Thursday, November 18, 2010

Adidas plans major Chinese growth drive

Curated By ZenithOptimedia, The ROI Agency
Find out more at

Adidas, the sportswear giant, is substantially enhancing its presence in China, targeting "middle affluent" shoppers and lower-tier cities.

The company will open 500 stores in the country next year, taking its total to 6,100, as sales hit €1bn ($1.4bn; £850m) by the close of 2011.

"We'll see double-digit growth in China over the coming years. It's a big population and a lot of people want their sneakers," Herbert Hainer, ceo, Adidas, told Bloomberg.

"China is an important market for us and consumers want access to our products."

One of the firm's primary goals is attracting increasingly wealthy customers from metropolitan hubs like Beijing and Shanghai, who typically boast above-average disposable incomes and spend more on apparel and footwear.

"Middle affluent" individuals enjoying discretionary expenditure of 5,000 yuan ($753) a month constitute the most interesting audience in such areas.

Adidas' techniques for ensnaring this demographic include developing shops focusing on premium offerings and creating stores based around certain sports.

The corporation also intends to move into conurbations containing at least 500,000 people and those possessing just 50,000 citizens, where entry-level products could be priced approximately 15% below Tier 1.

Although households in smaller regions generally have comparatively limited budgets, enthusiasm for quality - and foreign - goods is often high.

Christophe Bezu, managing director, Adidas Greater China, suggested residents of these urban centres would like "access to global brands", and predicted the organisation should be active in seventh tier cities in 2015.

"We have laid out an ambitious five-year plan and expect to grow our business in Greater China by double digits each year. This will lay the foundation to regain market leadership in China by 2015," he said.

In an effort to engage younger customers, Adidas is due to strengthen the role of its Neo range aimed specifically at teens, and featuring items priced at roughly half the rate of other lines.

The German multinational hopes buyers may then be persuaded to trade up within its portfolio.

Such strategies could yield significant benefits, according to Carol Liao, of the Boston Consulting Group.

"In the next decades, the population of China's middle-class and affluent consumers, whose annual household incomes exceed 60,000 yuan will nearly triple, from 150m to more than 400m," she said.

"Two-thirds of them will reside in small cities."

Frost & Sullivan estimated that Nike held 10.2% of China's 93bn yuan sportswear category in 2009, beating Li Ning on 10% and Adidas on 9.6%.

Hainer forecast that Adidas' investment in the country would enable it to retake second spot behind Nike, with the overall objective of surpassing its US rival.

"I'm pretty confident we will take back our original number two position next year … and we build a plan in the years to come to become number one in the market," he said.

One particular difficulty that impacted Adidas in China was overstocking in the 2008 Beijing Olympics, but Hainer argued it has now turned a corner.

Indeed, Adidas saw Chinese revenues rise 9% during the last quarter, measured against a 14% retail expansion in the US, which should remain ahead of China for the next five years at least.

"What you have seen is that we are growing fast in China," said Hainer. "Don't worry about where we will be in the future."


Wednesday, November 17, 2010

Gap Enters China With Four Stores And Online Shopping

Curated By ZenithOptimedia, The ROI Agency

Gap Inc. announced today the debut of its first four wholly
owned contemporarily designed Gap stores in China, bringing Gap's modern, accessible style to Chinese consumers for the first time. Each store will house all Gap collections: Gap, GapKids, baby gap and Gap Body. An online retail store is also launching today --, making Gap clothes immediately available to all customers throughout China.
"Gap is the first American retailer in China to offer a single style destination for the entire family. We are excited to introduce Gap's cool, modern American designs to Chinese consumers. I believe customers will be extremely pleased with fit, quality and the affordable style of our clothes, including our newest and most successful product, the 1969 Premium Jean," said Redmond Yeung, President of Gap China.
Gap is opening its first flagship store in Shanghai on November 11. This is a 1,140 square meter space in Hong Kong Plaza on Mid Huaihai Road, one of Shanghai's premier shopping high streets. A second flagship store, occupying two floors in the Venture Tech building on the premier Nanjing West Road, will open in the next several weeks.
Gap will open two stores in Beijing on November 13. The first is a two-storied flagship store spanning 1,165 square meters in the APM Building on Wanfujing Street, and a second 1,800 square meter store in Chaobei Joy City, located in the eastern part of Beijing.
"Each store offers customers great service by a team of highly-trained staff. Greeters welcome Gap customers at the entrance and each collection has dedicated specialists to assist shoppers. All four stores offer Denim Fit sessions by appointment," noted Lorenzo Moretti, Managing Director of Gap China.
Gap is opening the stores around the theme of "Let's Gap Together," celebrating the coming together of China and the U.S., and our shared spirit of creativity and individual expression. To commemorate this special occasion, world-famous photographer, Annie Leibovitz photographed a series of portraits pairing iconic Chinese and American leaders in their fields such as Zhou Xun, a Chinese actress who is devoted to sustainable development and Philippe Cousteau Jr., an environmentalist and grandson of Jacques Cousteau. These images can be seen in the stores and on outdoor advertising in each city. For images:
The arrival of Gap stores in China, the most populous country in the world, is a cornerstone of Gap Inc.'s global expansion strategy. Gap invested in extensive, multi-year market research and this entry marks the beginning of a long-term, multi-channel strategy that will eventually result in more stores throughout the country.

Adidas Group Greater China promotes Colin Currie to China MD

Curated By ZenithOptimedia, The ROI Agency

Adidas Greater China has announced that Colin Currie (pictured), senior VP of marketing and sales, will succeed Christophe Bezu as managing director Greater China, effective 1 January 2011. Bezu will remain on the board for Adidas Group Greater China.

Adidas Group Greater China promotes Colin Currie to China MD

Since taking on his first Greater China role at the beginning of this year, Currie (pictured) has worked closely with Bezu helping the company rebound and setting it on a course for future success, the company said in a statement.
In his new role, Currie will also report directly to Herbert Hainer, Adidas Group CEO.

The statement added that Currie’s broad skills and experience in Hong Kong, Taiwan and Mainland China made him the natural choice to fill the role and help ensure that the transition is seamless.

The announcement follows the recent appointment of Christophe Bezu as chief e-commerce officer for Adidas. In this role Bezu will focus on the important new sales channel for the company, while still being in a position to provide mentoring, coaching and strategic guidance to the very important markets of Greater China and its leadership.

Bezu will continue to report to Hainer.

“China is one of the most dynamic and important markets for the Adidas Group globally, and together, the new management team will be well positioned to drive our business forward into 2011 and beyond,” Hainer said.

“Christophe has provided amazing guidance and vision for Adidas Group China that has helped place us where we are today as a leading sports brand in this market. Colin, meanwhile, knows this market intuitively well and is an expert team-builder, making him a perfect match for his new role,” he added.


Burberry sales soar on the back of digital and brand strategy

Curated By ZenithOptimedia, The ROI Agency

Fashion house Burberry has reported a 18% year-on-year jump in revenue to £673m 

for the first six months of the year on the back of ambitious digital campaigns focusing on the brand and simplifying buying.

Burberry will continue to invest in digital marketing strategies in the New Year to capitalise on the increased brand reach the group has achieved since launching its new strategy in autumn 2010. Digital sales were up by 50% over this period.
The brand is continuing to push a premium position, with "classic" designs never before sold at a discount, helping to push its gross business margin up to 64.3%. Pre-tax profit leapt 50% to £117.7m.
Angela Ahrendts, chief executive, said: "The continued focus on the brand, ongoing investment in our digital, IT and retail infrastructure, especially in China, and a disciplined approach to driving growth underpin our confidence in delivering long-term sustainable returns."
Digital marketing has been a success according to the interim statement. It said: "Burberry now has nearly three million Facebook fans, the largest of any luxury brand, and over 650,000 people viewed the livestream of the September runway show.
"This was also transmitted to invited audiences in 25 flagship stores through Burberry's new 'retail theatre' technology. A global digital commerce platform is being tested for roll-out in the coming months."
Burberry has expanded aggressively into digital and social marketing in the past year, with iPhone apps enabling consumers to buy instantly, and the launch of the artofthetrench website to promote its classic coat designs.

Monday, November 15, 2010

Nike's environmental plans to "Innovate towards a better world"

Nike, Toyota target green innovation drives

NEW YORK: Major brand owners such as Nike, Toyota and Procter & Gamble are focusing on green innovation, both to enhance consumer perceptions and drive growth.

Sportswear giant Nike has recently outlined plans to "innovate towards a better world", firstly by designing goods containing fewer rare raw materials.

The company's "Reuse a show" initiative also asked customers to return old footwear, which was then utilised in creating basketball courts and football pitches.

"We believe our products still have value after they've been used, and would rather take them back for future use," Sarah Severn, Nike's director of stakeholder mobilisation, told Business Review.

Elsewhere, Nike has established the GreenXChange, an online hub allowing corporations and experts to swap suggestions and intellectual property supporting eco-friendly schemes, with partners like Best Buy and Yahoo.

"We're using this as a shift in our business model, to change the structure of our supply chain, and we need a whole ecosystem of people to do this," said Severn. "We continue to encourage the democratisation of innovation."

Toyota Motor Sales USA has followed a similar strategy through the "Ideas for Good" programme, challenging the American public to identify other fields in which its technology may be applied.

The carmaker will promote this contest with TV spots demonstrating how NASCAR, Yellowstone National Park and Wake Forest University Baptist Medical Center have employed Toyota systems.

"We're sharing a side of Toyota that many are not aware of and engaging the public in a way we've never done before," said Bill Fay, group vice president of marketing at TMS.

"The campaign inspires new thinking about what Toyota has already been doing for many years. Ultimately, with consumers' help, we hope to inspire new ways that our innovation can benefit society."

Procter & Gamble, the FMCG specialist, is endeavouring to reduce packaging by 20% and access more sustainable resources, with its Connect + Develop open innovation platform playing a central role in this process.

"P&G is the largest consumer packaged goods company in the world today, and we recognize our impact as a global company," said Len Sauers, P&G's vp, global sustainability.

"Innovation and external partnerships are key in making this work. Our suppliers have already been hard at work bringing sustainability innovation to the table."

General Electric, the conglomerate, also intends to buy 25,000 vehicles, including 12,500 units of GM's Chevrolet Volt, offering various advantages.

"By electrifying our own fleet, we will accelerate the adoption curve, drive scale, and move electric vehicles from anticipation to action," said Jeff Immelt, GE's ceo.

"We make technology that touches every point of the electric vehicle infrastructure," he added. "This transformation will be good for our businesses."

Clorox was an early-mover in this sector, and its Brita water filters have enjoyed renewed popularity as preferences changed.

"We said, 'Holy God, this isn't just a sustainability issue, this is an affordability issue," said ceo Don Knauss. "So our advertising changed. That's one of the things that's driven Brita in double-digit growth the last three years."

The firm's eco-friendly cleaning range Green Works has faced certain obstacles, but the financial recovery could yield equally favourable results.

"I continue to believe in the core proposition of Green Works," said Lawrence Peiros, Clorox's evp, North America. "And I think as the economy turns, this is one category that will probably turn disproportionately."