Overview which shop according to trends. The world

Overview of the
Industry (Sportswear and Sports Apparels Retail Industry).

The market
of the global sport attire ought to collect $186.4 million in 2020, registering
a CAGR of 5.3% throughout the forecast amount 2015 – 2020. Sportswear markets
are chiefly known within the coaching sessions or while playing a sport. It is
intended to supply comfort and suppleness in physical movements. The sportswear
market on a worldwide scale has fully fledged a major growth as a result of the
growing awareness of health and therefore the increase in fitness activities
like aerobic exercise, swimming, career, and yoga among the growing customer
base. The markets are further being supplemented with the increasing
participation of women and children in sports and activities. Researches
further supported that claim and showed that North America was the most
important region for generating financial gain within the market wearing sport
apparel at the worldwide level in 2014. However, Asia Pacific would be the region
manufacturing the most financial gain in 2020, as a result of the rise of
financial gain and therefore the improvement of living conditions within the growing
economic countries like China and India. However, the provision of counterfeit
product of poor quality has restricted the expansion of the market of world
sport. Several key players operate their units within the market like Greek
deity, Inc., Ralph Lauren Corporation, Umbro, Ltd., row, Inc., Lululemon Athletica
Incorporation, New Balance Athletic Shoe, Inc. and Columbia Sportswear Company have
adopted numerous ways that contribute to the growth and bigger market share by
increase their patronage. Product launches, partnerships and acquisitions are
the prime growth strategies adopted by these companies to sustain the intense
competition in the market. In July 2014, Adidas entered into partnership with
Manchester United and in 2015 Chelsea with Nike, two of the most popular soccer
clubs worldwide, to push their product. This has helped the companies to
strengthen their position within the market in numerous places.

The Indian
market garb has evolved from niche segment that was supposedly just for the
athletes to a burgeoning
consumer sector which shop according to trends. The world has raised full fledged
in recent years, because of the expansion of financial gain, dynamical
lifestyles and therefore the entry of foreign players with easement in
regulations. The growing craze of cricket, combined with the growing interest
in sports like soccer, hockey and tennis, has contributed to the expansion of
useful garb market within the country. Additionally to the present, the trend
of the utilization of leisure vesture has extended the definition of target
customers of the massive brands. Some brands conjointly provide the collections
to retort to the present request for garments. The marketplace for the retail
sale of vesture in India is calculable on the idea of365.8 million and is
anticipated to grow at a CAGR of thirty three percent throughout 2010-2014. The
market includes sportswear, footwear and accessories, where footwear is the
foremost vital product that sells, representing concerning sixty per cent of
the entire market. The phase of the clothes of the country is essentially non-unionized
employees organized players represent solely concerning half portion of the
market. Franchised exclusive brand outlets (EBOs) and multi-brand outlets form
the core retail channels for sportswear in India. Thus, it’s necessary to research
and analyze market trends through the analysis of the competition that consists
of tools like the SWOT analysis to satisfy client demand and maintaining the brand’s
profitability.

In 1994, Nike
has celebrated the Indian market through a contract with the Sierra Industrial
Enterprises Pvt. Later, the Society has created a subsidiary within the
exclusive property of India in 2004.

Today, the
organized sports in India of the market is dominated by the “Big
Four” (Adidas, Reebok, Nike and Puma) global players, who have about
eightieth percent of the market shares of the organized market, with many
others, like Fila, Lotto Asics and Skechers mounting their presence.

These brands
face competition from multi-brand sportswear retailers such as Planet Sports and Royal Sporting House
(RSH).

Global Sports Apparel Market
Segmentation

The report has
analyzed the garb market based on its end users, mode-of-sale and geography
division. Based on mode-of-sale, the market is fragmented to retail shopee and
e-stores. Retail stores dominate the market by mode-of-sale. This is the most
common channel of sale for various market competitors. Rising inclination towards
trendy sports apparel and favorable demographics have boosted the growth of the
market. Numerous companies are focusing on setting up retail and company owned
stores to increase their product sales which led to the growth of this category
of the market. North-America is the market leader in sports attire retail
stores market however; Asia-Pacific is expected to grow at the highest growth
rate. The future growth is expected to come from the e-stores and sales have
witnessed a sustainable growth in the past few years owing to booming
popularity and diverse penetration of internet and availability of a wide range
of varied product line at a discounted price.

BY END USER

Ø  Men

Ø  Women

Ø  Kids

BY MODE OF SALE

Ø  Retail stores

Ø  Supermarkets

Ø  Brand outlets

Ø  Discount stores

Ø  Online stores

BY GEOGRAPHY

Ø  North America

Ø  Europe

Ø  Asia-Pacific

Ø  LAMEA

 

 

 

Retail Policy in India

Retail:
Multiple Regulators

•       
FDI
isn’t allowed in multi-brand retailing

•       
100%
FDI is allowed in cash and carry wholesale trading

•       
Since
2006, FDI of up to 51% is allowed in a single-brand retailing – FIPB approval

§   only single brand products could be sold

§   Products should be sold under their brand
internationally

§   They would only cover products which are
branded during manufacturing and

§   Any addition to product’s category line to be sold
under “single brand” would

§  Require fresh approval from the
government.

•       
FDI
up to 100 per cent with FIPB approval is allowed for trading of items sourced
from

§   small-scale sectors

§   test marketing

§   trading of items for social sectors

§   Trading of hi-tech, diagnostic items, medical and

§   Domestic sourcing of products for exports
subject to Policy

•       
FDI
up to 100 per cent is permitted in e-commerce activities – B2B activities

•       
FDI
up to 100 per cent is allowed for manufacturing – wholly-owned subsidiaries can
have retail outlets

•       
100%
FDI in franchisee and commission agent services – RBI approval

FDI not an Entry ban – Multiple
Routes

•       
100%
FDI in whole sale cash and carry is most suitable for volume based business

•       
Direct
selling is a part of wholesale trading where potential route for sports and
fitness goods retailers lies

•       
Non-store
formats like telemarketing is also viable

•       
Most
foreign retailers enter through exclusive licensing and distribution agreements
e.g. Lotto Sports Italia

•       
Wholly
owned subsidiary through setting up manufacturing e.g. Nike, Reebok, Adidas,
Asics

•       
Franchising
is also a common mode to increase retail footprints in the market

 

 

 

 

 

 

 

 

 

 

 

 

Market Size of Sportswear Retail:

Sportswear / Sporting goods companies
ranked by worldwide revenue in 2015 (in billion U.S. dollars)

 

Top Sportswear/Sports Apparel Brands
are as under:

Ø  Nike.

Ø  Puma.

Ø  Adidas.

Ø  Reebok.

Ø  Under Armour.

Ø  Skechers.

Ø  Asics.

 

Nike

Nike, Inc. is the world’s largest supplier and also
manufacturer of apparel, athletic shoes and other various sports
equipment. The company has employed about 70,700 personnel
worldwide in 2017, and the revenue they generate
globally is more than 32 billion U.S. dollars. The North American region
of Nike has generated the largest portion of the company’s revenue in that
year; almost 15 billion U.S. dollars, with the Oregon based company’s athletic
footwear segment only, generated approximately 9.3 billion U.S. dollars of that.
Nike attributes a lot of its success to the brands worldwide marketing campaign
which uses various sponsorship agreements with celebrity athletes like Cristiano
Ronaldo (football), Tiger Woods (golf) and professional sports teams like
Manchester City, Indian Cricket team and college athletic teams to use their
products and in return to promote their technology and design. In 2013, Nike spent nearly about 1.1 billion U.S.
dollars on advertising in the United States alone.
As a result, Nike was and will continue to be one of the most popular brands
amongst men and women when it comes to athletic apparel worldwide. 

 

Key Figures

Values

Nike’s revenue
worldwide

$32,376m

Nike’s net income
worldwide

$3,760m

Nike’s footwear
revenue in North America

$9,299m

Number of Nike’s
employees worldwide

70,700

Total number of
Nike retail stores worldwide

1045

Athletic Footwear
and Apparel Market

Values

Athletic footwear
sales of Nike

$90m

Athletic footwear
sales of Adidas

$25m

2020 forecast of
Nike’s global market share

27.20%

 

 

Adidas

Adidas AG is the largest sportswear manufacturer in Europe
and the 2nd largest in the world as of now. The company has employed
approximately 55,555 people workforce worldwide in 2015.
The Adidas Group’s worldwide annual sales have amounted to about 16.92
billion Euros in 2015. In that year as well, the North American region of
the Adidas Group generated 21 percent of the company’s retail net sales.
Footwear and apparel are two of the Adidas Group’s biggest segments. In 2015,
the company produced 301
million pairs of shoes worldwide and also 364 million units of
sports apparel. As a result, Adidas has become one of
the most popular brands amongst consumers when it comes to sportswear
worldwide. 

 

Adidas Overview

Values

The adidas Group’s
net sales worldwide

€16,915m

Net sales of
adidas brand worldwide

€13,939m

Net profit of
adidas

€640m

Number of retail
concept stores of adidas Group worldwide

1,698

Number of
employees of the adidas Group worldwide

55,555

Adidas Footwear
& Apparel

Values

The adidas Group’s
footwear production worldwide (pairs)

301m

Revenue from
footwear segment of adidas

$9.13bn

Worldwide athletic
apparel revenue of adidas

$7.97bn

The adidas Group’s
apparel production worldwide

364m
units

 

Puma

Puma is a multinational company, headquartered in
Herzogenaurach, Germany, that produces athletic sportswear. In 2014, Puma’s brand
sales amounted to about 3.17 billion euros worldwide. The Americas
accounted for 36.8 percent of Puma’s global brand sales that
year. The Puma brand is broken down into three primary segments: footwear,
apparel and accessories. In 2015, the footwear
segment generated about 1.51 billion euros of Puma’s total sales worldwide.
The global sports and fitness clothing industry is highly fragmented, with many
brands competing, from basic discount brands to high-end fashion names. Even
well-established brands have to work hard to maintain their share of the
market. Consumers are demanding more versatile wear with wider functionality,
which means retailers continue producing new styles of sports apparel for men
and women. In some instances, sports apparel companies, like Adidas and Puma,
have begun collaborating with fashion designers in order to produce new styles
which will broaden their product lines. Puma has a long-term mission of
becoming the most desirable
sport lifestyle company in the world. Describing
themselves as the ‘blue mountains’, Puma has been trying to incorporate more
edge, creativity and uniqueness to their designs which is evident with their
collaborations with designer fashion names such as Sergio Rossi and Alexander
McQueen. 

 

 

Puma Overview

Values

Puma’s
consolidated sales

€3,387.4m

Number of Puma
employees

11,351

Number of Puma
stores worldwide

540

Footwear and
Apparel

Values

Puma’s footwear
sales worldwide

€1,506.1m

Puma’s apparel
sales worldwide

€1,244.8m

Puma’s sales of
its accessories segment worldwide

€636.4m

 

Worldwide Athletic Apparel Revenue of Athletic Apparel Vendors in
2011 (in billion USD)

Athletic Footwear Global Market
Shares

Global Revenue of Adidas, Nike and
Puma from 2006 to 2015 (in Billion Euros)

 

Net
Income of Sports Equipment manufacturers Adidas and Puma from 2006-2015(in
million Euros)

Revenue of footwear segment of Nike,
Adidas and Puma from 2010 to 2016 (in billion USD)

 

Adidas Revenue H1 2015 and H1 2016,
by Region (in million Euros)

 

The Adidas Group’s net Sales
worldwide from 2000-2015(in million Euros)

Brand Value of the Sports Company
Nike  from 2012-2016(in billion USD) Source:

Brand Value of Adidas

Previous Close:

$78.90

Volume:

26.56K

Market Cap:

$31.61B

Enterprise Value:

$19.74B

Last Quarterly Filing:

30-Sep-16

Beta (5yr):

1.03

Shares Outstanding:

400.62M

Revenue:

$20.79B

Gross Margin:

46.25%

Net Margin:

5.31%

EPS:

$2.69

Price-to-Earnings:

$2.58

Price-to-Book:

9.41

Analyzing the Prospects of Nike’s
Geographic Segments

o   Nike in North
America

§  Most of Nike’s (NKE)
incremental revenue was recorded in its North America market, Nike’s largest
geographical segment. Nike derived ~44% of its revenue from North America in
1H15. In contrast, peers Lululemon Athletica (LULU)
and Under Armour (UA) derive over 90% of their revenues from the
North American market. Nike’s reported North American revenue grew 13.8%
year-over-year to $6.8 billion.

§  Revenue
gains were a result of retail expansion in the
company’s direct-to-consumer (or DTC) channel, 10% store comps growth in
1H15, and higher e-commerce sales. Nike’s market share also
expanded in key product categories.

Ø  Overseas markets

o   Nike’s
performance outside North America in 1H15 was mixed. Revenue showed
above-average growth in Western Europe and Greater China—both key markets for
Nike. Western Europe and Greater China contributed 4% and 2%, respectively, to
the overall growth in revenue. Western Europe is Nike’s second-largest segment,
accounting for 19.7% of revenue. Reported revenue grew at 27.4%
year-over-year to $3.0 billion in 1H15. Nike has been expanding its retail
footprint rapidly in Western Europe. Growth in Western Europe was spurred by
higher DTC sales, which grew 40% year-over-year. Nike also recorded comps
store growth of 17% and higher e-commerce sales.

o   China is another
key market for Nike. Greater China revenues grew 19.4% year-over-year to
$1.4 billion in 1H15. DTC growth was strong, with comp sales growing at 28% in
1H15 and higher e-commerce sales. But all was not sunshine in China. The
company experienced declines in men’s training, action sports, and soccer.

o   Despite the
relatively healthy growth shown by the world’s #1 sports gear company in
overseas markets, macro fundamentals are undergoing a change. We’ll discuss
these changes in parts 8 to 10 of this series.

o   Nike (NKE) is part of the
select 30-stock Dow Jones Industrial Average and the broader market–tracking
S 500 Index. ETFs like the SPDR Dow Jones Industrial Average ETF (DIA), the SPDR
S 500 ETF (SPY), and the SPDR Consumer Discretionary Select Sector
ETF (XLY) provide exposure to Nike (NKE). DIA, SPY, and
XLY invest 3.5%, 0.4%, and 2.9% of their portfolio holdings in Nike (NKE).

 

 

 

 

 

 

 

 

 

 

 

Market Trends

Market Trends of Nike

Ø 
Nike’s initial product
advertising strategy of using professional athletes for increasing demand was
through word of mouth and also provides the good publicity.

Ø 
Nike changes its target
market from teenagers to younger consumers due to intense competition with
Adidas and Reebok and also to expand its target market.

Ø 
During the time of recession
consumers was willing to pay on that brand because Nike having superior
quality, style and reliability. Nike generates the higher revenue from its
competitors because of its Slogan “Just Do It” and strong product. (Deng, 2009)

Ø  It also introduces the digital sports and e-commerce in its recent years
due to changes in technology trends.

Ø 
It introduces the Nike+
running sensor in collaboration with Apple Inc. and other products like fuel
brand personalize the hi- tech experience for the customers. (Soni,2014)

Ø 
Nike has been launched its
technologically advance shoe models from time to time through innovative
advertisements , celebrity endorsements , successful association and event
sponsorships.

Ø  Company still faces many challenges in this changing fashion trends and its
sale is falling in the shoes category and increased competition. After these
changes though it is trying its best to create the good position in the market
and make products according to fashion trends (Aid, 2005).

Market Trends of Adidas

ERIC LIEDTKE, EXECUTIVE BOARD MEMBER RESPONSIBLE
FOR GLOBAL BRANDS Quotes the following: “We are closest to every consumer with our
unique brand portfolio.  In the future, we will not only talk to and talk
with our consumers. We will be the first sports company that invites athletes,
consumers and partners to be part of its brands. We will open up so that they
can co-create the future together with us.”

As a Group we have taken three clear strategic choices that we want to
focus on: Speed, Cities and Open Source. Our People will bring them to life.

?’Creating the New’
is the headline for our next five-year strategic business plan. ‘Creating the
New’ is the attitude that leads us into the future – an exciting future,
because our industry is growing in size and scope and will continue to do so.
In fact, the sporting goods industry is growing faster than most other
industries, including consumer electronics. This trend will continue. Sport is central to every culture and society and is
core to an individual’s health and happiness. All of this is very good news to
us because our core competency is sport. Through
sport, we have the power to change lives. We work every day to inspire and enable people to harness
the power of sport in their lives. We also translate our competence in sports
into street wear and fashion because sport is an attitude and a lifestyle. Everything
we do is rooted in sports.  

At
the very heart of ‘Creating the New’ are our brands. Our brands are what
connect us with our consumers; therefore, the success of our brands defines the
success of our business. Our core brands – Adidas, Reebok and Taylor

Made
– have strong identities in sport. Adidas appeals to athletes, Reebok focuses
on the fitness consumer and Taylor Made is all about the golfer. Through
our unique portfolio of leading sports brands, we cater for the needs and
desires of more consumers than any of our competitors. With ‘Creating the New’,
we will get closer to them than ever before. To achieve that, our plan is based
on three strategic choices:

Ø 
Speed: We will become the first true fast sports
company: Fast in satisfying consumer needs, fast in internal decision-making.

Ø 
Cities: We have identified six key cities in which
we want to grow share of mind, share of market and share of trend.

Ø 
Open source: We will be the first sports brand that
invites athletes, consumers and partners to be part of our brands.

‘Creating
the New’ is an ambitious, yet realistic plan that provides the layout for our
accelerated growth, both on the top and on the bottom line between now
and 2020.

MAKING IT SUCCESSFUL WILL BE A TRUE TEAM EFFORT.
WE ARE HERE TO WIN!