Sportswear brands pin hopes on Olympic performance
As the London 2012 Olympics approaches, sportswear firms are battling to take centre stage, launching new innovations that are set to boost athletes' performance and drive maximum commercial value out of the event.
The Olympic Games offer a once every four years opportunity for sportswear firms to showcase the latest advances in technology, which they hope will drive sales at a time of low consumer confidence in many of their markets.
Official sportswear partner, and team GB uniform supplier, Adidas, is in a battle for market leadership, with the Olympics offering the opportunity to knock rival Nike off its perch in the UK. Nike currently commands around 18% of the GBP4.3bn UK sportswear market, while Adidas holds around 15% market share, says Kurt Salmon manager Kevin Dearing.
"We have a couple of key objectives attached to the Olympics," Adidas chief corporate communications officer Jan Runau told just-style.
"The first objective we have is that with the help of the Olympics, using our status as official sportswear partner of the London 2012 Olympics and Paralympic games, we want to lay the foundation to become the number one in the UK," Adidas chief corporate communications officer Jan Runau tells just-style.
He says the group grew its UK business by 19% in the first quarter. "You can already see we are on to a good way of increasing our business, because the Olympics have already played a part in our growth in the UK this year," he adds.
A long-term strategy
Adidas has spent US$201m to sponsor the games, the biggest single investment the German sportswear group has ever put into a UK sporting event. However, Kurt Salmon's Dearing emphasises that Adidas must expect to reap long-term benefits from the deal as it only expects a the games to bring GBP100m in extra sales in the UK across the four-year sponsorship deal.
"The Olympics is a classic example of longer-term marketing strategy, as the real rewards aren't the short-term boost to sales during the Olympic period, but from the longer term gains in market share over the next few years stemming from brand exposure," says Dearing. "Determining who comes out on top is more of a longer term view."
However, the UK is not the only focus for any gains, with the Olympics set to have 4bn viewers around the world.
"The biggest prize is likely to stem from the exposure brands will receive in the fastest growing markets around the world, particularly in Asia," says Dearing.
Indeed, Kurt Salmon manager Laura Biggs says the majority of the growth that sportswear brands are seeing is being driven by developing markets. For example, Puma recorded 10-11% growth across India, Korea and Japan during the first quarter of this year, compared to a meagre 4% in the struggling Eurozone.
While Adidas is sponsoring the British Olympic team, which will be wearing uniforms designed in collaboration with Stella McCartney, it faces stiff competition from rivals Nike, Puma and Bosco Sports who have created the US track and field uniforms, the Jamaican team outfits and Russian kits respectively.
Dearing says Nike will be "sure to have a substantial advertising campaign, supported by widespread product placement" which, combined with its position as sponsor of team USA merchandise, will mean that it is set to see a boost over the Olympics.
"Nike has historically seen a 6% boost in stock price during the Olympic period and there is no reason to suspect that London 2012 will be any different," he says.
Unlike many sporting events, Olympic venues carry no perimeter advertising, which means apparel and footwear logos worn by the athletes are the most recognisable brands.
This makes the games one of the best events for sports manufacturers to showcase the latest technologies which can contribute to athletes' record breaking performances.
For instance, Nike has launched its new generation of Project Swift apparel for the US team to maximise athlete velocity. The brand claims the AeroSwift technology reduces drag and means the that the uniform can help sahve 0.023 seconds across an athlete's performance across 100m.
Meanwhile, Puma introduced its evoSpeed footwear collection, which includes the Bolt evoSpeed runner inspired by athlete Usain Bolt. While Puma is set to receive significantly less exposure than Nike or Adidas in the 2012 games, it is still poised to see rising sales, emphasises Dearing.
"Having been a long-term sponsor of the world's fastest man, Usain "Lightning" Bolt, they believe they have greatly benefited from this association, claiming that it contributed significantly to the 10% increase in footwear sales they achieved in 2011," he explains.
"Bolt's exposure will only increase in 2012, this, in combination with their sponsorship of what will likely be a highly successful Jamaican Olympic team."
Swimming is one sport that has seen massive leaps in the way technology drives performance. Speedo claims its latest swim suit, the Fastskin3, which includes cap, goggles and suit, offers full-body passive drag reduction of up to 16.6%, an 11% improvement in the swimmer's oxygen economy, and a 5.2% reduction in body active drag.
But in the current economic climate, sales lifts are uncertain warns Dearing. "Few spectators would be able to ignore the aspirational draw of Usain Bolt's Puma spikes or Michael Phelps' Speedo Fastskin 3, but whether this will translate into immediate increased sales is still to be seen."
With additional research by Katie Smith.
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