Dianbaobao: the transformation of the physical industry to e-commerce becomes an inevitable choice

At the end of 2020, the total annual sales of Nike, the world's largest sports brand, fell from US$39.1 billion in fiscal year 2019 to US$37.4 billion, a decrease of 5%. Revenue shrank by nearly 40% in March alone. After being forced to close about 90% of its physical retail stores, Nike began to reorganize this summer and plans to lay off all employees, with related expenses as high as $250 million.

Similar to Nike, as of August, Adidas' revenue has evaporated by about 500 million euros, more than 70% of physical stores have been forced to close, and sales in Europe, North America and Latin America have experienced a cliff-like decline;

Also affected by extensive store closures, Puma's net profit in the first quarter fell to 36.2 million euros, a decrease of 61.6% from the same period in 2019. Quarterly sales fell from 1.32 billion euros to 1.3 billion euros. Among the four giants, the current situation of Under Armour is the most severe, with a loss of nearly US$800 million in the first two quarters and the number of layoffs reaching 600.

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Zhang Bin, head of the Dianbaoo E-commerce Research Institute, believes that in the face of a comprehensive collapse in revenue, rising inventory levels, and sharp stock price fluctuations, restructuring, layoffs and reforms and upgrades have become inevitable choices for brands to adapt to the current situation.

Under the pressure of the epidemic, the sports equipment retail industry in the United States is groping for a new path, increasingly changing from a wholesale model to a DTC model (Direct To Consumer), selling products to consumers through e-commerce and retail stores directly managed by brands.

While the epidemic has hit the retail industry, it has also accelerated the development of e-commerce to a certain extent. The major sports equipment giants have also seized the opportunity of the e-commerce platform to recover. Among them, Nike is the most active in developing e-commerce business.

In fact, Nike's e-commerce platform has already performed well before. In order to boost revenue during the epidemic this time, Nike implemented a company-wide transformation plan, requiring more attention to e-commerce platform consumers. Thanks to this plan, Nike closed a large number of physical stores, but its online sales in the second quarter surged by 75%. E-commerce revenue rose to 30% of its total revenue for the first time.

In the following three months, although some retail stores reopened, online sales continued to rise, with significant growth in North America, China, Europe and the Middle East. At the same time, Adidas' e-commerce sales have also seen "extraordinary growth." In the second quarter, Adidas' self-operated e-commerce channel business grew by approximately 93%. The growth rate in April and May reached triple digits.

Puma, which has transformed from a fashion brand to a sporty style, also saw DTC sales increase by about 40% during the epidemic. Under Armour, which is the most difficult to restart, benefited from the upsurge of e-commerce business, and revenue in the third quarter improved. However, Under Armour is currently undergoing company restructuring, and the high restructuring costs and various legal disputes have created tremendous pressure.

Overall, the rise of e-commerce has indeed made up some of the losses for the sports giants. This year, the sales of e-commerce platforms for sports shoes and apparel in the United States accounted for 40% of total revenue, reaching a record high. At the end of the year, these major sports goods giants will also actively operate and strive to get back on track. For example, Adidas is preparing to sell Reebok to reduce vicious competition with different brands within the company, and Puma will continue to promote sports marketing.

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Origin blog.csdn.net/cnmjwz/article/details/112982851