2016 SPORTS BRANDS
Published in 2016 Best Global Brands | Interbrand
With all of the challenges around growth, the sports sector continues to expand. It’s among the Top Growing Sectors in this year’s Best Global Brands report, rising 10.2 percent in total value from USD $29,881 million to USD $32,919, with adidas (+16%) as the Top Growing Brand in the sector, and Nike (+9%) one of the Top 20 brands.
Investment banking company Macquarie estimates the sporting goods category at large to be worth EUR €285 billion (USD $318 billion), outpacing the broader consumer sector. But in the sports apparel, footwear, and equipment segments, the story question seems to repeat itself every year: What’s the growth opportunity, and how can brands possibly raise the bar?
With the rising focus on health and fitness across the board, and the subsequent rise of the “athleisure” category, sports brands have more opportunity to work their way into peoples’ lives. While partnerships continue to be a platform for growth, the top players have to be more strategic to stay ahead of rising competitors, connect more closely with new audiences, and take advantage of rising global markets.
TWO HEAVYWEIGHTS AND A CHALLENGER
Nike continues to dominate the category and has set an ambitious goal of reaching USD $50 billion in global sales by 2020. The brand had a great Olympic showing in Rio, with more than 1,500 athletes from over 60 countries sporting Nike. These brand-affirming partnerships are part of the company’s greater growth strategy. Nike’s model is straightforward: it supports its product pipeline and manufacturing excellence by engaging consumers and linking the best athletes around the world to its brand.
But a resurgent adidas and a determined Under Armour are adding fuel to an already super-competitive environment. adidas has strengthened its performance and has become the fastest-growing sportswear brand in North America. The company has brought numerous product innovations and new fashion lines to market and has signed deals with some of the best athletes around the world. Although adidas has a similar endorsement strategy to Nike, some of its more unique partnerships—with musician Kanye West and NBA star James Harden, for instance—show how adidas is not just targeting traditional sports audiences, but is becoming ingrained in pop culture, creating confidence in the brand’s sustained growth.
But when it comes to partnerships, it’s not just about getting the the biggest players on your team—brands must be strategic in the face of competition. Even iconic brands need to make hard decisions about where best to focus their resources. Despite high-profile partnerships with players Tiger Woods and Rory Mcllroy, Nike exited the golf equipment business this year. adidas followed suit by putting its TaylorMade golf equipment business up for sale after revenue declines in seven of nine consecutive quarters.
THE UNDERDOG BRAND
Although adidas has pulled ahead of it, Under Armour also had tremendous visibility at the Rio Olympics. Under Armour brand athletes—including Michael Phelps, the US gymnastics team, and a host of others in Rio—were seen at the medals ceremony multiple times. While both Nike and adidas drive a lot of traffic with their social media platforms, one of the most watched Facebook Live video sessions was of Michael Phelps, with nearly four million views.
Building off of its strong US footprint, the Under Armour brand is in a good position to grow globally and is expected to increasingly generate revenue in international markets. This will put even more pressure on both Nike and Adidas to step up their games.
THE NEXT BIG MARKET
In Asia, the sports sector will continue to grow at a respectable double-digit pace, with China seeing some of the greatest potential in the world. Chinese government officials are making significant investments in home-grown entertainment and strengthening the talent and performance of national teams. The goal is clear-cut: make China a global sports powerhouse.
For years, Manchester United and the English Premier League have had significant visibility in Asia. Clubs such as FC Bayern Munich are capitalizing on this success by building a ground presence to drive expansion in both China and the broader Asian market. The NBA has continually built up its presence across Asia and this year opened up the world’s first NBA Playzone for Kids in the basketball-friendly city of Shanghai. As sports become a large part of the education platform in China, the industry has ample room to grow, for decades to come.
The 2022 Winter Olympics in Beijing will once again thrust China into the international spotlight. A local player to look out for is Anta, a sportswear brand that continues to use the Olympics platform as a long-term growth vehicle for its business. Anta has a strong presence, with 7,000-plus retail stores in China, but is also the brand that dressed its national athletes at the Summer Olympics in Rio. Anta bolstered its brand portfolio by acquiring Fila’s China operations and forming a joint venture with Japan’s ski equipment maker and apparel brand, Descente. The company has invested in its own R&D center and works closely with suppliers to deliver the breakthroughs that will compete against adidas and Nike. With passion and a long-term view, Anta is strongly positioned to deliver in a competitive China marketplace.
POSITIONED FOR LONG-TERM SUCCESS
In most countries, sports are ingrained into the culture, with highly engaged consumers passionately supporting their teams and individual athletes. And today, passion is on the rise around healthy, active lifestyles, which provides opportunities for sports brands to deepen relationships with existing audiences and expand beyond their niche. Intense competitive conditions will require the top sports brands and franchises to drive greater engagement in local markets and use technology to drive the future product pipeline. Growth will continue in mature markets, with endless commercial opportunities in less-developed markets. The industry has not peaked—all signs indicate that the sports engine is getting stronger.