MISSION: TO BE THE BEST FITNESS BRAND IN THE WORLD
Reebok is an American-inspired global brand with a deep fitness heritage and the mission of being the best fitness brand in the world.
To realise this mission, the past years have been characterised by a transformation from traditional sports to fitness. The three sides of the Reebok Delta, a symbol of change and transformation, represent the physical, mental and social changes that occur when individuals embrace the challenges of fitness.
Through this journey, Reebok has invested in its training and running businesses to develop products that cater to an evolving fitness routine, while returning to its fitness roots in Classics to support a fashion-forward lifestyle outside of the gym. Driven by its ambition to be the innovation leader in fitness, Reebok is pioneering new fitness activities as well as developing new technologies and products to reinvent the uniform of fitness and inspire people to be their absolute best.
CONSUMER OBSESSION:
THE FIT GENERATION
Reebok strives to lead fitness through a more social and more intense version of fitness that transcends any traditional workout regimen.
The ‘Fit Generation’ is at the epicentre of this fitness movement and therefore Reebok’s target consumer group. These consumers, equally men and women, are driven by mental, social and physical challenges. They are constantly setting new goals and recalibrating their definition of success. These consumers believe that fitness is not just something they do; rather, it is part of their identity.
They approach fitness with a holistic mindset, engaging in fitness activities several times a week and taking care to constantly mix up their routine to avoid complacency. Through robust research and interaction with consumers, Reebok has taken significant time to understand the complexities of their fitness lifestyle as well as their product needs and desires.
FOOTWEAR FRANCHISES:
CREATING THE FOUNDATION FOR FITNESS
Reebok recognises the importance of building strong footwear franchises, establishing repeatable product lines that become annuities for the brand and core items for the consumer. This is not only essential for enhancing consumer perception and brand consideration, but also essential for the overall efficiency of the Reebok brand.
For this reason, Reebok is heavily investing into franchises, making this a key priority going forward. By 2020, Reebok expects footwear franchises to represent at least 25% of the brand’s total footwear business. In 2017, key franchises will include Classics products unique to Reebok’s fitness DNA such as the Classic Leather and Club C, while continuing to build on the success of the Nano, a product that is continually enhanced by the CrossFit community and has deep-rooted authenticity. In addition, 2017 stands as a pivotal year for Reebok Running and will include the launch of the FloatRide and Pump Plus as well as the newest evolution of the Print Run.
WOMEN’S: WINNING WITH HER
Reebok is putting women at the heart of everything the brand does. This female-centric approach, where women are the focal point of content strategy, marketing activation and distribution, is a fundamentally different approach relative to other brands in the industry, which will allow Reebok to become a truly dual-gender brand with its women’s business representing 50% of the brand’s net sales.
MARKETING INVESTMENTS:
AMPLIFYING THE BRAND’S PURPOSE
Reebok is focused on creating inspirational marketing capabilities that build brand equity and consumer advocacy, while unleashing powerful brand messages. A key tenet of Reebok’s marketing and communication strategy is that movement is essential to living a full life.
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Be More Human: Inspiring people to be their absolute best physically, mentally and socially is not only the brand’s guiding principle, but also the essence of Reebok’s global marketing campaign ‘Be More Human’. Launched in 2015, ‘Be More Human’celebrates everyday people who have reconnected to a primal physicality that allows them to live more fulfilling and less self-focused lives. For these individuals, fitness isn’t just a physical activity – it’s something that enhances their entire life and empowers them to reach their full human potential. In 2016, Be More Human saw continued success with the latest chapter,
’25,915 Days’, which delivers the important message of living each day in one’s life to the fullest.
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Partnerships: To amplify the brand, Reebok has entered into a series of groundbreaking partnerships with some of the fastest-growing and most innovative organisations in the fitness world, such as CrossFit, UFC, Spartan Race, Ragnar and Les Mills.Reebok also partners with a number of highly influential music artists and athletes such as Kendrick Lamar, Ronda Rousey and J. J. Watt. Most recently, talented music artist Future and high-profile supermodel Gigi Hadid have joined Reebok’s strong roster of brand ambassadors.
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Instructors: With over 100,000 instructors currently part of its global network, Reebok seeks to be the brand of choice for instructors around the world, providing them a platform to share consumer insights and collaborate on product innovation.Continuing to build relationships with fitness instructors is a crucial component of Reebok’s goal of connecting with the global fitness community.
ROLE OF THE CATEGORIES
Reebok Running, Training and Classics each serve vital roles for the Fit Generation. Running is the original fitness activity and will remain a staple within the Fit Generation’s exercise routine. Reebok Running’s insight-driven and consumer-led approach fosters continually innovating the use of technologies that support authentic and desired cushioning experiences. Reebok Training is central to Reebok’s fitness mindset and offers a complete range of both highly specialised and versatile products that are at the forefront of fitness and true to the culture and community the Fit Generation trains in.
Reebok Classics fuses the brand’s fitness heritage with the modern looks of fitness reflected in Running and Training to support the Fit Generation consumer who seeks to reflect a fitness lifestyle in every aspect of life.
REEBOK REORGANISATION: STRENGTHENING THE BRAND’S GROWTH FOUNDATION IN NORTH AMERICA Over the last years, Reebok has made major progress in its transformation from a general sports brand to a 100% fitness-focused brand and has witnessed continued top-line growth in the
last 15 quarters. Despite all progress, Reebok continues to grow at a slower pace compared to many of its competitors. In addition, there has been no growth in Reebok’s home market, North America, over the last years and the brand’s margins are not accretive to the company’s overall profitability.
Therefore, in 2016, we announced a plan, starting in 2017, to accelerate Reebok’s top-line growth and improve its profitability going forward.
As part of this plan, the company has created one united team for Reebok in North America, combining the Global and US organisations under one leadership team, aimed at sharpening the brand’s focus on the needs of the US consumer. This also allows us to streamline Reebok’s current organisation and create an environment that is fully dedicated to Reebok and fitness. In this context, Reebok will move its organisation to a new location in the heart of the city of Boston in 2017.
Furthermore, to win in North America, efficient and effective distribution is key to Reebok’s future success in this all-important market. The company is therefore accelerating its initiatives to streamline Reebok’s store base in the market. In 2016, the company closed another 23 own-retail stores, including half of its Reebok FitHub concept stores compared to the prior year. It is forecasted that 2017 will see an even higher number of store closures.
We are confident that the initiated changes will have a positive impact on Reebok’s operational and financial performance and will accelerate the brand’s top-line growth, particularly in the US market, and significantly lift the brand’s profitability in the years to come.
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GLOBAL OPERATIONS
Global Operations manages the development, production planning, sourcing and distribution of the majority of our products. The function strives to increase efficiency throughout the company’s supply chain and ensures the highest standards in product quality, availability and delivery for our customers as well as our own-retail and eCommerce activities at competitive costs. Additionally included under the banner of Global Operations, Global IT manages all digital platforms for the adidas business solutions. It enhances the core systems to be future-proof, builds an open digital platform to connect to consumers and employees, and drives continuous change and innovation.
CLEARLY DEFINED PRIORITIES FOR GLOBAL OPERATIONS
The strategy of Global Operations is an extension of the overall adidas strategy – thus the consumer is at the centre of everything.
The function strengthens brand desirability by providing the right product to consumers – in the right quality, size, colour and style, in the right place, at the right time, across the entire range of the company’s channels and brands. Additionally, Global Operations builds capabilities that further improve supply chain efficiencies, while mitigating costs, thereby ensuring a continuously competitive supply chain.
Global Operations delivers upon its mission to:
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Create the best product by focusing on innovative materials and manufacturing capabilities.—
Provide the best service by enabling product availability as the consumer chooses through the company’s omni-channel approach to supply chain agility.—
Enable the best experience by creating tools that engage consumers through interactive mobile platforms, in-store technology and the ability to co-create.Within our strategic business plan ‘Creating the New’, Global Operations focuses on delivering against three strategic priorities driven by several initiatives:
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Become the first fast sports company.—
Create a seamless consumer experience.—
Transform the way we create and manufacture.By delivering on these priorities, Global Operations leverages efficiencies across infrastructure and processes and ensures a competitive digital ecosystem and supply chain. This continues to be underlined by our strong ‘On-Time In-Full’ (OTIF) metric, a non-financial KPI for our company, measuring the adidas delivery performance towards our customers and our own-retail stores. In 2016, adidas delivered 77% (2015: 81%) of its adidas and Reebok brand products ‘on time’ and ‘in full’. While this is broadly in line with the target of around 80%, the decline compared to the prior year reflects the strong increase in volumes throughout 2016. For 2017, Global Operations strives to increase OTIF to a strong level of 80%.
OTIF was measured for 68% of net sales of all adidas and Reebok
brand products in 2016. It is also planned to further roll out OTIF to those markets that are currently not in scope, thereby increasing the overall share of adidas and Reebok brand products measured against
‘on time’ and ‘in full’. see Internal Management System, p. 86
BECOME THE FIRST FAST SPORTS COMPANY
‘Speed’ is a strategic priority for both the company as a whole and for Global Operations. Our ambition is to be the first fast sports company in the sporting goods industry. see Corporate Strategy, p. 48 We will leverage market and sell-through data in new ways, respond quickly to deliver concepts that are fresh and desirable and made available when and where they are wanted by the consumer across our wholesale, retail and eCommerce channels. Bringing products to market faster allows our customers and direct-to-consumer channel to place orders closer to the actual time of sale, facilitating buying decisions that are based on better market knowledge. Consequently, adidas will move away from predominantly developing product ranges in advance of seasonal merchandising calendars and towards creation and production capabilities that respond to consumer demands with an in-season development and rapid replenishment manufacturing.
Fresher and more desirable products will increase the company’s full-price share of sales and reduce the risk of overbuying. By 2020, our target is to achieve 50% of the company’s net sales through speed-enabled articles. For this part of our business, we expect to achieve a 20% higher share of full-price sales compared to the regular range which, driven by higher brand and product desirability, will also see significant increases in the full-price sell-through.
Global Operations is scaling the fast replenishment capabilities of best-selling seasonal articles, creating more articles within season based on sales data and ensuring constant availability of long life cycle products. To adjust product supply flows to the changing demands of markets, the function is building a more integrated and agile planning environment with flexibility for deploying products to markets. In 2016, Global Operations continued to expand its efforts to ‘enable later ordering’ and further reduced production lead times.
The function succeeded in providing 60-day production lead times on 80% of apparel volumes in the fall/winter ‘17 season. The majority of footwear volumes are already on 60 days or less production lead times.
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adidas is leveraging its strengths in sourcing and partnering with industrial and academic experts to develop smart manufacturing solutions that can react quickly to consumer trends. In this context, Speedfactory is one way we are moving production closer to key markets while developing high-quality performance products faster than ever before. Powered by intelligent robotic, process and material technologies, Speedfactory allows us to support the growing demands for product individualisation, in a socially and environmentally responsible way. As well as providing fast reaction times to consumer needs, we envision a Speedfactory network which will enhance the consumer experience, enabling them to co-create in an interactive production process. see Research and Development, p. 67
CREATE A SEAMLESS CONSUMER EXPERIENCE
Global Operations has a strong track record for establishing state-of-the-art infrastructure, processes and systems that are required to support the company’s growth ambition. It has been successfully consolidating and improving legacy structures, thereby reducing complexity and costs for adidas. The function is focused on innovative distribution and IT capabilities, with the goal of providing the best service by enabling product availability as the consumer chooses through the omni-channel approach to supply chain agility.
By creating a higher commonality of our products across the various channels, Global Operations ensures higher flexibility at each consumer touchpoint. This, in turn, enables a broader range of products to be available at the point of sale, including online orders able to be picked up in our own-retail stores or shipped from a store and own-retail stores able to sell inventory available in other own-retail stores. Through the inclusion of the IT organisation, Global Operations is prioritising being ‘insights driven’. Data generated during product creation, marketing processes and at consumer interactions is being linked to create actionable insights which the company makes use of to react more quickly to changing consumer needs.
In 2016, Global Operations focused on further optimising the distribution centre network, while at the same time preparing it for rapid business growth. In this context, we opened a new distribution centre in Hong Kong/China. 2016 also saw extensions and improvements in our distribution centres in Pyeongtaek/South Korea, as well as Manchester/UK. Lastly, Global Operations kicked off its new e-commerce distribution centre ‘Campus North’ in Rieste/
Germany – a multi-million euro project focused on ensuring we get our e-commerce products to our consumers across Western Europe whenever and wherever they want them.
Global Operations is developing further IT capabilities to build platforms that support key initiatives which drive brand desire, such as personalised footwear tools. With the close collaboration of Global IT and our brands, efforts are focused on delivering fresh and exciting consumer services with a ‘mobile first’ approach, allowing consumers to connect to our brands at every touchpoint – from own-retail stores to e-commerce to social networks.
TRANSFORM THE WAY WE CREATE AND MANUFACTURE
Global Operations is driving innovation in new materials, new product constructions and new ways of manufacturing that deliver consumer value and enable competitive advantage. With the consolidation of product features and investments in tools that more directly connect design and factory production, Global Operations is changing traditional models of development to deliver freshness, speed and efficiency.
Through ‘Digital Creation’, Global Operations, in cooperation with Design and IT, has already improved the creation process from idea to market. With 3D software tools, we look at products the way the consumer sees them. Digital technology will allow us to take product decisions faster, improve collaboration between creation functions and our suppliers and reduce drop rates see Glossary, p. 216. 3D technology allows for more frequent and rapid virtual product 01 GLOBAL OPERATIONS IN GO-TO-MARKET PROCESS
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iterations without increasing the need for physical samples. In 2016, all major business units tested the new 3D software tools in apparel and footwear. From 2017 onwards, some of our business units will begin using 3D technology as their new way of working in the product creation process. see Research and Development, p. 67
The utilisation of state-of-the art digital technology not only drives creativity and efficiency in product creation, it also generates efficiencies in manufacturing by linking the creation process directly with the factory. Global Operations continues to support the Speedfactory programme by feeding product data straight into the Speedfactory for manufacturing without any manual interaction.
In 3D printing, Global Operations supports the cross-functional initiative called Futurecraft, which places open-source collaboration and craftsmanship at the heart of design to drive innovation across all areas of production. Being at the forefront of digital technology and modernising our approach to product creation not only supports sustainability efforts to reduce the carbon footprint, but also attracts the next generation of highly qualified ‘digital native’ employees.
Transitioning to a set pre-season selection of standard product features and driving consistent executions across categories for core products has been underway for several seasons in apparel.
Meanwhile Global Operations has fully embedded the modular approach to creation as a ‘way of working’ that ensures a consistent brand footprint, captures cost savings in factory efficiencies and expands product modules on faster production lead times.
In 2016, we laid the technical foundation to incorporate our new digital creation tools into the modular approach, which further increases speed in creation of our core products and allows us to leverage automation opportunities. We will gradually roll out the new digitised way of working in 2017 as a first step to our vision of an end-to-end digital value chain from pre-season planning to product creation, production and sales.
Furthermore, we are investing in the next generation of materials by focusing, amongst others, on knitted footwear and direct-to-textile digital printing. In addition, we are developing footwear manufacturing process innovations. Working cross-functionally, we intend to reduce dependency on manual labour and to deliver compelling product
Furthermore, we are investing in the next generation of materials by focusing, amongst others, on knitted footwear and direct-to-textile digital printing. In addition, we are developing footwear manufacturing process innovations. Working cross-functionally, we intend to reduce dependency on manual labour and to deliver compelling product