The deal will see Reebok partner withBelle International Holdings, one of China’s largest footwear retailers, who will oversee the rollout of its FitHub concept stores — seven of which have already opened in China over the past few months in Beijing, Wuhan and Qingdao. A further 50 stores are expected to open this year.
With the sportswear and fitness market in China rapidly expanding, it’s a golden opportunity that many global brands are keen to cash in on. Indeed, for Adidas and Nike who have long been established in the market, China now represents the second-largest market in their businesses, second only to the US.
And this opportunity only looks set to grow. Activewear brands are benefiting from a cultural shift as China opens up to fitness. Sports participation in the country is rising fast thanks to a government initiative encouraging citizens to work out. Gym and health club revenue in China has nearly doubled over the past five years; Shanghai alone is now home to over 1,000 gyms.
"I don’t know that Reebok is going to significantly help Adidas in unseating Nike".In addition to the government initiatives, China is also seeing a growing interest in professional sports, increased appreciation for fitness and well being, and a move towards athleisure as a fashion trend.
“Also, as activewear has become more and more a part of fashion. Chinese consumers who appreciate fashion have also become more and more a part of the activewear and wellness industries,” he adds.
Combined, Nike and Adidas also account for about a third of China’s sportswear sales. Last year Adidas saw its revenues in Greater China grow by 28 percent, on a like-for-like basis, to €3 billion ($3.2 billion) while Nike reported in its third quarter, footwear and apparel segments in China rose 14 and 22 percent respectively.
In 2016, China’s sportswear market was estimated to be worth $28.4 billion, according to data from Euromonitor, and is expected to grow to $41 billion by 2021 at a compounded average growth rate of 7.6 percent.
“It’s always a little dangerous to dive in headfirst,” notes Buchwald. “For Reebok, as a challenger brand, it’s going to take them a long time to break into the top tier.”
“One of the lessons we certainly learned in the last couple of years is opening up retail, especially in China, doesn’t necessarily drive revenue growth,” he continued. “So they’re going to have to be very careful [to ensure] they are able to drive the demand along with that supply, and I’d say right now, you have the incumbents like Nike, Adidas and [domestic sportswear brand] Anta, they’re going to be very difficult to dislodge at this point… I don’t know that Reebok is going to significantly help Adidas in unseating Nike.”
Source; BOF
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