EXCERPT from the Digital IQ Index®: Sportswear to Access the Full Report, Contact [email protected]
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® EXCERPT from the Digital IQ Index : Sportswear To access the full report, contact [email protected] January 28, 2014 SCOTT GALLOWAY NYU Stern in partnership with: Sportswear © L2 2014 L2ThinkTank.com ® EXCERPT from the Digital IQ Index : Sportswear ® Digital IQ Index : To access the full report, contact [email protected] January 28, 2014 Sportswear Wearables: Forecasted Sales by Region 2013–2018 REVENGE 300 250 Middle East & Africa of the Nerds Australasia Pocket pen protectors and M.I.T. diplomas are on the 200 rise in Portland, Oregon. Wearables, mass customization, Asia Pacific and e-commerce have made engineering degrees the 150 equivalent of a Rose Bowl ring. More than a third of global Latin America Sportswear brands offer customization of products ranging Millions of Units from swim goggles and hiking boots to running shoes 100 North America and cold-weather jackets. Nike now offers more than 450 Eastern Europe customizable products through its NikeID program. 50 Western Europe Winning 0 Tech firms Apple and Google should own the wearables market. However, 2013 2014 2015 2016 2017 2018 while Angela Ahrendts moves from London (Burberry) to Cupertino (Apple) Source: Euromonitor, December 2013. and “Glassholes” (Google) try to show the world why spectacles warrant sensors, Sportswear firms have established a leadership position in wearables with robust, useful products. The competition is fierce. Nike, Adidas, Under Armour, and Fitbit have custom wearable fitness products that foster loyalty and exploit network effects in a category projected to explode to $50 billion in By 2017, wearable devices will drive 50 percent sales over the next five years.1 of total app interactions (on mobile devices). Source: Gartner, January 2014. E-commerce E-commerce is the fastest growing channel in Sportswear, but is still only 6-7 total sales.4 More recent entrants including Lululemon do better, suggesting percent of total sales.2 Direct-to-consumer/vertical channels are even smaller. the friction is focus and aptitude, versus consumer behavior. The yoga apparel Nike tallied 540 million in sales in fiscal 2013 through Nike.com,3 or 2.1 percent retailer registers 16.3 percent of its sales via e-commerce.5 In the fourth of global sales (forecasted to reach $2 billion by 2017). Rival Adidas registered quarter of 2013, Lululemon rolled out m-commerce devices in high-volume direct-to-consumer e-commerce sales growth of 77.5 percent in 2012 (versus stores to increase inventory availability. 11 percent total sales growth). However, online sales are only 1.1 percent of 1. “Wearable Technology Market Set to Explode, Could Reach $50 Billion, Says Credit Suisse,” Vikram Kansara, Business of Fashion, May 19, 2013. 2. “The Sportswear Revolution: Global Market Trends and Future Growth Outlook,” Magdalena Kondej, Euromonitor International, July 2013. 4. “Global web sales grow nearly 80% for adidas,” Mark Brohan, Internet Retailer, March 25, 2013. 3. “Nike envisions $2 billion in web sales in four years,” Mark Brohan, Internet Retailer, October 21, 2013. 5. “Direct-to-consumer sales increase 37% for Lululemon in Q3,” Katie Evans, Internet Retailer, December 12, 2013. © L2 2014 L2ThinkTank.com. Circulation of the report violates copyright, trademark and intellectual property laws. 2 ® EXCERPT from the Digital IQ Index : Sportswear ® Digital IQ Index : To access the full report, contact [email protected] January 28, 2014 Sportswear Hurdles Sportswear: Global Annual Growth Rate by Channel Despite the opportunity, several challenges hamstring the Sportswear 2007-2012, U.S. $ Millions industry online: Store-based Retailing E-commerce Homeshopping • E-commerce giant Amazon threatens to undercut price and brand 30% perception in a market increasingly focused on premium products. 24.5% 25% Although 57 percent of Sportswear brands sell on Amazon, major 22.9% players including Adidas, Nike and Puma have limited their distribution 20% 16.5% on the platform. 15% 12.7% • Sportswear brands have yet to exploit multichannel marketing 10% 8.4% opportunities. Despite the shift to vertical retail and substantial 6.9% 6.9% 5.2% investments in e-commerce, few brands connect the two. Only 11 5% 3.0% percent of Sportswear brands feature real-time inventory integration, and Year Over Change 3.1% 0% just three—Eastern Mountain Sports, REI, and The North Face—provide -3.6% 1.2% in-store pickup. While brand mobile apps have been successful, just 28 -5% -3.5% percent incorporate a store locator. -5.3% -10% -7.6% 2013. February Euromonitor, Source: 2008 2009 2010 2011 2012 • Personalized marketing and customer service lag. Only 14 percent of brands personalize emails, and just a quarter send automatically triggered abandoned-cart emails. Site customer service features (e.g., live chat) are employed by less than half of brands. Sportswear: Global Market by Channel Digital IQ = Shareholder Value 2012, U.S. $ Millions Our thesis is that digital competence is linked to shareholder value. This Store-based Retailing E-commerce Homeshopping study attempts to quantify the digital competence of 57 global Sportswear brands. Our aim is to provide a tool for identifying strengths and $15,007 $3,195 weaknesses, helping brands achieve greater return on digital investment. Like the medium we are assessing, our approach is dynamic. Please reach out with comments that improve our methodology and findings. SCOTT GALLOWAY Professor of Marketing, NYU Stern Founder, L2 $226,928 [email protected] Source: Euromonitor, February 2013. © L2 2014 L2ThinkTank.com. Circulation of the report violates copyright, trademark and intellectual property laws. 3 ® EXCERPT from the Digital IQ Index : Sportswear ® Digital IQ Index : To access the full report, contact [email protected] January 28, 2014 Sportswear About the Ranking The Methodology 35% 25% 20% 20% Site & E-Commerce Digital Marketing Mobile Social Media Effectiveness of Brand Site Search, Display, and Email Marketing Efforts Compatibility, Optimization, and Brand Presence, Community Size, Technology Search: Marketing on Smartphones, and Tablets Content, and Engagement Search & Navigation Traffic, Web Authority, SEO/SEM Smartphone Experience: : Facebook: Product Pages Compatibility, Functionality, Ability to Likes, Annual Growth, Custom Tabs & Email: Customer Service & Store Locator Transact Apps, Responsiveness, Engagement Ease of Sign-Up, Frequency, Content, Behavioral Account & Loyalty Triggers Tablet Experience: YouTube: Customization/Communities/Sponsorship Compatibility, Responsiveness, UI/UX Search Visibility, Channel Experience, Blog & Other User-Generated Content: Optimization Video Views, Virality of Content Mentions, Sentiment, and Brand Buzz Brand Translation Provided by: Mobile Search: Twitter: Aesthetics Advertising & Innovation: SEO/SEM, Localization Followers, Annual Growth, Frequency, Messaging & Visuals Display, Retargeting, and Cross-Platform Online Voice Initiatives Mobile Applications (iPhone, iPad, Android): Instagram: Availability, Popularity, Functionality Presence, Community Size, Engagement Emerging Social Media: Pinterest, Google+, Tumblr, Vine Digital IQ Classes Genius 140+ Gifted 110–139 Average 90–109 Challenged 70–89 Feeble <70 Digital competence is a point of Brands are experimenting and innovating Digital presence is functional Limited or inconsistent adoption of Investment does not competitive differentiation for these brands. across site, mobile, and social platforms. yet predictable. Efforts are mobile and social media platforms. match opportunity. Brands have embraced customization, Digital presence is consistent with brand often siloed across platforms. Sites lack inspiration and utility. online sports communities, and cross- image and larger marketing efforts. platform campaigns. © L2 2014 L2ThinkTank.com. Circulation of the report violates copyright, trademark and intellectual property laws. 4 ® EXCERPT from the Digital IQ Index : Sportswear ® Digital IQ Index : To access the full report, contact [email protected] January 28, 2014 Sportswear Digital IQ Ranking GENIUS Nike Genius, Gifted, Average The North Face REI adidas RANK BRAND DIGITAL IQ RANK BRAND DIGITAL IQ RANK BRAND DIGITAL IQ GIFTED New Balance Genius Gifted Puma Under Armour 1 151 5 135 11 122 L.L.Bean Lululemon Athletica Ugg Australia Nike New Balance Athletic Shoe Quiksilver Patagonia Quiksilver Reebok Timberland Vans 2 149 6 133 13 118 Eddie Bauer Ray-Ban AVERAGE VF Corporation Kering Adidas Converse Saucony Columbia Sportswear Eastern Mountain Sport Oakley 3 148 6 133 14 117 Teva Vineyard Vines Athleta Recreational Equipment Under Armour VF Corporation Hurley Lacoste Speedo Brooks Burton 4 146 8 130 15 115 Volcom Skechers Sperry Top-Sider Adidas L.L.Bean VF Corporation Merrell Arc’teryx Mizuno Billabong Nautica 9 128 16 113 Asics Reef Lululemon Athletica Golden Gate Capital CHALLENGED Mountain Hardwear Wolverine Lucy Keen 10 123 17 112 Rockport Champion TYR Deckers Outdoor Corporation Luxottica Group Helly Hansen FEEBLE Average Russell Marmot Napapijri 11 122 18 109 Danskin K-Swiss Vibram FiveFingers Patagonia Nike Skins Fila Umbro © L2 2014 L2ThinkTank.com. Circulation of the report violates copyright, trademark and intellectual property laws. 5 ® EXCERPT from the Digital IQ Index : Sportswear ® Digital IQ Index : To access the full report, contact [email protected] January 28, 2014 Sportswear Digital IQ Ranking GENIUS Nike Average The North Face REI adidas RANK BRAND DIGITAL IQ RANK BRAND