, Jay-Z.
UNDER ARMOUR STRATEGIC FOCUSES
                                                                                                 17

“To make all athletes better through passion, design and the relentless pursuit of innovation”

As one of the younger of the major sports apparel brands, it’s unsurprising that Under
Armour’s business strategy to “Protect This House” is focussed around developing a
“smarter, faster and stronger business”.

CEO Kevin Plank wants to make sure that “every product does something,” reflecting
their original mantra of boosting athletic performance.

A key strategy for Under Armour is to expand their direct-to-consumer offering and open
more Under Armour retail stores, to provide a more “holistic expression and experience”
for customers. On a similar track, as part of their sales push Under Armour is looking to
partner with Amazon to utilise the e-commerce platform as a distribution outlet.

In January 2019 Under Armour also announced it was to become the Technical
Spacewear partner of Virgin Galactic, a boundary-pushing collaboration on all levels.
NEW BALANCE STRATEGIC FOCUSES
                                                                                            18

New Balance’s recent campaign entitled “Declare Your Independence” saw the brand
pushing the theme on individuality and courage. With the tag line “Fearlessly Independent
since 1906”, the ad campaign has advertised its proud traditions as a family run business
which champions individuality, self-confidence and courageous lateral thinking.

“Made to Move” is the slogan relating to New Balance’s corporate social responsibility
objectives. The website section features prominent internal and external directives, from
environmental compliance to waste reduction efforts and supplier sustainability.

They pride themselves on being the only footwear manufacturer still making shoes
in America, with five US factories and one in the UK. CSR is an element of corporate
that some brands have fallen foul on, so New Balance have been keen to promote this
through extensive reporting on their own website.

Moving Forward, Giving Back
Moving The Environment Forward
Moving Forward Together

The New Balance angle is somewhat alternative. They see themselves as challenging the
conventions of the sporting industry. A curious example was their Strava Pub, set up
in London ahead of the annual London Marathon. Complete with darts board and a
jukebox, the only currency accepted in payment for alcohol was miles ran.
REEBOK STRATEGIC FOCUSES
                                                                                             19

Reebok’s strategy has utilised a theme of 80s and 90s nostalgia for a new campaign
“sport the unexpected”. As a self-proclaimed “alternative” and challenger brand, Reebok
is chasing the pack on all levels.

The brand is setting up a new Headquarters in Boston, closing stores that were
detrimental to brand value and launching its own internal influencer network, as part of a
major push to identify closely with fitness. They have brought in a Manager of Influencer
Marketing to drive the focus on social media and to reach audiences via professional
digital influencers.

One specific campaign #perfectnever featuring international model Gigi Hadid,
invited female followers on Twitter and Instagram to show their true selves by
highlighting imperfections.
CHINA DEEP DIVE
                                                                                                                                                                                                                                             20

China’s 2016-2020 National Fitness Plan aims to get 435 million people - a third of
its population - participating in regular exercise by 2020. Along with government
investment in sport, gym memberships in China have doubled since 2008 and the
number of marathons has grown six fold over the past five years. With China’s 415 million
millennials increasingly embracing the fitness lifestyle, now is an ideal time for sports
apparel brands to increase their visibility within the Chinese market. Brands already
established in China are engaging in different initiatives to help increase sales, including
collaborating with high profile sports stars, partnering with popular digital platforms,
targeting specific sports and opening multi purpose fitness hub stores.

                                                                                                                                                                 • Puma has its sights set on making China its top market by 2022 and
          • Nike is driving growth and awareness through the flagship retail      • China’s new found passion for running prompted Adidas to include China
                                                                                                                                                                  aims to open 400-600 stores each year.
           platform, Tmall and, a multi-purpose social media and mobile payment    as one of the locations for the Parley Run for the Oceans campaign. The
                                                                                                                                                                 • Bloomberg found that the NBA is six times more popular in China
           app, WeChat.                                                            initiative helps to educate consumers about the environment and attracted
                                                                                                                                                                  than the three largest European football leagues combined.
          • Nike have created a combined NikePlus and Tmall account option and     over 500,000 Chinese runners.
                                                                                                                                                                 • Puma signed four of the top 15 2018 NBA draft picks, offering them
           launched a partnership with WeChat running promotions through the      • With the announcement of the National Fitness Plan, Adidas signed
                                                                                                                                                                  the immediate chance to become the face of Puma basketball.
           app, reaching its 1 billion monthly active users.                       a three year deal to create football programs in 20,000 elementary and
                                                                                                                                                                 • Four Chinese labels; Li-Ning, Anta, Peak and 361 degrees have
                                                                                   middle schools across China.
                                                                                                                                                                  gradually acquired NBA ambassadors to be the face of their brand.
                                                                                  • Adidas often collaborates with popular Chinese underground musicians,
                                                                                                                                                                 • Dwyane Wade signed a lifetime deal with Li-Ning and Klay
                                                                                   DJs and artists to position themselves as trend-setters.
                                                                                                                                                                  Thompson signed a 10 year deal with Anta in 2017.

          • Approximately half of Under Armour’s Asia-Pacific sales are from
           China, valued at roughly $434m in 2017.
                                                                                  • A 12 minute video released in 2016 for the brand’s 110th birthday and      • Reebok is planning to open 500 FitHub stores in China by 2020 with the
          • To expand its direct-to-consumer offering, Under Armour opened
                                                                                   featuring Chinese musical godfather, Jonathan Lee, had over five million     aim of becoming the nation’s’ leading fitness brand.
           hundreds of new retail channels in 2017 and 2018 including a 20,000
                                                                                   views within the first five days. The campaign was titled ‘Every Step       • The FitHub concept offers customers a wide range of experiences
           square-foot space in Beijing - its largest store in Asia.
                                                                                   Counts’ and integrates traditional Chinese philosophy with storytelling.     including fitness classes, events and a retail store consisting of experts
          • NBA superstar and brand ambassador, Steph Curry, helps drive
                                                                                  • Chinese consumers embrace the ‘Made in USA’ label to associate with         providing advice on the right gear for each workout.
           brand awareness in the Chinese market through promotional tours and
                                                                                   quality and more of a fashion label than sportswear.
           appearances for his signature apparel line during the NBA offseason.
TRENDS
                                                                                                                                                         21

• China Land Grab
  With a growing middle class and government backed initiatives to encourage physical activity, the sports apparel market is all to play for in China.

• Greater focus and investment in women’s sports to target women’s market
  A growth in demand for women’s products has been reported across the board. Brands are increasingly looking to associate themselves as
  supporters of female empowerment and physical activity, whilst leveraging rights holders and female athletic influencers to engage new consumers.

• Establishing as a values-driven brand
  There seems to be a shift away from brands simply responding to socio-political trends towards being the trend-setter and conversation
  starters, largely evident through bold and provocative content marketing. Nike has proven itself unafraid of tackling contemporary cultural
  discussions including racism, sexism and class through sport. You need a certain level of brand power to even be able to do this - but
  this skill demonstrated by Nike and to a lesser extent Adidas and Puma could continue to eat market share from the smaller players - as
  consumers respond to brands who can literally be their values.

• Sport, music and arts collaboration for experiential offering
  Sports rights-holders are strategically diversifying to become more modern and experiential. By bringing sports together with music,
  apparel brands are well positioned to capitalise from activations within these formats and all parties benefit from the broadened consumer
  audience. It’s a win-win-win option.

• Environment & Sustainability
  An established Corporate Social Responsibility strategy is a useful way brands can align themselves with meaningful issues to society as
  a whole. Large brands in particular now have to be seen to give back. In 2018, Adidas produced five million pairs of trainers from recycled
  plastic with the aim of doubling that in 2019. They paired this with the internal CSR initiative of plastic free offices, ultimately leading to 40
  tons of avoided single use plastic per year. This has not only boosted sales but improved brand empathy and equity.

• Authenticity
  Millennial consumers increasingly engage with brands who hold authenticity in high regard. When a brand is perceived to be trustworthy,
  their offering has greater appeal. New Balance in particular promotes its authenticity as a sign of quality, having kept their ‘Made in the
  USA’ product status.

• Basketball
  More brands are competing with Nike, Adidas and Jordan for the signature of NBA players to help grow brand awareness in China.
REFERENCES
                                                                                                                                                                                                                                                                     22

• Adidas Q3 2018 Results, 7 November 2018                                                                                    • Nike. NIKE, Inc. Reports Fiscal 2018 Fourth Quarter and Full Year Results, 28 June, 2018
  https://www.adidas-group.com/media/filer_public/9d/2d/9d2dd47c-6bd3-4923-ab85-4701cefce69f/q3_2018_presentation.pdf          https://news.nike.com/news/nike-inc-reports-fiscal-2018-fourth-quarter-and-full-year-results

• Adidas, Group Strategy, accessed 12 March 2019                                                                             • Nike: Dream Crazier, 2018
  https://www.adidas-group.com/en/group/strategy-overview/                                                                     https://www.youtube.com/watch?v=whpJ19RJ4JY

• Adidas: Creativity is the Answer, 2018                                                                                     • Nike: Nothing Beats a Londoner, 2018
  https://www.youtube.com/watch?v=eOqjdlGYVwI                                                                                  https://www.youtube.com/watch?v=mEB1C59hCvs&t=31s

• Bloomberg. Nike Climbs as Earnings Top Estimates, 20 December 2018                                                         • Puma, Consolidated Financial Statements, Overview 2018.
  https://www.bloomberg.com/news/articles/2018-12-20/nike-climbs-as-north-america-china-help-earnings-top-estimates            https://about.puma.com/en/investor-relations/

• Business Insider. Nike ignited a firestorm of fury with its new Colin Kaepernick ad, but it's still a brilliant strategy   • Puma, Investor Presentation 2019
  https://www.businessinsider.com/nike-colin-kaepernick-deal-strategy-2018-9?r=US&IR=T                                         https://about.puma.com/en/investor-relations/presentations

• Cloud9. Cloud9 welcomes new partner Puma for 2018 LCS Spring Split, 14 January 2019                                        • Puma. Puma delivers strong growth in sales and profitability in 2018
  https://www.cloud9.gg/blogs/news/cloud9-welcomes-puma                                                                        https://about.puma.com/en/newsroom/corporate-news/2019/2019-02-14-puma-full-year-and-q4-2018-results

• The Drum. Adidas China reports 26% growth as Asia Pacific also increases 15% in Q1, 04 May 2018                            • PUMA LONDON | WE #RUNTHESTREETS, 2017
  https://www.thedrum.com/news/2018/05/04/adidas-china-reports-26-growth-asia-pacific-also-increases-15-q1                     https://www.youtube.com/watch?v=mx-uLz_rVhA

• England Netball. Nike partnership to take the sport to the next level, 27 November 2018                                    • PUMA INDIA x EASTERN EUROPE | #RunTheStreets, 2017
  https://www.englandnetball.co.uk/nike-partnership/                                                                           https://www.youtube.com/watch?v=DvyBnqKIYrE&t=24s

• Fashion United. Puma Q4 profits improve, sales increase by 20 percent, 15 February 2019                                    • Quartz. While it struggles in the US, Under Armour is thriving around the world, 13 February 2018
  https://fashionunited.uk/news/business/puma-q4-profits-improve-sales-increase-by-20-percent/2019021541607                    https://qz.com/1206001/under-armours-ua-international-business-grew-in-2017-especially-in-china/

• New Balance, ‘Fearlessly Independent’ 2018                                                                                 • Reebok | Storm The Court, 2019
  https://www.youtube.com/watch?v=KYps0oD_7cQ                                                                                  https://www.youtube.com/watch?time_continue=70&v=wtz9bt9g7_o

• New Balance, Newsroom, accessed 12 March 2019                                                                              • Under Armour. Under Armour Reports Fourth Quarter And Full Year 2018 Results; Reiterates 2019 Outlook, 12 February 2019
  https://www.newbalance.com/about-new-balance-content-assets/inside-nb-press-releases.html                                    https://about.underarmour.com/investor-relations/news-events-presentations/corporate-news/id/20406

• New Balance, Inside NB, accessed 12 March 2019                                                                             • Under Armour. Under Armour Presents 2023 Strategic Growth Plan; Updates 2018 And Provides Initial Full Year 2019 Outlook, 12 December 2018
  https://www.newbalance.com/about-new-balance-content-assets/inside-nb-overview.html                                          https://about.underarmour.com/investor-relations/news-events-presentations/corporate-news/id/20261

• Nike. 2018 Form 10-K, 31 May 2018                                                                                          • Under Armour. Investor Toolkit, accessed March 2019
  https://s1.q4cdn.com/806093406/files/doc_financials/2018/ar/docs/nike-2018-form-10K.pdf                                      https://about.underarmour.com/investor-relations/resources

                                                                                                                             • Under Armour: ‘All Day Hustle. Project Rock’, 2018
                                                                                                                               https://www.youtube.com/watch?v=HSY5qd8Dd5k
23

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