1、Sporting Goods 2023The need for resilience in a world in disarrayDisclaimer:This work is independent,reflects the views of the authors,and has not been commissioned by any business,government,or other institution.Sporting Goods 2023The need for resilience in a world in disarrayForewordThe World Fede

2、ration of Sporting Goods Industry(WFSGI)and McKinsey&Company have teamed up once again to present our third annual Sporting Goods Industry Report “Sporting Goods 2023 The need for resilience in a world in disarray.”After the industry recorded a widely positive performance in 2021,the past year has s

3、een multiple challenges,including the threat of global recession,war in Europe,continued supply chain challenges,and rapidly rising interest rates;all contributing to a world in disarray.This third edition of this report drills into the dynamics driving performance in the sporting goods industry.It

4、sets out areas in which sporting goods companies have outperformed and faced challenges in the past 12 months,with deep dives into the US and China,the largest global markets.In addition,it explores how the industry can boost its resilience to the current storm.As in past editions,we focus on key tr

5、ends that have impacted the industry of the past year and will shape performance in 2023 and beyond.We highlight the ever-increasing importance of branding,show how companies are responding to the sustainability imperative,and provide new insights into the nearshoring trend.We also zoom in on the va

6、lue the industry is creating and how that is attracting the attention of the private investment community.In this third edition,we dedicate even more space to our feature interviews with industry executives and experts.We are grateful for their insights into the evolution of business and for their h

7、onesty in sharing the strategies enabling them to navigate,and often thrive,in the current environment.In many ways,the sporting goods industry is in a fortunate position.Compared to many other industries,the past two years have,in aggregate,been characterized by solid growth,equaling or outperformi

8、ng pre-pandemic levels.Looking to 2023,there are clouds on the horizon.Rising costs,the looming threat of recession,and continuing operational challenges are set to create headwinds early in the year.In response,companies are under urgent pressure to embed resilience into their operations.That will

9、mean going beyond raising prices to boost productivity,manage cash more rigorously,and find the right balance between saving and investment.We see this as the beginning of a time that will be more challenging to navigate,but with positive megatrends driving performance:in the mid-to-long-run,we expe

10、ct a more constructive picture,building on one of the lasting effects of COVID-19,the general increase in health awareness.During the pandemic,consumers increased focus on health and wellbeing has been one of the key drivers of the industrys fast recovery,primarily driven by increasing interest in s

11、ports from new customers(as shown by growing beginners product sales).Nevertheless,globally,we still face significant health risks relating to higher levels of inactivity:81 percent of adolescents and 27.5 percent of adults currently do not meet WHOs recommended levels.In 2018,the WHO published the

12、Global Action Plan on Physical Activity(GAPPA),which set out evidence-based recommendations for all countries to increase physical activity levels by 10 percent by 2025 and 15 percent by 2030.The WHOs recent Global Status Report on Physical Activity 2022 showed that global implementation of the poli

13、cy actions“has been slow and uneven.”The report notes that,“A consequence of this“inaction”is that already stretched health systems are burdened with preventable disease today and even more so in the future,and communities fail to benefit from the wider social,environmental,and economic benefits ass

14、ociated with more people being more active.”In addition,recent WHO data shows that the projected cost of inaction will add an additional$301.8 billion to the global health budget.It is therefore clear that a lot can,and must,be done to promote sports further and close the physical activity gap.Globa

15、l change on this level is beyond the capacity of the sporting goods industry alone,and multistakeholder action is critical to achieve the GAPPA goals.One of the truisms of sporting success is that“the harder the battle,the sweeter the victory.”Over the coming 12 months,sporting goods companies have

16、an opportunity to put this to the test,aiming to navigate the recessionary wave and emerge more robust for the medium and long terms.We hope this report will support you in making the right decisions for 2023.Thank you for reading,and we welcome your feedback and comments.4Sporting Goods Report 2023

17、Table of contentsForeword 4Contributors 6Acknowledgments 8Executive Summary 9Sporting Goods 2023 at a glance 12Interview Barbara Martin Coppola,Chief Executive Officer,Decathlon 14Economic environment Navigating the recessionary wave 16Performance of the industry-US Between a rock and a hard place 2

18、2Performance of the industry-China Chinas long horizons 28Interview Colin Browne,Interim President and 34 Chief Executive Officer,Under Armour Interview Tim Boyle,Chief Executive Officer,Columbia Sportswear Company 36Brand relevance Becoming a brand super winner 38Interview Ann Miller,EVP,Chief Lega

19、l Officer,Nike 44Interview Holger Schwarting,Chairman of the Board,SPORT 2000 International 46Sustainability Time to make it real 48Interview Rakhil Hirdaramani,Director,Hirdaramani Group 54Interview Sandra Wolf,Chief Executive Officer,Riese&Mller 56Nearshoring Balancing acts 58Interview Hoa Ly,Seni

20、or Vice President for Global Sourcing,adidas 64Investments in the industry Sporting routes to profitable growth in private investments 66Interview Andy Rubin,Deputy Chair,Pentland Group 72Contacts 745Sporting Goods Report 2023WFSGISajal KohliChicagoGlobal Leader Consumer&RetailSajal Kohli is the Glo

21、bal Leader of McKinseys Consumer&Retail practice,which encompasses the Sporting Goods industry.He focuses on retail transformations,operations topics and marketing&sales.Robbert de Kock MurtenPresident and CEO WFSGIRobbert de Kock is the WFSGI President and CEO.He brings more than 35 years of sporti

22、ng goods industry experience.Robbert also holds a number of board positions within international,continental and national sport federations.Emma P.(Mason)ZwieblerBerlinVice President Strategic and External AffairsEmma Mason is the WFSGI Vice-President for Strategic and External Affairs.Emmas work is

23、 focused on international sport relations,the evolution of international sport and major sporting event regulations,and the promotion of physical activity and sport.Marc-Ivar Magnus FribourgVice President Trade,Corporate Responsibility and LegalMarc Magnus is the WFSGI VP for Trade,Sustainability,Ma

24、nufacturing and Legal.Marc specializes in international,European and penal law,as well as in international human rights and humanitarian law.Achim BergFrankfurtGlobal Leader Apparel,Fashion&LuxuryAchim Berg leads McKinseys Global Apparel,Fashion&Luxury group and is active in all relevant sectors inc

25、luding sportswear,clothing,textiles,footwear,beauty,accessories and retailers.Alexander ThielZurichLeader Sporting Goods Practice EMEAAlexander Thiel is a Partner and a leader of McKinsey Sporting Goods Practice in EMEA as well as the Consumer Sector in Switzerland.He serves Sporting Goods brands,re

26、tailers and manufacturers.Sabine BeckerZurichLead Author Sporting Goods ReportSabine Becker is an Associate Partner in the Apparel,Fashion,and Luxury practice and part of the leadership of McKinseys Sporting Goods Practice.Victor V.DuranZurichCo-Lead Author Sporting Goods ReportVictor Duran is an As

27、sociate Partner and part of the leadership of McKinseys Sporting Goods Practice.Prior to joining McKinsey,he held multiple senior leadership positions at leading sporting goods brands and retailers.Raphael BuckZurich EMEA Leader Consumer&Sporting Goods Expert Raphael Buck is a Senior Partner and the

28、 leader of the Consumer practice of McKinsey in EMEA.ContributorsMcKinsey6Sporting Goods Report 2023 North America Sporting Goods Experts Asia Sporting Goods ExpertsMcKinseyEric FalardeauMontrealSporting Goods Expert Fitness/WellnessJessica GentaZurichProject Manager in the Consumer Goods practice,w

29、ith focus on Sporting Goods Julien BoudetLos AngelesNorth America Sporting Goods ExpertDaniel ZipserShenzhenAsia Sporting Goods Expert Elisa AlbellaLos AngelesProject Manager in the Consumer Goods practice,with focus on Apparel,Fashion&LuxuryAlice ScalcoHong KongAssociate Partner in the Consumer and

30、 Retail practice in Asia,with a focus on Sporting Goods and ApparelCaroline ShiShanghaiProject manager in the Marketing&Sales Practice in Asia with focus on Consumer GoodsOlga OstromekaWroclawSenior Analyst in the Consumer Practice and one of the leaders of the Fitness Service LineAsina de BrancheBe

31、ijingAsia Sporting Goods ExpertSara HudsonLondon Sporting Goods Expert Private EquityMatt PowellNew YorkSporting Goods Expert from The NPD GroupKarl-Hendrik MagnusFrankfurtSporting Goods Expert SustainabilityPatricio Ibanez Ohio-Cleveland Sporting Goods Expert NearshoringThomas BauerMunich Sporting

32、Goods Expert Sports MarketingKevin BrightLondon Sporting Goods Expert Inflation&Economic Environment External Expert Topical Experts7Sporting Goods Report 2023AcknowledgmentsThe authors would like to thank all members of WFSGI and the McKinsey community for contributing to the development of the 202

33、3 Sporting Goods report and the many industry experts who generously shared their perspectives for our interviews.In particular,we would like to thank:Barbara Martin Coppola,Colin Browne,Tim Boyle,Ann Miller,Holger Schwarting,Rakhil Hirdaramani,Sandra Wolf,Hoa Ly,and Andy Rubin.The authors would als

34、o like to thank the WFSGI Board,which has been hugely supportive of this report,both in approving it and contributing to the content.Furthermore,the authors would like to thank The NPD Group for its collaboration in developing a detailed perspective on industry performance,with a specific perspectiv

35、e on the United States.A particular thank you goes to Matt Powell,who leveraged his significant experience to share interesting insights and perspectives on the interpretation of NPDs data.In addition,the authors would like to thank Corinne Ehinger for her help in coordination.The authors would like

36、 to thank David Wigan for editorial support and Dominic Baumann for external relations and communications.Finally,the authors are grateful to Eralda van Zurk,Robin van Merkestein,and the whole design team for their creative input and direction,as well as Getty Images and Turbosquid for supplying ima

37、gery to bring our findings to life.8Sporting Goods Report 2023Executive SummaryOn the heels of the global pandemic,the past 12 months have seen new challenges in the form of rampant inflation,pressure on household incomes,and geopolitical tensions.The Sporting Goods 2023 report analyzes the current

38、environment and explores how the industry can bolster its defenses.In addition,it provides an in-depth analysis of industry performance,including deep dives into the US and China,the worlds biggest sporting goods markets.The report examines the key trends shaping the industry,including the enduring

39、power of brands to create value,growing pressure to deliver on sustainability promises,the strategic case for nearshoring,and the rising attention of private investors.Through these lenses,we see an industry that is in excellent health but must work hard to build resilience in the months ahead.Revie

40、w of 2022Two thousand and twenty-two was set to be another great year for the sporting goods industry:consumer sentiment was improving month-on-month,reflecting looser COVID-19 restrictions in most markets,companies were placing large orders,both in anticipation of demand and to avoid the supply cha

41、in challenges of 2021,and performance in the first half of the year was widely positive.In the background,however,storm clouds were gathering.Inflation was picking up due to the impacts of the war in Ukraine(especially in Europe),and higher raw material and energy costs were prompting some companies

42、 to raise prices.Meanwhile,consumer sentiment showed signs of deterioration,and discretionary spending declined.Supply chains gradually became more reliable,but the sudden increase in volumes led to widespread overstocking.In the second half of the year,the economic outlook darkened,amid rising conc

43、ern over geopolitical instability and the trajectory of interest rateswhich tightened constraints on both companies and household budgets.The aggregate impact of these factors was a significant weakening in industry performance compared with 2021(although still in advance of pre-COVID levels).The un

44、comfortable reality was that sporting goods companies were able to raise prices,but not enough to offset declines in units sold.That said,some categories performed better than others,leading to both risks and opportunities for individual players.Outlook 2023In 2023,we expect a challenging economic e

45、nvironment and continuing subdued consumer sentiment.This will require sporting goods companies to focus both on preserving demand and building resilience.However,companies must go beyond price adjustments and formulate a holistic response to the headwinds they face.This will mean assessing and opti

46、mizing all options that will not put demand at risk,including sourcing and supply chain,productivity,operational efficiency,and cash flows.Given the uncertain economic environment,we believe that the best predictors of future industry performance are the signals coming from the most recent retail da

47、ta.In fact,for this report,we took the opportunity to collaborate with our partner NPD Group to drill down into the most recent US sales data and its implications.We hope these insights will support decision-makers as they calibrate perspectives on the critical trends in the year ahead.9Sporting Goo

48、ds Report 2023Country deep divesUSAThe US sporting goods market saw a strong post-COVID recovery in 2021,in many categories surpassing 2019 performance.In 2022,the US market was exposed to the many forces shaping the global market,leading to unit sales declines of 4-8 percent in the first nine month

49、s,compared with 2021 levels,which was not offset by higher average selling prices.These unforeseen volume declines led to significant overstocking and heavy discounting in the second half.Athletic footwear and activewear saw revenue declines of 4-6 percent in the first nine months of 2022,driven by

50、weakening consumer demand and conservative assortments.Equipment categories had a hard time beating their record years of 2020/2021.Home fitness equipment saw a 28 percent revenue decline compared with the same period in 2021.The exception was e-bikes,which continued to grow strongly.ChinaIn 2022,th

51、e Chinese sporting goods market saw a largely flat performance,in stark contrast to double-digit expansion over recent years.The key driver was the countrys dynamic zero-COVID policy.Still,in the longer term,we see resilient fundamentals that promise a return to growth.These include government suppo

52、rt for healthy lifestyles under the“Fitness for All”program1,the expansion of the middle class,and rising female demand(unlike in Europe and the Americas,women spend 15-20 percent more on sports and fitness than men).In general,sports are becoming a more significant part of peoples daily lives,and t

53、here is increasing interest in relatively niche areas such as skiing,surfing,and outdoor activities such as camping.Local brands such as Anta and Li-Ning are competing fiercely,for example,by offering more female-focused productsare capturing market share.Thus,there is rising pressure on internation

54、al brands to raise their games.In 2023,four themes will likely feature high on company agendas:i.Brand relevance increasingBuilding brand heat and loyalty is more relevant than ever,especially in a recessionary context,in which consumers tend to rely on trusted brands.The consumer journey is shiftin

55、g,especially when shopping for lifestyle categories.Whereas previously,consumers were motivated first by factors such as functionality,design,and price,they are now increasingly driven by brand.Notably,the industrys super-winners in terms of value creation are characterized by high levels of brand e

56、quity and loyalty.In the lifestyle apparel category,sporting goods companies are on a similar journey to fashion companies,amid a need to build strong and trusted brands that leverage the direct-to-consumer revolution,collaboration with other brands,and community marketing.ii.Sustainability,time to

57、deliver on promisesBrands,retailers,and manufacturers have made bold promises of a more sustainable future,but are they up to the challenge?With self-imposed deadlines on the horizon,it is time to deliver.Two priorities should shape their agendas:1 For a broader perspective on global physical activi

58、ty levels,please read the dedicated section in our Foreword10Sporting Goods Report 20231)Plotting the path to net zero by setting CO2 baselines,defining emissions abatement curves,prioritizing decarbonization levers,and planning for the challenges ahead.2)Defining the companys role in the growing ci

59、rcular economy,choosing from a range of business models to scale.Whatever they do and say,companies need to be careful to deliver against a background in which greenwashing is being targeted by both regulators and consumers.iii.Nearshoring,a potential solution for supply chain disruptionsSupply chai

60、n disruptions,higher trade barriers,and geopolitical turmoil are putting pressure on supply chain security and leading to higher costs.Nearshoring can unlock a range of benefits in a disruptive context:control and de-risking of the supply chain,agility and speed,cost structure competitiveness,protec

61、tion against trade barriers,and a more sustainable operating model in the eyes of consumers.Still,nearshoring does not always go to plan,evidenced by the fact that some companies have recently reversed nearshoring decisions.Whether to nearshore or not should be decided at product level,assessing exp

62、osure to supply chain shocks,the need for shorter lead times,and the economics.It is important that the nearshore country meets requirements for raw materials and components,and offers the right capabilities and capacity.A detailed business case should take into account a holistic set of variables t

63、o determine financial impact and feasibility,as well as potential government incentives.iv.Sporting Goods industry,a hot target for private investorsThe sporting goods industry has grown strongly over the recent years and is likely to continue on that path,amid rising consumer health awareness2,alon

64、gside deepening interest in outdoor lifestyles and athleisure apparel.In addition,the industry has proven to be more resilient in downturns,bouncing back faster than others.Furthermore,it comprises many smaller but well-differentiated brands,which make attractive targets for consolidation or growth

65、plays.These factors have fueled interest among private investors,including venture capital firms,private equity funds,and companies,with the number of annual deals doubling in the past decade.Focus areas have included outdoor categories,connected fitness equipment,athleisure/activewear,and sustainab

66、le sportswear.In a market dominated by super-winners,private investment is challenging.We see three key priorities for investors:aspire to build a portfolio to drive synergies;elevate digital,focusing on communities and personalization;and leverage analytics at scale to harness the power of data.To

67、navigate the current challenging environment,we believe it is time to invest in resilience and productivityactivating levers that will not harm demand and will lay the foundations for a steep recovery.However,these actions require investment upfront,in a context in which the cost of capital is risin

68、g.This will likely mean a wider gap between super-winners and the rest once the storm is over.2 For a broader perspective on global physical activity levels,please read the dedicated section in our Foreword11Sporting Goods Report 202354%of households will occupy the upper-middle income and high inco

69、me brackets4 by 20253%of participants who expect to spend more minus%of participants who expect to spend less4 Households with 160k RMB annual incomeSporting Goods 2023 at a glanceEconomic environment Navigating the recessionary waveIndustry performance-US Between a rock and a hard placeIndustry Per

70、formance-China Chinas long horizons-40%consumers net intent3 to purchase sporting goods items4-8%sales decline in US in Q1-Q3 2022 versus 2021 across main categoriesEconomic environment and country deep divesSporting goods companies are seeing weakening demand,as the global economic slowdown puts co

71、nsumers under pressure.The most resilient businesses will take the opportunity to reset and position for growth.As the post-COVID recovery fades,sporting goods companies face renewed challenges from the impacts of inflation and slowing economic growth.Tough times are ahead,with the exception of a fe

72、w bright spots.The 2023 Sporting Goods report assesses the major themes driving the industry and the impacts of the current economic environment on business around the world.This year,we also present deep dives into the US and Chinese markets.As in past years,we analyze the most important trends for

73、 the coming period.Despite short-term challenges,the outlook for the sporting goods industry in China is positive,amid rising interest in well-being and a strong association between sportswear and fashion.However,competition is intensifying and the need for real differentiation is increasing.12Sport

74、ing Goods Report 2023Sporting goods trends for 2023Brand relevance-Becoming a brand super winner Sustainability Time to make it real Nearshoring Balancing actsInvestments in the industry Sporting routes to profitable growth in private investments50%of surveyed sporting goods players expect to increa

75、se spending on branding 86%of surveyed companies have announced or plan to announce a CO2 reduction target75%of surveyed players plan to expand nearshoring by 202520%TRS(total returns to shareholders)in 2019-2021 in sportswear,compared with 4.5%among traditional apparel playersThe success of sportin

76、g goods brands has attracted a wave of private investment.By focusing on a portfolio strategy of complementary brands,an elevated digital interaction with consumers,and analytics at scale,funds are most likely to maximize their portfolios potential.In an era of supply chain disruption,more companies

77、 are turning to nearshoring as a core element of their supply chain strategies.However,decision makers need to do their sums before taking the plunge.Alongside peers in many other industries,sporting goods companies face a ticking clock on sustainability.To meet their highly-aspirational targets,com

78、panies need to both accelerate decarbonization and scale circular business models.Only through a combination of these levers will they transform their businesses and reach their goals.Sporting goods companies are among the most effective brand builders in the world.However,as consumer expectations r

79、ise and brand relevance deepens,companies should keep brand building at the top of their agendas,applying a through-the-cycle mindset.91918990PACSHOPAS943464DRIDEFPHYRW89786375PACSHOPAS749288DRIDEFPHYCB13Sporting Goods Report 2023 InterviewBarbara Martin Coppola,Chief Executive Officer,DecathlonBarb

80、ara,thank you for taking the time.When you look at the sporting goods industry,where do you see the biggest challenge,the most important call to action in the years ahead?The most important aspect is to enable everyone to have an active and healthy lifestyle.More and more people realize the benefits

81、 of sports,and the pandemic accelerated this trend.However,there are still many populations for example,lower-income segments and kids from non-privileged backgrounds-who are not taking part.The obesity rate has risen sharply,especially among teenagers and young adults.We therefore need to collectiv

82、ely do more to be inclusive and ensure that sport becomes a possibility and reality for everyone,whatever their level.What will be the most significant changes the industry needs to make to work?An important change is the evolution of the fundamental business model which has ruled the industry for m

83、any years.We need to move away from a model purely based on first-time ownership of goods to a usage-based model.With this business model we would lowerbarriers to trying sports,allow people to use seasonal products and then share them back with the community.Hopefully,this will open the possibility

84、 to more people to adopt an active lifestyle and try a wide variety of sports.I hope we will see going forward that people are not just defined by one or two sports but by many sports.People will have more flexible options to fit sport into their daily lives.What else does the industry need to do to

85、 open the world of sports for everyone?We must question how we all have positioned sports in our marketing and communications.Quite often,there is a focus on performance,strength,and competitiveness.This can be intimidating to many people.Instead,the positioning of sports should be as whatever you b

86、elieve sport should be for you.Emphasizing health and well-being,and the connection to others.Sport is not a luxury and not a privilege of the fit,trained,and shaped.It is a way of life that needs to be accessible to everyone.Sport needs to be fully democratized.Walking around the lake is as sporty

87、as climbing Mount Everest.You talked about the necessity to keep up with the evolving needs of society and the emergence of a new business model.To what degree does this new business model need to be more sustainable?It is essential that we rapidly move towards decarbonization and circularity.The sp

88、orting goods industry is already adapting significantly to decarbonize its value chain,yet there is potential for further acceleration.Sustainable products should not come at a premium,they should be accessible to everyone.Furthermore,circularity needs to end its niche existence and become mainstrea

89、m recycling,refurbishing,repairing,re-selling,and renting are the future.I think we are at a tipping point of seeing solid progress on circular business models.This starts with the products design it needs to be focused on longevity,durability,the use of low-carbon materials,and,ultimately,recyclabi

90、lity.But this is not enough,the whole end-to-end lifecycle needs to be rethought.This includes modes of production,transportation,and nearshoring.Finally,it will also be critical to get the commercial aspect of this new business model right so that it increases,and not decreases,accessibility and is

91、 attractive for both consumers and brands.How do you at Decathlon think about this sustainability transformation?First,I strongly believe that sustainability cannot be a luxury.It needs to be affordable.This is imperative for Decathlon.Also,I firmly believe that there will be significant economic va

92、lue in this transformation.Hence,the faster we evolve,the better it will be for the planet and the business.At Decathlon,we have already made substantial progress in integrating circularity into our routines.For example,we have more than 1,800 14Sporting Goods Report 2023workshops in stores which re

93、pair products like bikes.And in many stores,we are currently running tests to rent equipment instead of buying it.Of course,this is only the beginning,and I see it as our responsibility as a major global player to lead the way.What will be required from the consumer to make this vision of a sustaina

94、ble future reality?We have been trained for a long time to act in a certain way.When you want to take up a sport as a consumer,you go and buy the necessary equipment.So,moving from a product-based to usage-based model means that we would be changing the industry and consumers habits.There is a push

95、and pull that needs to happen.Propositions from the industry to consumers need to evolve to rethink what and how we sell,but then consumers need to be open to this new model as well.To get to this future you are describing and envisioning,do we need to change our common definition of corporate succe

96、ss?The sporting goods industry will only exist and thrive if our playing field,the planet,is respected and protected.Hence,as the new CEO at Decathlon,I made sure that,as a critical part of our strategy,we put sustainability on the same level as revenue and profitability.Historically,financial aspec

97、ts were always the most important measures of success sometimes the only ones that mattered.Now we are leveling up the sustainability aspects to the same height.I firmly believe that decarbonization and circularity need to be measured as rigorously as cash flow or EBIT,and must be equally important

98、when defining whether we are successful.I hope we will see this across the industry and arrive at a joint aspiration on measuring sustainability and what to aim for.There is also a role to play for regulators to hold us accountable,playing by the same rules and ensuring transparency towards clients.

99、Regulators can ensure everyone is sufficiently aspirational,in line with scientific targets regarding climate change.Concretely,by putting sustainability goals on the same level as financial success,how do you envision this will change how managers across Decathlon will make decisions for the compan

100、y in the future?I would like everyone making decisions for Decathlon to go ahead only if both financial and sustainability goals are met.It might take longer or be a more difficult path,but its a path that creates more value,for shareholders,society and the planet.Maybe we need to find new partners,

101、create new alliances,rethink processes,or question long-held beliefs.I realize this is raising the bar quite a bit,but if we get it right,we will lead the way as a good corporate citizen,and we can all feel a sense of pride in doing so.And by making these decisions transparent and measurable,we will

102、 know whether we are moving in the right direction and whether we are doing it fast enough.While the industry and Decathlon are adapting to realize a more sustainable future,there are also several acute short-term challenges.How do you prepare for the uncertain times we find ourselves in?It is a ver

103、y uncertain environment with inflation,almost unprecedented energy prices,and geopolitical tension creating very choppy water to navigate.Therefore,building business cases and operating models around flexibility and agility is essential.Wherever there is rigidity,for example,regarding long lead time

104、s or dependencies on single factories,there is a risk.At Decathlon,we are making our entire supply chain more flexible and adaptive,leveraging the possibilities that digitalization affords us in areas like end-to-end forecasting,building in more slack where necessary,and developing new muscles.Final

105、ly,I am convinced that in uncertain times,there is an opportunity to create competitive advantage and get to a higher level.What role if any does near-shoring play in your vision of a derisked supply chain for a global player like Decathlon?What we are aiming for is right-shoring.There is definitely

106、 much effort,together with partners,to optimize assembly and production in a geographical area when we serve that same geographical area:China for China,India for India,and Europe for Europe.By doing so,we aim to create regional and local ecosystems.For us,it is about the diversification of producti

107、on areas and avoidance of dependencies and monopolies.We are rethinking our entire value chain,from the material to the transportation and movement of final goods,not only to de-risk our supply chain but to optimize for sustainability and we are doingthis not alone but with our network of long-stand

108、ing partners and innovative companies.“Sport needs to be fully democratized.Walking around the lake is as sporty as climbing Mount Everest.”15Sporting Goods Report 2023Navigating the recessionary waveSporting goods companies are seeing weakening demand,as the global economic slowdown puts consumers

109、under pressure.The most resilient businesses will take the opportunity to reset and position for growth.Economic environment16Sporting Goods Report 202317Sporting Goods Report 2023 Economic environmentAcross many economies,recent months have seen a“perfect storm”of cyclical,structural,and supply cha

110、in challenges,all of which are fueling inflation that is likely to persist in the medium term.To date,the impact on sporting goods companies has been muted compared with other sectors.However,all the signs point to a tough year ahead.With inflation running in 2022 at the highest level for at least 4

111、0 years in Europe and the US,just 6 percent of sporting goods companies are confident about their resilience and performance5.Indeed,the three words that executives most use are challenging,uncertain,and unpredictable5.The biggest concerns in the second half of 2022 have been falling demand and exce

112、ss inventory.Looking to the coming year,22 percent of decision makers expect both revenues and margins to contract by more than 5 percent.Amid rising input costs at the end of 2021 and into 2022,many sporting goods 5 Source:WFSGI&McKinsey Sporting goods companies survey,September 2022(N=211)6 Source

113、:Oxford Economics,retrieved on the 01.10.20227 Source:McKinsey&Company Europe Consumer Pulse Survey,9/2310/2/2022,n=5,156(France,Germany,Italy,Spain,UK),sampled to match European general population 18+yearscompanies reacted initially by lifting prices.Of the 60 percent of companies that did so,two-t

114、hirds lifted across the board,while a third acted based on price elasticity at product level.Meanwhile,consumer sentiment has headed in the opposite direction,driven by factors including the war in Ukraine,higher energy prices,and rising interest rates,which have reduced household incomes and put pr

115、essure on discretionary spending(Exhibit 1).About 60 percent of consumer spending in major European economies is focused on non-discretionary categories,including food,housing,and electricity6.As inflation rises,a larger share of household spending will go into mandatory expenditures,reducing consum

116、ers disposable income.At the same time,savings are shrinking,and one in three consumers is tapping into savings to cover their daily expenses7.High levels of pessimism are consistent across income groups.However,younger cohorts are less pessimistic,with 27 percent of Gen Z expressing“We observe a ce

117、rtain amount of downtrading but,interestingly,not so much between brands.And,of course,we are seeing more customers waiting for promotions and picking up the product at a better price.”Holger Schwarting,Chairman of the Board,SPORT 2000 International18Sporting Goods Report 2023confidence in a post-cr

118、isis recovery,compared to an average of 14 percent across age groups8.Net intent to purchase in footwear,apparel,and the sports and outdoors category has continuously fallen over the course of 2022(Exhibit 2).Furthermore,consumers are likely to reduce their sporting goods spending over the coming pe

119、riod.More than 50 percent of consumers say they will buy fewer items,while about 20 percent say they will trade down to less expensive brands8.Our expectation for an upcoming dip is reinforced by recent demand dynamics,which saw peaks in 2021 and the first half of 2022(with many purchases supported

120、by economic stimulus).After an exceptional performance during the pandemic,durable goods for individual private use,such as sports equipment,are likely to be hit hardest.Pressure on performance is expected to be unavoidable.8 Source:McKinsey&Company Europe Consumer Pulse Survey,9/2310/2/2022,n=5,156

121、(France,Germany,Italy,Spain,UK),sampled to match European general population 18+yearsSource:OECDConsumer Confidence Index(CCI),as of 28th October 2022(or downloaded/retrived 28th October 2022)Consumer confidence,EuropeIndex,monthlyChange,%Dec 19-Dec 20Change,%Dec 20-Dec 21-2,1-2,8-4,0-1,7-1,6-0,8Ita

122、lyEurozoneSpainUKFranceGermany1,62,03,11,61,12,3-4,6-6,1-5,1-3,5-3,1-4,7Change,%Dec 21-Jun 2200909496212023ItalyFranceGermanyUKSpainEurozoneChange,%Jun 22-Sept 22-1,2-1,7-1,3-0,2-1,5-0,5Exhibit 1 Consumer confidence continues to fall,and is below levels seen during t

123、he pandemic“When we look at spring 2023,we are concerned.”Rakhil Hirdaramani,Director,Hirdaramani Group 19Sporting Goods Report 2023One powerful factor in the trajectory of demand will be central bank interest rates,which have impact borrowing and mortgage costs.Higher rates over the course of 2023

124、will further compress consumer spending on discretionary items.At the same time,sporting goods companies will see their cost of capital rising.Highly-leveraged businesses will feel the most pain and may face 9 Source:McKinsey Analysisdifficult choices and a squeeze on investment plans.Learning from

125、previous crisesPrevious crises have revealed strategies that have enabled some companies to be more resilient than others.Businesses in the top quartile of total return to shareholders protect revenues and margins by taking a holistic approach to managing through adversity.That means embracing top-l

126、ine and bottom-line levers,and being willing to assess a range of alternatives that do not put demand at risk.Resilient companies tend to move fast and hard on productivity,preserving their capacity to grow.They focus on cost of goods sold(COGS)reductions to boost efficiency.Moreover,they tend to de

127、leverage heading into downturns,for example,through divestment.They then normalize their leverage ratios as the recovery accelerates,allowing them to re-invest in growth.In terms of total returns to share holders,resilient companies in the ten years after the 2007-2008 financial crisis outperformed

128、their non-resilient peers by 277 basis points9.How should the industry respond?Sporting goods companies must develop strategies to help them navigate the current economic environment.Raising prices is not an antidote to lower demandespecially given the wide availability of more affordable options.In

129、 an inflationary context,a holistic approach will encompass five key action areas:Economic environment1.Net change is calculated by subtracting the%of respondents stating they expect to decrease spend from the%of respondents stating they expect to increase spend in the category.2.Low income=50,000.I

130、ncome brackets use euros for France,Germany,Italy,Spain;for UK,the same brackets were used with pounds.3.Includes silent generation.Source:McKinsey&Company Europe Consumer Pulse Survey,9/2310/2/2022,n=5,156(France,Germany,Italy,Spain,UK),sampled to match European general population 18+yearsTotalMidd

131、leMillenialsGen XersGen ZersBaby boomers3Income level2Age groupHighLow-40-20-600FootwearSports equipmentApparel0-20-40-60Expected change in spending in next 3 months,Europe,net change1Exhibit 2Consumer expect to reduce spending;especially low-income groups and older generations“I think we all probab

132、ly feel that volatility is persistent and change is certain.”Ann Miller,EVP,Chief Legal Officer,Nike20Sporting Goods Report 2023“I believe it will take some time for demand and supply to right itself,especially as I suspect the economic conditions may well continue to worsen as we go into 2023,with

133、impacts on consumer confidence.”Colin Browne,Interim President and Chief Executive Officer,Under ArmourWorking on smart pricing and channel management:Data and analytics,for example relating to price elasticity and competitor offerings,can inform flexible pricing strategies and revenue management to

134、 protect net margins and limit the impact of volatility.Effective implementation can lead to a 5-15 percent revenue boost.Resetting return on investment:Decision makers should conduct a top-down review of efficiency by channel and SKU to invest for growth.We estimate this could lead to a 10-20 perce

135、nt saving in marketing budgets and enhanced return on investment.In a reality where cash and capital are not as available as previously,a more rigorous approach to investment prioritization and capital allocation is critical.Strengthening brand communications:Communications should be optimized and r

136、efocused on the core value proposition.Successful implementation can lead to a 2-5 percent revenue uplift.Building supply chain resilience:Supply chain resilience needs to be increased through fail-safes and right-shoring.However,both are inflationary,so they need to be combined with next-generation

137、 levers to optimize the cost base.Fostering next-generation organization productivity:An agile approach and innovations such as robotic process automation can lead to longer-term savings.Companies could review warehousing and transportation costs to unlock productivity levers,recover transportation

138、costs as the market slows,and review facilities networks.Optimizing finance:Companies could focus on freeing up cash and exploring divestments and acquisitions.Through these commercial,operational,and financial levers,companies can get a grip on recessionary impacts,shape their business models,and p

139、osition for a speedy return to growth.The key for decision-makers will be to manage these priorities based on their unique circumstances,while embracing a positive lens that builds competitive advantage.21Sporting Goods Report 2023 Performance of the industry-USUS-Between a rock and a hard placeAs t

140、he post-COVID recovery fades,sporting goods companies face renewed challenges from the impacts of inflation and slowing economic growth.Tough times are ahead,with the exception of a few bright spots.22Sporting Goods Report 202323Sporting Goods Report 2023Sporting goods companies are stuck on an econ

141、omic rollercoaster,amid swings in performance that are creating both strategic and operational challenges.After a post-COVID recovery in which some companies surpassed pre-pandemic levels of activity,the past few months have presented renewed challenges,amid faster inflation,higher interest rates,an

142、d continuing supply chain disruption.In the US,unit sales were 4-8 percent below 2021 levels in the first nine months of 2022,and the impact on revenues was not offset by higher averaging selling prices(ASP)(Exhibit 3).In planning for the current period,brands were blindsided by the war in Ukraine a

143、nd the wave of inflation that has swept through the global economy.Many were distracted by supply chain bottlenecks,to which they responded by ramping up orders.When that stock eventually arrived,it coincided with a fall in demand,leading to widespread overstocking.While 2022 performance in aggregat

144、e remained ahead of 2019,the challenge for industry participants was to balance multiple dynamics in the context of an economy that appeared set to remain under pressure.While the macro impacts of the current environment played out across segments,individual category performance varied considerably.

145、Here we analyze the performance of various sub-categories in the US:Athletic footwear and sportswear posted a strong performance in 2021,after seeing more than 10 percent growth(CAGR)between 2019 and 2021.However,growth stalled in 2022 as economic pressures led to declines in consumer demand.In addi

146、tion,the continuing move to direct-to-consumer distribution failed to pay off for some brands.Conservative assortments,meanwhile,reflected a commercial deficit that made growth even more challenging.And to reduce stock,brands focused increasingly on promotions to support sales.Performance of the ind

147、ustry-USExhibit 3 A decline in US units sold was not offset by rising average selling prices*YTD US revenues by category(January September)Year-to-Date=January September-Excludes Fashion categories.Each category leverages a different data sources of sales dataYTD 2022 vs.2021-7.3%+3.5%-8.0%+2.1%-4.5

148、%+5.0%$13.3B$14.3B$17.6BYTD 2019YTD 2022YTD 2020$17.7BYTD 2021+11.2%+0.2%$17.9B$20.1B$16.7B$21.4B+9.5%-6.1%$20.5B$25.9B$19.2B$24.9B+12.6%-3.9%Source:The NPD Group/Retail Tracking ServiceCyclingTeam sports equipmentHome fitness equipmentYTD 2022 vs.2021-7.2%+9.8%-16.9%+8.7%-30.4%+3.1%YTD 2022$2.5BYTD

149、 2019$2.1B$2.9BYTD 2021$1.4BYTD 2020+42.7%-28.3%$5.9B$6.6B$6.7B$4.5B+21.1%-9.7%$6.1B$5.6B$8.3B$8.4B+21.8%+1.9%Athletic footwearActive apparelOutdoor in Volume in ASPXXXXMatt Powell is a Senior Sports Industry Advisor for The NPD Group and advises senior executives of athletic retailers and brands.He

150、 has 45+years in the Retail industry and 30+years in the Sporting Goods industry,where he worked for 20+years as industry analyst.*Note:this chart has been adjusted vs.an incorrect version in the printed copy24Sporting Goods Report 2023 Sportswear brands reported an about 4 percent decline in revenu

151、es.They saw a 7.3 percent fall in unit volumes that was only partially offset by a 3.5 percent ASP rise10.Still,this was in the context of a 22 percent revenue jump compared with pre-pandemic 2019.The worst performing sub-categories were swimwear and sports bras,seeing 12 and 11 percent revenue decl

152、ines respectively,while sweatshirts were strongest performing with a 7 percent revenue gain.Athletic footwear posted a 6 percent revenue decline,albeit against the background of a 13 percent rise from the pre-pandemic period.Units sold fell by 8 percent,while ASP rose by 2 percent.The best-performin

153、g sub-categories were soccer,which saw a 13 percent revenue gain versus 2021,and walking,where revenues rose 8 percent.Over the slightly longer term,price rises in some sub-categories have been significant.Mens running shoes,for example,saw rises of 29 percent in 2022,compared with 2020.The outdoor

154、category bucked the negative trend,reporting 2022 revenues 0.2 percent higher than the previous year,against the background of 11 percent growth from 2019 to 2021(Exhibit 4).Revenues were 24 percent higher in 2022 than pre-pandemic,even as units sold fell by 4.5 percent and ASP rose 5 percent.Growin

155、g sub-categories were apparel and accessories at 3 percent and 5 percent respectively,while equipment fell 4 percent and footwear declined 3 percent.The fact that consumers have been feeling safer doing activities outside has been a general boost for outdoor categories to the detriment of indoor foc

156、used sports like swimming,in some cases also linked to the closure of facilities,for example due to rising electricity costs.In the US,outdoor activities remained mainly focused on“backyard”themes,supporting categories such as camping equipment.10 2022 numbers in this chapter refer to first three qu

157、arters performance versus the same period in 2021,2020,and 2019 from NPD Retail Tracking Service.The data does not include direct-to-consumer brands or vertical brands“After a post-COVID recovery.the past few months have presented renewed challenges,amid faster inflation,higher interest rates,and co

158、ntinuing supply chain disruption.”25Sporting Goods Report 2023 Performance of the industry-USEquipment categories saw more modest gains,or declines,in 2022,after record years in 2020 and 2021.This reflected the fact that most equipment is bought for the long term(the one and done phenomenon),militat

159、ing against high levels of repeat business.Still,2019-2021 growth(CAGR)was more than 20 percent,as the category expanded faster than apparel or footwear.Team sports equipment posted a slightly positive performance in 2022,with a 2 percent gain in revenues mainly driven by price increases.Units sold

160、fell by 7 percent,while ASP rose by 10 percent.Compared with the pre-pandemic period,revenues were 15 percent higher.The best-performing sub-categories were Lacrosse,in which revenues were 27 percent higher than in 2021,racket sports,driven by Pickleball,where revenues were 13 percent higher,and soc

161、cer,where income was up 10 percent.Cycling revenues fell 10 percent compared with 2021,after 20 percent growth in 2019 to 2021.Again,however,2022 revenues were well in advance of the pre-pandemic period,with an uplift of 32 percent.Units sold decreased by 17 percent in 2022,while ASP rose by 9 perce

162、nt.The best-performing sub-categories were e-bikes,in which revenues rose 16 percent compared with 2021,amid 400 percent growth since before the pandemic(Exhibit 5).We expect strong performance in e-bikes to continue,in part because growth is coming from a long-awaited structural shift Exhibit 4 The

163、 outdoors sector performed slightly better in 2022,albeit with mixed results across sub-segments54%Apparel16%24%Equipment6%FootwearAccessoriesDollar change YTD 2022 vs.YTD 2021 Year-to-Date=January September-Excludes Fashion Categories.Each category leverages a different data sources of sales data25

164、2-171-8645AccessoriesEquipmentApparelFootwearAbsolute dollar change%change+3%-4%-3%+5%Source:The NPD Group/Retail Tracking ServiceUS outdoor industry split by subcategory,%of total sales volumes“The one and done nature of certain categories is slowing down sales after peak demand years”26Sporting Go

165、ods Report 2023NPD is a global market information company offering data,industry expertise,and prescriptive analytics to help our clients understand todays retail landscape and prepare for the future.Over 2,000 companies worldwide rely on us to help them measure,predict,and improve performance acros

166、s all channels,including brick-and-mortar,e-commerce,and B2B.We have services in 21 countries worldwide,with operations spanning the Americas,Europe,and APAC.Practice areas include apparel,appliances,automotive,beauty,books,B2B technology,consumer technology,e-commerce,fashion accessories,food consu

167、mption,foodservice,footwear,home,home improvement,juvenile products,media entertainment,mobile,office supplies,retail,sports,toys,and video games.Exhibit 5 E-bikes were the exception to a broader cycling category decline(partly the result of relatively high prices that are now starting to fall)and b

168、ecause supply chain challenges in 2021 are yet to fully flush through the system.Indeed,supply chain bottlenecks may continue to constrain opening price performance,while one and done may also have an impact in the medium term,offset by demand for aftersales services Fitness equipment struggled in 2

169、022 with a 28 percent decline in revenues due to consumers returning to gyms,and due to the one and done nature of the category.The change followed 40 percent growth in 2019-2021 category.Still,revenues were a solid 46 percent higher than in the pre-pandemic period.Units sold fell by 30 percent whil

170、e ASP rose by 3 percent.Given the mixed performance of sporting goods companies,and the likelihood of continuing challenges,the massive industry overhang will probably continue into 2023,amid an uncertain growth trajectory.On the other hand,the trend toward healthier lifestyles is well established11

171、,and the direct-to-consumer juggernaut is set to remain in place,providing cost and engagement upsides for companies that execute successfully.Moreover,e-commerce is not going anywhere,creating efficiencies and supporting data-driven business models.Finally,niche categories such as e-bikes and pickl

172、eball(paddleball)offer promise.The key for decisions makers will be to strategically assess these dynamics and selectively reset to take advantage.11 For a broader perspective on global physical activity levels,please read the dedicated section in our Foreword$0$1,200$1,000$200$600$800$400$1,400Life

173、style/LeisureTires/TubesElectric BicyclesMountainRoadBike Service/RepairsTransit/FitnessComponentsHelmetsChildrensYear-to-Date=January September-Excludes Fashion Categories.Each category leverages a different data sources of sales dataSource:The NPD Group/Retail Tracking Service-13%-13%+1%-15%-5%-10

174、%+16%+1%-24%-34%2020202120222019Top 10 Cycling Classes,$Volume($M)=%change YTD 2022 vs.YTD 2021+/-%27Sporting Goods Report 2023 Performance of the industry-ChinaChinas long horizonsDespite short-term challenges,the outlook for the sporting goods industry in China is positive,amid rising interest in

175、well-being and a strong association between sportswear and fashion.However,competition is intensifying and the need for real differentiation is increasing.28Sporting Goods Report 202329Sporting Goods Report 2023 Performance of the industry-China12 For a broader perspective on global physical activit

176、y levels,please read the dedicated section in our Foreword13 Source:NBS,McKinsey Global Institute14 Source:BigOne Small data,FashionScope15 Source:McKinsey Global Institute16 Source:FashionScope,McKinsey Global InstituteDeclining consumer confidence and COVID-related headwinds have put the Chinese s

177、porting goods market under pressure in 2022,curtailing a strong run of growth.However,robust underlying demand and a deepening focus on healthy lifestyles,at least among urban populations12,suggest companies that engage successfully will continue to perform in the years ahead.In August 2022,just 49

178、percent of Chinese consumers described themselves as optimistic,the lowest level since at least 2015 and far below the 67 percent reported in October 202113.The key driver of the change was the COVID-19 pandemic,which continued to cause high levels of disruption under Chinas dynamic zero-COVID polic

179、y.As a result,the markets flat year-to-date performance in 2022 stood in stark contrast to double-digit expansion in previous years14.High-income groups still had an appetite for spending,but to a lesser extent than in 2019,our 2023 China Consumer Report shows.Middle-income groups were feeling the p

180、ressure,with only 17 percent having increased their spending by at least 5 percent in 2022(compared with 31 percent in 2019).Despite these headwinds,several factors point to resilient fundamentals.The middle-class demographic continues to expand,with 39 percent of households categorized as upper-mid

181、dle and high income in 2021,compared with 12 percent in 2015(Exhibit 6)15.Indeed,in Tier 1 cities,we predict sporting goods spending will closely mirror spending in many leading western economies by 202516.This surge in wealthier households has created millions of new consumers for sporting goods br

182、ands,fueled by a growing appetite for real sports Source:MGI Insights China macro modelAnnual household income in China,RMB,2020 real%of upper-middle&high income54%12%(160,000)(85,000)(85,000-160,000)289 38620152025ENumber of urban households by income group,Million39%355202134Lower-middle&lower inc

183、omeMiddle incomeUpper-middle&high income7320911463Exhibit 1.The growth of Chinas upper-middle and high income groups will fuel demandExhibit 6The growth of Chinas upper-middle and high income groups will fuel demand30Sporting Goods Report 2023experiences,alongside sports fashion and athle

184、isure.By 2025,we expect 54 percent of households will occupy the upper-middle income and high income brackets.Given this trajectory,we predict single-digit expansion in the sporting goods market up to 2025.Four fundamental trendsAside from demographics,four fundamental trends suggest the Chinese spo

185、rting goods market is fighting fit for the longer term.1.Government support promoting the expansion of the sports industryThere is strong government support for healthy lifestyles under the“Fitness for All”program17.This is a key element of the national agenda,which aims to create one of the worlds

186、largest sporting industries by 2025 and a RMB5 trillion($700 billion)value chain18.Progress can be seen in the doubling of public sports facilities over the past five years,with“sports”now third in terms of time spent in school19,after Chinese and mathematics.Alongside policy efforts,China has becom

187、e an increasingly important hub for international sports events,including the 2022 Winter Olympics and the 2022 Hangzhou Asian Games20.National competitions have also flourished.In marathons,for example,the number of both events 17 For a broader perspective on global physical activity levels,please

188、read the dedicated section in our Foreword18 Source:Fitness for all(全民健身),China national development and reform commission;Nov 5 202119 Per guidance from the Ministry of Education of China,starting Sep 2022,physical education is required to account for 10-11%of time(3-4 hours per week)in 9-year comp

189、ulsory education(Avg.age between 7 and 16)20 Currently delayed to 2023 Sep due to COVID-1921 Source:China Marathon Big Data Analytics Report 201922 For a broader perspective on global physical activity levels,please read the dedicated section in our Foreword23 A term coined by Chinas education minis

190、try in 2007,meaning the female-targeted market24 Source:China Daily Women push against body shaming Jun 22 202125 Source:Qianzhan Research Institute,Aurora Big Data,CBNData,China Sporting Goods Industry Federation 2020 Fitness Behavior and Consumption Research Report26 Source:Weibo,November 202227 L

191、eading B2C e-commerce platform operated by Alibabaand participants has soared from 22 events with 0.4 million runners in 2011 to 1,828 events with 7 million runners in 201921.2.A new generation of health seekers especially womenA fundament growth driver is consumer demand for a more premium lifestyl

192、e.The middle class is much more focused on health than previous generations22 and increasingly desires quality products and experiences,with greater emphasis on physical and mental health.Amid the rise of the she economy23,woman have become more body confident24 and more willing to express themselve

193、s through their purchasing decisions.Women engage in fitness activities 1.25 times more frequently than men on average,and spend 15-20 percent more on sports and fitness25.3.Sport is a bigger part of peoples daily livesInterest in sport has surged over the recent period.For example,the 2022 soccer W

194、orld Cup topped search engine activity while it was being played.Early in the tournament,one match accounted for nine of 10 hot topics on Sina Weibo26.In parallel,more and more people are taking part in sports such as soccer and running.Tmall27 sales of small and mid-sized home fitness equipment ros

195、e by 50 percent from 2019 to 2021,31Sporting Goods Report 2023 Performance of the industry-Chinasupported by more than 60,000 registered fitness communities in Shanghai alone28,29.The surge in sports participation is reflected in social media activity.One sports influencer on the Douyin platform saw

196、 a 10 million rise in followers in a single day,after live-streaming a fitness course.Professional athletes such as Winter Olympic medalist Gu Ailing are increasingly among the stars of the current generation of celebrities.4.Niche is the new mainstream.A notable recent trend has been rising interes

197、t in niche sports such as skiing,surfing,hiking,rock climbing,and road cycling.On Tmall,the ski category saw an about 70 percent rise in GMV from 2019 to 202230.Keyword search analysis also reveals a wave of enthusiasm for activities such as frisbee and paddle board,supported by a five-to six-fold r

198、ise in publications on the RED platform.In parallel,more consumers are discovering the joys of back-to-nature and the outdoors.Camping-related online keyword searches rose more than seven-fold in 2022,indicating surging interest in activities such as traditional camping holidays and city glamping.Tm

199、all sales of camping equipment rose almost 30 percent annually from 2019 to 202230.A competitive playing field Despite solid market fundamentals,competition in the Chinese sporting goods market is intense,with rising numbers of players seeking to establish themselves and expand market share.In a hig

200、hly dynamic environment,a range of distinct player types are emerging.Probably the most resilient market participants are prominent local players such as Anta and Li-Ning.These have piggy-backed on events such as the Olympics to build market share,and have capitalized on consumer support 28 Source:B

201、igOne Tmall data29 Source:Shanghai“Fitness for all”report 202230 Source:BigOne Tmall data31 Source:Fidelity International and China Market Research Groupfor local brands.Overall,market sources point to a rise in preference for local over international brands;One report found that the proportion of c

202、onsumers preferring local brands rose about 1.5 times from 2016 to 202031.This suggests consumers are becoming less willing to pay a premium for international brands,amid a perception that the difference in brand value is limited.Indeed,54 percent of consumers say that local-brand sports shoes are m

203、ore suitable for Chinese consumers,compared with 18 percent that say multinational brands are more suitable.In addition,56 percent say that local sports brand apparel offers greater value for money,compared with 17 percent saying the same of multinational brand apparel(Exhibit 7).Local brands have a

204、lso shown themselves to be agile,responding more nimbly to consumers needs and harnessing emerging trends faster than global players.Domestic players also often have an edge in navigating a dynamic digital ecosystem.In one example,local players have quickly expanded their live-streaming capabilities

205、,responding to a rise in content-driven social commerce through platforms such as Douyin(TikTok).During the Double 11 shopping festival,both Anta and Fila hit 2022 record sales on Douyin(above RMB3 million($420,000)on Nov 11)through an average of four live streams per day.By contrast,some internatio

206、nal brands Douyin accounts do not support live streaming.Despite signs they may be losing their edge to specialized players and local brands,multinational brands have seen strong growth in recent years,increasing their share between 2018 to 2021.Indeed,some global players have found success by tailo

207、ring their approaches to local demand.One formula has been to offer a technical assortment focused on niche sports.Companies such as lululemon,On,32Sporting Goods Report 2023and The North Face have grown through this approach,signaling that outperformance is possible through strategic prioritization

208、,products,and demonstrable expertise.Rising female consumption represents another opportunity,with lululemon in China among those tapping into the trend.China was one of the first markets in which lululemon debuted its new footwear brand,designed as a“women-first”proposition32.These dynamics give sp

209、orting goods companies plenty of food for thought on how and where to play.But looking through the current economic situation,the outlook in aggregate remains positive.32 https:/ 2022)In spring 2023,we will publish a comprehensive China deep dive examining the key trends shaping priorities for sport

210、ing goods brands and retailers.Sports apparel393328272625252424221413Personalized products that are more suitable for ChineseGood(after)sales serviceValue for moneyMakes me feel that I am living a better lifeHave wider product selectionsReliability and trustworthyMore advanced functionality and inno

211、vationEnd-to-end good user experienceUser-friendly packageGood qualityAttractive designPremium brand positioningSource:2023 McKinsey China Consumer Report32362424202522222424119Sports shoesNet preference of local brands over international brands,delta in p.p.4949474843434942323

212、2629302554648484232523242424303125XX%of respondents who prefer local brandsXX%of respondents who prefer international brands1.Net preference of local brands is calculated by the sum of%of responses who think local brands are extremely better/better than foreign brands,minus the

213、 sum of%of responses who think foreign brands are extremely better/better than local brands(n=1098)Exhibit 7Local brands are preferred,amid value for money for sports apparel and personalized products for sports shoes33Sporting Goods Report 2023 InterviewColin Browne,Interim President and Chief Exec

214、utive Officer,Under ArmourColin,thank you for taking the time.Looking back at 2022,what were some of the main trends you have observed,what changed from prior years,and what is here to stay for 2023?It has definitely been an interesting and challenging few years,with 2022 being the cumulation of the

215、m all.In 2020,we went into a full lockdown and saw significant revenue headwinds.As we came into 2021,we saw huge pent-up demand,and now in 2022,we are living with the implications of the two previous years.We are currently seeing an increasingly large amount of inventory,which has landed at the sam

216、e time as softening demand,due to a broader economic environment that has started to deteriorate.I believe it will take some time for demand and supply to right itself,especially as I suspect the economic conditions may continue to worsen as we go into 2023,with impacts on consumer confidence.Beyond

217、 this dip,I do think the sports and fitness industry is going to continue to be incredibly relevant going forward.Demand for sportswear,and more broadly for the comfort and convenience that comes with sportswear and a healthy lifestyle,will continue to be important,and I believe we at Under Armour a

218、re well positioned to navigate through the choppy waters that lie ahead.You mentioned impacted consumer confidence and softening demand.Do you see any differences here between different types of consumers?I think we will see some polarization:People who are financially more stable will be less conce

219、rned about continuing to buy sporting goods.But,as is common during a recession,people with lower incomes will be more challenged.We need to make sure that we are offering products that operate across the spectrum.What measures has Under Armour already taken in light of these economic challenges?We

220、spent a lot of time thinking about how we ensure that we continue to drive value to our stakeholders.From a business point of view,productivity is an incredibly important metric.That doesnt just mean saving money,but also doing more with less and in more productive ways.It involves being really thou

221、ghtful on SKU rationalization and making sure that you have a good understanding of what your product will do for each consumer.If we look at different sports categories you play in,how have these developed over recent years and what is your expectation going forward?On a category level,running has

222、been immensely important in the past.And we see this trend continuing,because it is an activity that people can do without needing to go the gym.Even if we experience a recession in the next 18 months,you can always go outside and run.We also have a smaller outdoor business,which has grown very quic

223、kly in the past couple of years,and I see no reason why it would slow down.Again,in a difficult recessionary environment,people will still have the opportunity to spend more time outside,and so I think it will continue to be an important category for us.We also see good growth with our basketball bu

224、siness,where we have Stephen Curry as a core athlete.In North America,a lot of our business 34Sporting Goods Report 2023is based on American football and baseball,primarily.We are continuing to outfit team sport athletes and are really working to include them within our brand.We have also seen major

225、 growth over the past couple of years in the golf category.Golf is one of the sports that I think is becoming younger,and more relevant,and is also opening up from a gender perspective.Looking forward,what areas are you are planning to focus on in 2023?We will continue to refine our offering,and mak

226、e sure we are providing the right products for athletes,as well as being considerate and thoughtful in how we do that.We are also extending our engagement model with consumers,which we call“the journey to compete”.Historically,we split this journey into three different stages,which were training,com

227、peting,and recovering.Now we have added a fourth stage,which we call“live”.This builds on the idea of balance and how to include wellness into your life 24/7,as opposed to just when you exercise.Thats a pivot that I think we are going to see more broadly in society.One last question.Looking at the m

228、acro trends in the industry in the next three to five years,what do you think are the biggest opportunities?I think we will continue to see consumers focus on health,fitness,wellness,and sports.We are undoubtedly in a market that will continue to grow.I also think that the idea of branding and being

229、 really clear on who you are,and what you stand for as a brand,will continue to be important in building meaningful,individual relationships with consumers.In addition,sustainability and circularity are clearly going to be big drivers.We published our sustainability report last quarter,and we are in

230、credibly excited about making a lot of progress there.On circularity,I think the industry needs to come together to figure out solutions.We have a responsibility,not only as individual brands but also as leaders.“The idea of branding and being really clear on who you are,and what you stand for as a

231、brand,will continue to be important in building meaningful,individual relationships with consumers.”35Sporting Goods Report 2023 InterviewTim Boyle,Chief Executive Officer,Columbia Sportswear CompanyDear Tim,thank you very much for your time.How do you look at the Sporting Goods market at the moment

232、?Arguably,the number of sporting goods brands has reached an unsustainable level.In China alone,we have 700 branded competitors.Therefore,I think the main challenge is distinguishing your brand and offering your customers a truly unique value proposition.Theres a famous marketing executive who just

233、recently passed away here in Portland named Dan Wieden,and he basically said,“a brand is a promise.”So,when people buy your product,they expect that you fulfill a promise beyond the products features.Its about the experience when people wear a particular brand:what it reflects and how it makes them

234、feel.How do you see Columbia positioned in the world of Outdoor?We believe were an authentic brand.Were not in the Outdoor space because the category is hot but because this is who we are.When we describe who we are in more detail,we use some keywords:The first is“American.”Its comparable to when pe

235、ople think about a German car company like Mercedes.So,when we go to market,we try to continue to be known as an American company.Its actually very helpful in Europe,South America and in China and Japan,and around the world as it gives us a certain identity.Furthermore,we obviously are“Outdoor”and t

236、hink of ourselves as being in the“Active Outdoor”business.Were not making blankets to be used up.We make stuff to be used actively.Another keyword we use is“Value.”This doesnt mean inexpensive,but it means that we pride ourselves on being able to provide high-quality merchandise at reasonable prices

237、.So,we see ourselves as an American Active Outdoor Company with Great Value.Columbia has significantly benefitted from a real boom in everything“Outdoor”in the last few years.How do you see this trend evolving?I think we need to look back more than two years.Its hard to pinpoint precisely when the o

238、utdoor boom started.Weve been in business since 1938 and have grown steadily.Obviously,its grown much more rapidly in the last 18 to 24 months than it had in the previous period,as it coincided with the onset of the pandemic,the various lockdowns around the globe,and people being more comfortable ou

239、tside.Furthermore,Outdoor is also becoming a lifestyle.As you know,the percentage of running shoes sold that are used for running is not high.And I would think the same is true for outdoor apparel.Its designed for abuse in extreme conditions,but the chances its being worn for everyday wear are incre

240、asingly high.How do you see outdoor growing in parts of the world where it is still a relatively new trend,like ChinaIndeed,historically speaking,the Outdoor business in China is relatively new for example,if you compare it to Japan,where we have had an outdoor business for more than 40 years.When w

241、e first began doing business in China,we introduced ourselves as being in the outdoor business,and people didnt understand what that meant.People thought,You mean youre a farmer outdoors?.Obviously,we have seen a remarkable transformation in this regard,and nowadays,Outdoor is a major category in Ch

242、ina with fantastic growth outlooks.36Sporting Goods Report 2023“The success formula for our brands is creative vision paired with a well-oiled machine.”At Columbia,you have a portfolio of multiple brands.How do you drive synergies in such a portfolio of sportswear companies?The success formula for o

243、ur brands is creative vision paired with a well-oiled machine.Excellent leadership and creative vision are critical elements for each brands success.Weve been very fortunate to have genuinely distinct individuals leading the businesses that weve purchased and built who have almost a religious approa

244、ch.For example,somebody like Yvon Chouinard injects his personality into his products.So,once you have one of these individuals,you have to bolt it onto a machine that delivers to make sure they can focus on what they do best,and everything is in place to make them successful.This machine is also es

245、sential,of course.Its about branding,marketing,getting the product to market,incl.distribution and logistics,and manufacturing efficiency.But none of that will make you successful if you dont start with the first component that gives you authentic differentiation.That may be a somewhat more simplist

246、ic description,but in a very general way is how weve approached our multifaceted business.A topic that is top of mind for many consumers is the sustainability of their sporting goods purchases.How do you see this trend,and how do you approach it at Columbia?There is no question that its important an

247、d top of mind,but it is still tricky to showcase to the consumers everything we do.We almost dont talk about it ever,primarily because theres no point of differentiation in discussing that topic.Its most outdoor companies primary message,so how can we possibly be different if we talk about the same

248、message as everybody else?However,that doesnt stop us from heavily investing in this area out of a feeling of responsibility.For example,we created an entire product category in rainwear that uses a fabric we developed in-house that doesnt require a PFAS application.However,explaining that to consum

249、ers is a real challenge.Its complex,and consumers dont necessarily react to complicated messaging.Maybe we all,including our retail partners,need to do a better job of making sustainability visible and experienceable at the point of purchase.This could become a real issue for the industry.Many sport

250、ing goods companies have set ambitious CO2 reduction targets in absolute terms.However,achieving them is not only on the industry,but it also requires pull from the consumers.Without that,a lot of companies will have trouble reaching their targets.I believe that we cannot wait for the consumer,but w

251、e need actively push decarbonization levers that we control.Is nearshoring a lever for decarbonization that you consider relevant maybe even a way to de-risk supply chains further?Quite frankly,I think the whole nearshoring and logistical advantages are mostly a myth.Making the commercials work is a

252、lmost impossible.Why,Firstly,its so easy in Asia for these commodities.So,any advantage you find in logistics has to be so dramatic that it can overcome the cost savings in Asia.Secondly,when youre talking specifically about outerwear,a big commodity for us,it might have 30 components.The idea that

253、you would somehow be able to marshal those 30 components,which are frankly different in every style,in a fast way,thats just not going to happen.I would suggest that whatever efforts would have to be put forward to nearshore a complex product category would be better expended with more thought on wh

254、at the product is going to be,more investigation of market acceptance,and use of the existing established processes.37Sporting Goods Report 2023Becoming a brand super winner Sporting goods companies are among the most effective brand builders in the world.However,as consumer expectations rise and br

255、and relevance deepens,companies should keep brand building at the top of their agendas,applying a through-the-cycle mindset.Brand relevance38Sporting Goods Report 202339Sporting Goods Report 2023Leading sporting goods companies are masters of brand equity building,and of encouraging their customers

256、to engage and transact.Nike and adidas are ranked by Interbrand in the top 100 global brands33,while 7 of the 10 most valuable apparel brands are in the sportswear category,according to Kantar BrandZ34.The strongest brands are value creators by virtue of their brands alone.As per McKinseys State of

257、Fashion report,this ability has catapulted them into an elite group of 20 global fashion super-winners in terms of economic profit.On that basis,Nike is the leading fashion brand in the world,while adidas,Anta Sports,lululemon,Dicks Sporting Goods,JD Sports,and Li Ning are not far behind.There were

258、ten top 20 sporting goods super-winners in the financial years 2019-2021,compared with three in 201835.For consumers,brand loyalty often comes down to trust,which is closely associated with willingness to purchase.Indeed,55 percent of global consumers,and 66 percent of Asian consumers,say that trust

259、 is a make-or-break factor:without trust,they wont buy36.In the current economic environment,customer loyalty is being tested by increasing uncertainty,so trust is 33 Source:Interbrand Best Global Brands 202234 Source:Kantar BrandZ Top 10 Most Valuable Apparel Brands 202135 Source:State of Fashion 2

260、022,McKinsey&Co.and the Business of Fashion36 Source:Adobe study,July 202237 Source:WFSGI&McKinsey Sporting goods companies survey,September 2022(N=211)more important than ever.Brands need to adapt quickly to this changing environment and make brand building a priority.Indeed,many sporting goods com

261、panies understand this and,despite pressure to cut costs,are adding to their brand building budgets(Exhibit 8).Fifty percent plan to increase spending by more than 5 percent,WFSGI&McKinseys latest survey shows37.Consumer sentiment is also shifting.Previously,consumers were primarily driven by factor

262、s such as functionality,design,and price.Now,brand is increasingly important,or even dominant,in the purchasing decision.A typical customer looking to buy a pair of trainers,for example,in the past considered design and functionality first and brand second;nowadays,the first decision is which brand

263、reflects and amplifies the customers identity.Some brands are taking brand building a step further,considering new ways to engage with consumers and influence their desire to purchase.These reassessments often catalyze bold moves to boost brand profile and create an ecosystem that will support both

264、acquiring and retaining customers.Leading companies leverage five levers to build a strong brand:Brand relevance“Consumers ability to influence and push brands is stronger than ever.”Ann Miller,EVP,Chief Legal Officer,Nike40Sporting Goods Report 20231.The direct-to-consumer(DtC)revolution As recentl

265、y as a decade ago,wholesale distribution was the dominant business model.However,that is changing fast as DtC becomes increasingly relevant(Exhibit 9).For example,in 2012,just 17 percent of Nikes sales were DtC.In 2022,it is 42 percent,and the company aims to get to 60 percent by 202538.Many other b

266、rands are following suit.The starting point for a strong DtC model is a deep understanding of the consumer.Successful brands invest in integrated digital ecosystems to collect customer data and develop insights to inform the DtC strategy.A good example is Under Armours“Innovation idea house”,through

267、 which the company engages with consumers to gather ideas on topics such as products and innovations.38 Source:Company reports39 Source:Company website,press releases,fashion search engine Lyst2.Collaborations with high-end fashion brands Several highly-technical brands have joined forces with fashi

268、on businesses to broaden their appeal and tap into new audiences whose willingness to pay is often high.Tie ups between On and Loewe,Arcteryx and Jil Sander,and The North Face and Gucci have forged winning combinations of design and craftsmanship.One impact has been to expand customer bases.Online s

269、earches for On rose 42 percent after the tie-up with Loewe was announced,and were up more than 114 percent in the first four months of 2022,according to online fashion platform Lyst39.Another example is the Fjllrven-Specialized partnership,which developed a collection of functional clothing and equi

270、pment linked to cycling activities.19%27%54%Much more or More importantMuch less or less importantConstantSource:WFSGI&McKinsey Sporting good companies survey,September 2022(N=211);In your opinion,how is the relevance of having a strong and trusted brand evolving?(n=163);How are your companys invest

271、ments on brand building evolving?(n=88)Evolution of brand relevance,%of respondents 6%10%34%40%10%+15%or more-15%or less-5 to-15%+5 to+15%-5 to+5%Expected change in brand investment,%of respondents Exhibit 8 Sporting goods companies are focusing and investing more on brand41Sporting Goods Report 202

272、33.The power of community Sporting goods brands are rewriting the digital marketing playbook to create a much more prominent role for communities.With the same aim,companies are also investing in social media,affiliates,search,apps,platforms,and media networks.They are backing this up with purposefu

273、l brand stories,hero products,and personalization,alongside multiple micro-campaigns throughout the year including across non-commercial touchpoints.Indeed,the top sports-focused digital communities,including Strava,Freeletics,and Relive,are developing customer relationships that extend far beyond t

274、he transactional.Nike,lululemon,and Gymshark are among the brands to have been successful in fostering communities,and this has enabled them to reduce their traditional media spend.Lululemon has said that community building is core to its marketing strategy,including initiatives such as an ambassado

275、r program founded by local fitness and yoga coaches.Finally,digital communities(“there is an app for that”)have enabled active people to be part of a group while taking part in sports that are otherwise more solitary,including hiking,cycling,and running.4.From celebrity endorsement to influencer mar

276、keting Celebrity endorsement has traditionally played a significant role in sporting goods marketing,with sports stars an obvious choice to lead campaigns.And athletes are still the most trusted people when it comes to the technicalities of sportswear and equipment.Influencer marketing plays an incr

277、easingly important role in building brand awareness and loyalty.Brands are using social media channels to boost their most significant sponsorships,often reaching new audiences through the human faces of micro-athletes.Adidas is working with 50,000 US college athlete brand ambassadors and with indiv

278、idual influencers such as Adriene Mishler in the yoga space,promoting an Brand relevanceSource:Companies annual reportsEvolution of DtC(online and offline)sales,%of total revenues26%30%39%202%42%47%202%33%45%202%35%41%201620212018NikeColumbia Sportswear CompanyUnder

279、ArmourVF Corporation1.2018 data for VF Corporation not available due to transitions in reporting;in 2017 DTC sales were 32%,and in 2019 33%Exhibit 9 Sporting goods players have moved to DtC in recent years42Sporting Goods Report 2023aspirational and authentic brand voice.Alo has launched a Yoga Pro

280、program,offering discounts to instructors and building a network,while Gymshark has signed deals with influencers such as LICK and Nikki Blackketter,backed by a range of pop-up stores,world tours,and fitness meets.The company almost doubled its revenues in 2021.Not surprisingly,the most amenable dem

281、ographic to influencer marketing is Gen Z,58 percent of which believes that influencers expose them to new products and services,compared with 23 percent of Baby boomers.McKinseys consumer research shows that Gen Z and Millennials are influenced by social media up to 20 percent more than the general

282、 population40.5.Working with wholesalers and retailersSome companies are working directly with partners to build brand equity,and many retailers now present assortments by brand rather than product category.Meanwhile,brands are seeking to expand customer loyalty in collaboration with strategic retai

283、lers.For instance,Nike signed a partnership with JD sports,Dicks,40 Source:McKinsey&company COVID-19 Consumer Pulse Survey,2/25-3/1/2022,n=2160and Zalando,by which customers purchasing Nike at the retailers enter Nikes direct customer loyalty program.In exchange,the customer experience is enhanced t

284、hrough new community-building events and access to exclusive products.The closer collaboration between brands and retailers represents a win-win opportunity for both sides,enabling more sophisticated and extended consumer engagement.By transacting directly with consumers,focusing on fashion industry

285、 collaboration,and developing communities both digital and traditional companies are developing a new vision of brand building that is tailored to the demands of the modern economy.They are backing this up with digitally-native influencer marketing and recalibrated distributor relationships.These in

286、itiatives show that brands understand that customer loyalty in a digital world is fragile,and the customers voice is powerful.In response,the most successful brands will continuously refresh and innovate their brand strategies to ensure they remain on point.“Leisure and lifestyle are about image and

287、 identity finding a brand you identify with.”Holger Schwarting,Chairman of the Board,SPORT 2000 International43Sporting Goods Report 2023 InterviewAnn Miller,EVP,Chief Legal Officer,NikeDear Ann,thank you for your time.Looking back at a tumultuous 2022,what trends or events would you highlight as pa

288、rticularly relevant?I think we all probably feel that volatility is persistent and change is certain.But more particularly to the sporting goods industry,we are seeing an expanded definition of sport,which is really exciting.We are seeing a trend towards wellness and mental health,and these present

289、great opportunities to engage with consumers on new levels and help people to discover their full potential.The role of leading brands like Nike in engaging with consumers has always been vital in this industry,but how do you see this evolving?We have seen consumer expectations for brands going thro

290、ugh the roof.Consumers expect you to have a commitment to sustainability.Consumers expect you to speak out on specific issues.Consumers expect you to live your values.Consumers expect you to be relevant in their communities and committed to Diversity,Equity&Inclusion.Some might say there are more pr

291、essures on brands.I would say there are more opportunities for brands to step up,play a more significant role,and make a difference.Are you saying consumers have an expectation that brands deliver more than just great products?Yes.Absolutely.At least at Nike,we do not believe consumers are just buyi

292、ng a product.They are buying a value proposition and our mission.When they make a purchase,they are essentially endorsing us as a brand.And we take that very seriously.If we were merely a commodity,you would not give that type of significance to a purchase.The pandemic has heightened those expectati

293、ons because we have become much more reliant on digital and social media.So,consumers have many more opportunities to express themselves,and they have a more prominent voice.Consumers ability to influence and push brands is stronger than ever.And we say bring it on!We should be pushed.It should be a

294、 two-way street for us all to try to get better.In fact,if you think about Nikes mission,it is not just to offer consumers good products.Our mission is to innovate and inspire.Consumers get behind that and therefore expect it of us.“At Nike,we do not believe consumers are just buying a product.They

295、are buying a value proposition and our mission.”44Sporting Goods Report 2023What is the right recipe for engaging with consumers,being meaningful for them,and increasing your brand relevance?First,really know yourself.Know your brand.Know when it makes sense to step in and have a voice.But equally,k

296、now when you are not the right brand to engage.We come back to our mission and our purpose,and that always guides when,where,and how we engage in a conversation.The danger is trying to be everything to everyone when you dont have authenticity,credibility,or a differentiated point of view.Contrast th

297、at with really knowing who you are and taking those opportunities when they are aligned with your values,aligned with your mission,aligned with your purpose.That is when you can be credible.That is when you can be authentic.And that is when consumers believe you,trust you,and will go with you on the

298、 journey.Taking a stand also means opening yourself up to potential criticism,no?The larger risk is that you speak out about something where you are not credible or authentic.Your consumers are sophisticated and will call you out.They know if you are saying something that isnt true to who you are.I

299、think if you are issuing a press release every time a social issue emerges,your voice is not going to be differentiated.In trying to stand for everything,you stand for nothing.I belive that having discipline and really knowing who you are should guide when you choose to speak out.If there is no uniq

300、ue proposition and no differentiated impact,then I urge caution.Because I think you dilute your impact,and I think you can harm your brand unintentionally by not really picking and choosing moments where you can really drive impact for consumers and communities and employees.And the last thing I wou

301、ld say is knowing when not to be quiet.Knowing when you actually have a role to play,and it is unique.If you dont speak in those moments,it can do just as much harm.This might seem complex but,in the end,it comes down to being true to yourself,and acting with both confidence and also humility.“I thi

302、nk if you are issuing a press release every time a social issue emerges,your voice is not going to be differentiated.In trying to stand for everything,you stand for nothing.I belive that having discipline and really knowing who you are should guide when you choose to speak out.”45Sporting Goods Repo

303、rt 2023 InterviewHolger Schwarting,Chairman of the Board,SPORT 2000 InternationalDear Mr.Schwarting,thank you for taking the time.As one of Europes most prominent sports retailers,what are your biggest challenges today?Reviewing the past couple of years,the sporting goods industry underwent major tr

304、ansformations but also experienced a lot of positive impacts,driven by growing sports participation and the blending of health and sports in peoples minds,as well as of private life and business life.However,we are still dealing with supply chain disruptions.We are still not getting all the orders w

305、e place with brands,either in the correct quantity or delivery time.The most significant risk for me in this regard is the Zero-COVID policy China is sticking to.It can result in lockdowns,factory closures,and quarantine regulations for business travel from one day to the next.Of course,because of d

306、ifferent expectations,most sports retailers are dealing with higher-than-usual inventory levels.Some retailers are even canceling specific orders to manage that higher stock level.What is counterbalancing that challenge is that prices are going up,and we ordered at lower prices.If we cancel the orde

307、r,we will then have a 10 percent higher price on the next order.So,sometimes it even makes sense to keep the orders.Overall,inventory is a challenge we can deal with.The second major challenge is inflation and the insecurity it causes among consumers.We observe a certain amount of downtrading but,in

308、terestingly,not so much between brands.For example,instead of buying a pair of trainers that used to cost 160 but have gone up to 180,consumers look for another pair of that same brand that costs 140.They are taking a slightly lower-value product from their brand of choice.And,of course,we are seein

309、g more customers waiting for promotions and picking up the product at a better price.You mentioned the transformation of the industry during the past few years.Could you talk about the most important shifts for you and how you are perceiving their stickiness now that it seems we have moved out of th

310、e pandemic state with all its implications?We saw,especially during the lockdowns,how quickly even people who had never purchased online suddenly did so naturally.For a retail group with many retailers who were not very digitally savvy,it was a challenge to put up a system as soon as possible that m

311、ade our retail offering digitally available.We managed to do it but had we failed,we would have faced grave consequences.Since the shops reopened,the incredible ecommerce growth has slowed down.Instead,we saw a revival of brick and mortar shops.It is evident that many people like to go back to shops

312、.They want to hold the products in their hands before buying them,and they value expertise on the sales floor.We are seeing a new normal with a mix of digital and bricks-and-mortar.The same consumer prefers to buy a couple of tennis balls quickly online but visits the store to buy an innovative new

313、racket.The bottom line is that we must play in both worlds and blend them into a unified customer experience.Even though we have some online pure-players in our group,our task is mainly to evolve our brick-and-mortar offerings with seamlessly integrated digital elements.46Sporting Goods Report 2023Y

314、ou mention that you observe consumers reducing spending but staying loyal to their chosen brands.What drives this brand loyalty especially in these uncertain times?Lets distinguish between sport leisure and lifestyle categories on the one hand and sports performance on the other.If people buy primar

315、ily for sports leisure,they are very brand driven.The large global brands are at a clear advantage here.They have the highest direct-to-consumer percentage and can fuel their brand heat through marketing,investments into digital touchpoints,well-known ambassadors,and even collaborations with high-en

316、d fashion brands.Leisure and lifestyle are about image and identityfinding a brand you identify with.On the other hand,we have the more technically driven sports performance segments.Here,people buy for a specific activity,which allows small specialist brands to gain traction.Brand trust in this seg

317、ment is less defined by image and identity than by the brand delivering what is needed in terms of technical features and attributes.What will the midterm effects on the sporting goods retail landscape be?What kind of players will benefit?I think well see increasing polarization.On the one hand,we w

318、ill have price-driven and low-priced products that are standardized and primarily purchased online.On the other end,we will have innovative,higher-value,brick-and-mortar retailers offering the kind of expertise and experience that make a physical store visit worthwhile.I think we will see winners on

319、 both ends of this spectrum.Whoever remains in the middle will be struggling.This is true for Europe and beyond.At SPORT 2000,we have always focused on specialization in critical categories like outdoors or running.This category expertise,in combination with strategic relationships with key brands,a

320、llows us to cater to customers who are not only driven by the lowest price.Finally,as you and other sports retailers aim to stay ahead of the curve of consumer trends and offer that premium experience,what is the next big thing you need to master?I think a trustworthy and impactful offering around s

321、ustainability.Sustainability has become table stakes for many consumers,as you wrote in your last report,and we need to deliver on it.And not only that;we are excited to do our part for a livable future.At SPORT 2000,we started many years ago with an initiative called Green&Fair,where we engaged wit

322、h brands on topics like fairness in production and sustainable materials.However,we were a bit ahead of the curve.At that time,not many brands had a strategy regarding these topics.This has changed in the past two or three years,and we see brands doing a lot.However,it is our job as a retailer to br

323、ing this across to consumers at the point of sale.One of our essential functions is working with brands and explaining sustainability strategies and products.Consumers today want to make sustainable choices but are faced with a vast offering of products with different and sometimes cryptic sustainab

324、ility claims.The brands have a big challenge here,but at the end of the day,we are the ones who need to bring this across in a transparent way on the shop floor.What about circular business models?Where do you,as a retailer,see the most significant potential?Rental is where I see the highest potenti

325、al for retailers like us.For example,ski rental allows reuse of a ski 30 to 40 times in the season.In Europe,60 to 70 percent of ski sales go into rental.Weve substituted sales with rental income.Of course,that is difficult for brands since their volumes have decreased,but it is a much more sustaina

326、ble model.The second area with potential is repair and service.We have much experience with that in the bicycle market.The bicycle market is a relatively high-value product,so people dont want to throw it away after two years.They want to come back to have it serviced.However,I see this as a general

327、 trend.Products,at least by the brands we work with,are increasingly built for longer lifetimes but will also require servicing or repair to reach their longevity potential.This goes beyond equipment,by the way,and includes performance apparel.Furthermore,in recycling,we are happy to play a collecti

328、on role and can assist in shipping it back to the brands.A closed-loop recycling system for brands will not work without the stores as critical collection points,and we are glad to take on this responsibility.47Sporting Goods Report 2023RepairedrPETRented2nd handRefurbishedSustainability-Time to mak

329、e it real Sustainability48Sporting Goods Report 2023RepairedrPETRented2nd handAlongside peers in many other industries,sporting goods companies face a ticking clock on sustainability.To meet their highly-aspirational targets,companies need to both accelerate decarbonization and scale circular busine

330、ss models.Only through a combination of these levers will they transform their businesses and reach their goals.49Sporting Goods Report 2023Across the sporting goods industry,the sustainability bandwagon is in full swing.Almost every brand has made a commitment to reduce emissions,tackle destructive

331、 environmental practices,and embrace circular business models.Most sporting goods companies are driving initiatives that go beyond CO2 reduction,tackling dimensions across the environmental,social,and governance(ESG)challenge.Companies have published targets,made promises,and reported on their progr

332、ess.However,many are still seeing rising absolute emissions,despite reducing CO2 intensity per unit of revenue.As they plan to meet their 2030 targets,the next two to three years will be critical(Exhibit 10).To get there,many will require a strategic pivot,and a commitment to put decarbonization and

333、 circularity at the top of their agendas.About 45 percent of sporting goods companies have announced targets to reduce greenhouse gas emissions,on 41 Source:WFSGI&McKinsey Sporting goods companies survey,September 2022(N=211)42 Patagonia did not publish Scope 3 emissions prior to FY 2018.The significant decrease in emissions from FY20 to FY21 is largely due to a decrease in product inventory and t