Nike losing teens in footrace with Adidas, analysts say

The investment bank and asset management firm Piper Jaffray released the findings of their latest biannual “Taking Stock with Teens” Survey, MarketWatch reports, and apparently, Nike is losing touch with teenagers. Instead, the demographic seems to be spending more with Adidas and Amazon.

Before you throw out your swoosh-covered sweats and socks, Nike (NKE) still holds court as the top clothing and footwear brand. The survey does relay that the sportswear giant is among the top brands that experienced the largest declines. Other household names that suffered sharp declines include: Ralph Lauren (RL); Steve Madden (SHOO); Ugg, (DECK); Fossil (FOSL); and Michael Kors (KORS).

Under Armour (UAA)  also took a hit from the survey, with teen males ranking it as the No. 1 brand classified as “old.” According to CNBC, Under Armour only got one vote among upper-income females as a brand favorite. Nike vs. Adidas aside, it actually seems as though the entire athleisure trend is beginning to lose favor with the teenage demographic. Only a third of teens chose athletic apparel as their preferred fashion pick, down 40 percent from last year. The overall trend moved towards festival fashion.

Piper Jaffray polled 6,100 teens across 44 states for the survey. The average participant’s age was 16; the average household income was $66,100.

After examining the results, analysts were most surprised by Nike’s decline compared to Adidas’ (ADS) surge in popularity. Adidas “doubled its mindshare,” going from 2 percent to 4 percent. Even with their rise, Adidas didn’t fully offset Nike’s losses.

“Overall, larger brands are ceding share for small brands,” Piper Jaffray analysts noted.

Analysts highlighted brands like Vans (VFC) and Supreme as rising in popularity.

Other familiar names ranked highly in the survey as well. Starbucks’ (SBUX) siren call resounded with teens from upper-income households (average yearly income of $101,000) as their top restaurant; it also ranked first among teens from median income households, those bringing in $55,000. Netflix (NFLX) chilled at the top for daily video consumption. Snapchat was the fan favorite for top social media platform. Turns out that teens don’t diverge much from their grownup counterparts when shopping, picking Amazon (AMZN) as their online retailer of choice.

One reason why Amazon has consistently ranked as teen’s favorite site for the past three years could simply be that the company knows their customer base well. Recognizing the opportunity to turn teen shoppers into lifelong customers, Amazon just announced that teens between 13 and 17 years old can now shop on their site with a personal login. Parents or guardians will receive an email or text with order details. Parents can then either approve the purchase or even set limits on their child’s spending.

Christian Magoon, CEO of Amplify ETFs, pointed out that Amazon’s strategy to capture a younger demographic was good for the company’s longevity, considering entire households can now be raised using Amazon smart home products.

“Younger generations rebel against things that are static,” Magoon highlighted, reasoning that other retailers should take notes from Amazon’s strategy.

“Amazon continues to innovate and grow,” he continued. “We’re not at peak Amazon. People are still excited about what’s next.”

Overall though, teen spending is down 4 percent compared to last year, CNBC reports. Teen spending accounts for 7 percent of the country’s retail sales, amounting to nearly $830 billion yearly.

China Trades Luxury Goods for Adidas?

China’s luxury market is facing some new competition.

In 2015, half of the global luxury market consisted of Chinese consumers. These consumers are now setting their eyes on sportswear.

But why did this trend surface? There are but two reasons.

Recently, luxury goods are becoming less accessible to the Chinese middle class due to last year’s anti-extravagance campaign led by president Xi Jinping. In addition, the tastes of the elite have moved from visible brand name goods to sportswear.

This trend mirrors the “athleisure” trend, athletic apparel that can be worn in non-athletic settings, in the U.S. Now that China has joined the bandwagon, it presents US companies with huge opportunities to profit from.

The Chinese sportswear market is quickly growing and may threaten to surpass the luxury-goods market in the next few years. Euromonitor International, a market-research firm, reports that the Chinese sportswear market grew to $25.3 billion in 2015 and estimates that the market will continue to grow to $43.1 billion by 2020, topping the Chinese luxury-goods market.

U.S. companies aren’t standing still. To satisfy the growing demand for sports apparel and goods, sports companies are opening more stores. Specifically, Adidas is opening 3,000 more stores in China, expanding from 9,000 to 12,000, after sales in the region increased by 18%. Under Armour and Lululemon also expect to reap benefits. Under Armour estimates that sales will increase up to 25% per year until 2018. Lululemon’s first store in Hong Kong is reportedly on track to making $8 million in sales in 2016.

With this new trend, Chinese sportswear companies are declining. As U.S. companies become bigger and more influential, they are devouring Chinese sportswear sellers. The South China Morning Post reported that Chinese companies were losing profit. The main driving factors for the athleisure boom come from the promotion of sports for the upcoming 2022 Winter Olympics held in Beijing and the possible boost from the end of China’s one-child policy which, in turn, strengthen the international athletic apparel companies leaving Chinese companies in the dust.

Adidas Passes on Rockport to New Balance

Adidas no longer holds the ownership of its Rockport business. As of Monday, Adidas has officially handed over their company to both Berkshire Partners LLC and New Balance Holding, Inc..

Both companies who bought Rockport are in affiliation with the New Balance brand. Berkshire is a Boston-based investment firm and New Balance, Inc. is head of New Balance investments. Another corporation who joined in part with the transaction is Drydock Footwear LLC, home to Cobb Hill, Aravon and Dunham brands and is also affiliated with the New Balance corporation. These jointments will be forming The Rockport Group.

Adidas has not yet announced what they officially sold their footwear based company for, but back in January when they announced they would be selling Rockport to Berkshire Partners and New Balance, the price was set at $280 million.

A CEO for The Rockport Group has already been named; Bob Infantino, who has worked at Drydock since 2011, will take on the role as CEO.

Rockport will still remain in its home stomping grounds in Canton, MA, but with The Rockport Group, it will now be considered a stand-alone company. The group is responsible for four global brands, Rockport, Cobb Hill, Aravon and Dunham. One will be able to purchase comfortable and casual clothing and footwear at the four retailers.

Image: Via Flickr/Mike Mozart

Adidas And Nike Battle Out Business Rivalry During The World Cup

As many know, Nike and Adidas have an ongoing rivalry that has yet to be settled. No one has ever been able to say which brand can officially be crowned the winner. What’s a better way to compare the two sporting companies than with The World Cup? Well, it turns out the two competitors both put up tough battle throughout the games in order to win customer votes.

Nike sure made a name for itself having soccer-related income raise 21 percent to $2.3 billion in the fiscal year that ended on May 31. “I promise you it will continue like that in the next year,” Chief Executive Officer Mark Parker told the Handelsblatt daily in an interview, according to Reuters

This overwhelming confidence that Nike holds is justified after shoe sponsor Mario Götze of Germany scored the only goal to make Germany World Cup Champions. Nike received a big boost of popularity after its name was written all over the winning finish.

Nonetheless, Adidas shouldn’t be ruled out of the competition just yet. The company still has strong ties to the event given its jersey deals with both of the finalist teams. In addition, Argentina stars Lionel Messi and Thomas Müller rocked Adidas cleats on the field, according to Bloomberg Businessweek.

Adidas Chief Executive Officer Herbert Hainer said that the company was investing a “double-digit-million sum” in World Cup advertising, according to Bloomberg Businessweek. It appears to be that this heavy spending paid off, too, because Adidas is now expecting $2.7 billion in soccer-related income.

So then who won? Both sporting companies created a strong fight within the industry. Maybe the decision should be left up to personal opinion, after all – but then again, maybe not.


FIFA’s Corporate Partners to Gain from Argentinean Win

With the United States and World Cup host Brazil out of the contest, FIFA’s big-spending corporate partners may be relieved by the outcome of the nail-biting semi-finals match between Argentina and the Netherlands on Wednesday, July 9.

After remaining in a scoreless stalemate through 120 minutes of play, the match was settled in a penalty kick shootout. Argentina’s goalkeeper Sergio Romero made two saves in the shootout that put Argentina on top, 4-2, and sent them to the World Cup final where they will face Germany for the cup.

Argentina has had an average of 3.63 million U.S. viewers, which nearly edges out the Netherlands’s 3.61 million. Even though that may seem like a small margin, some analysts speculate that Americans are more likely to tune in for Argentina than the Netherlands.

Forbes provided a chart that illustrates why Argentina has shown more support from American viewers than the Netherlands. The Netherlands’s average viewership was largely inflated by their match against Mexico, a team that has a strong following in the U.S. That game also skewed the comparison because it was played on a Sunday, while Argentina’s comparative Round-of-16 game against Switzerland was held on a Tuesday.

via Forbes
via Forbes

According to a Forbes article on June 2, FIFA gathered $404 million from marketing rights in 2013. FIFA’s major corporate partners, which include Adidas, Coca-Cola, Emirates, Hyundai Motor Group, Sony and Visa, spend $25-50 million per year, while second-tier sponsors pay $10-25 million annually. According to a July 9 article, ESPN pays $50 million for TV rights.


Read also: USA Win Over Ghana Breaks Records in World Cup


Although the growing trend in soccer viewership has shown major growth in this year’s World Cup for ESPN, and many viewers would have tuned in for Sunday’s final match regardless of who was in it, big spenders like ESPN and FIFA’s other corporate partners should be happy to have the extra boost that Argentina can offer.

Adidas, in particular, can rejoice over Argentina’s victory because they put out an ad that features Argentine superstar, Lionel Messi, who has cultivated a U.S. fan base.