Adidas and Reebok Team up with Nike's Dominance

The merger agreement between Adidas and Reebok will reshape the entire international sporting goods industry

The two super sporting goods companies Adidas and Reebok announced that they have reached an acquisition agreement. This disruptive agreement will reshape the entire international sporting goods industry. From then on, Nike will face an unprecedented challenge to dominate the world.

Analysts said it was Adidas America’s chief executive Eric Starnger that promoted the acquisition negotiations. He has always stated that he wants to expand the company’s market share in the United States and made similar comments in an interview with German newspapers in June. He said that the company’s U.S. operations reversed its decline in the second quarter, and its profit growth was faster than sales growth. "If we maintain this growth momentum in the next three years, the goal of occupying 20% ​​of the U.S. market will naturally become feasible."

On the other hand, Adidas recently under the leadership of Chief Executive Officer Herbert Heiner is undergoing restructuring of the company. Hainer’s most significant move was in May of this year when Adidas sold Salomon, a poorly performing winter sporting goods brand, to Emerson Sporting Goods of Finland for 485 million euros (about 590 million US dollars). Solomon was a brand acquired by Adidas for $1.3 billion in 1997, but the brand failed to become a profit driver for the company. Leaving Solomon to make Hainer have more funds for other mergers and acquisitions.

Through the acquisition of Reebok, Adidas’ share of the American sports shoe market will double to 20%. Nike is still the leader of the US sports footwear market. Last year, sales reached 907 million US dollars, sitting half of the US sports footwear market.

After the merger, the company will significantly narrow the gap with Nike's market share in the United States. According to statistics from the International Sports Goods Manufacturers Association, Nike’s share of the American sports shoe market was about 36% in 2004, while Adidas and Reebok were 8.9% and 12.2%, respectively. Nike’s full-year sales in the most recent fiscal year were close to US$14 billion, while Adidas and Reebok’s annual sales were US$8.1 billion and US$4.0 billion.

Analysts believe that the merged company will be more persuasive when negotiating with the retailer, and it will be able to secure more and better shelf positions; it will also be in a more favorable position when signing endorsement contracts with stars; Get more advertising discounts from the media.

Stephen Greser, a professor of sports marketing at the Harvard Business School, said that the merger of the two companies will not only increase the scale, but also produce a complementary effect on the geographical distribution, as well as on the distribution channels.

The merger will also enable both celebrity spokesmen to join forces. Currently, David Beckham is one of Adidas's signature spokespersons, while Iverson and Yao Ming are two of the most famous spokesmen for Reebok.

Adidas and Nike "grab" China

In the spring of 2005, Adidas announced a high-profile strategic partnership with the 2008 Beijing Olympic Games and plans to establish a Chinese company. Following the announcement of a series of news, Nike revealed in May that it would establish a new company in China.

This is a contest in the world sporting goods industry. As 2008 nears and closes, China is likely to replace the United States as the largest consumer market for sporting goods, and big brands will inevitably take the runway.

Herbert Hainer, the chief executive of Adidas, announced that after 2005 China will be regarded as "second only to the United States," everything will change.

For Adidas, the 2008 Beijing Olympic Games is a great opportunity to enter. In China and Asia, adidas' marketing strategy is to closely link with world-class sports events, signing endorsement agreements with gold medal team members and gold medal players, and carrying out brand promotion. In fact, for sporting goods companies, the Olympic Games, World Cup, NBA, and gold medal athletes are all great influences and have a good reputation. It is also the best form of publicity.

As Herbert Haener said, the Olympic Games is the largest and most exciting sports event in the world. It will be held in China in 2008. This will provide Adidas with a unique platform to establish a brand image of Adidas in China and throughout Asia. With business.

Adidas even prepared an Adidas professional team that includes global and Chinese experts. They will work exclusively for the Beijing Olympic Games. The purpose is to tailor products and equipment for the Beijing 2008 Olympic Games project.

On the other hand, Nike has been qualified for the Chinese sports delegation to provide prize equipment at the Asian Games, and from this year until 2008, it has become a partner of the China Swimming Association.

After signing the contract, Nike will fully provide equipment, financial support and other services for the China Swimming Association. Chinese national swimming team, Chinese synchronized swimming team, and Chinese water team will all be the object of Nike's support and service. In this year's World Swimming Championships, Asian Swimming Championships, World Synchronized Swimming Championships and other competitions, Nike's high-tech fast swimwear (Swift) will also appear in international swimming pool.