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Reebok Plans to Open 500 Stores in China by 2020

Joseph Lu

Reebok, a subsidiary of Adidas ADDYY, plans to open 500 stores in China by 2020, with 50 stores opening this year alone.

The sportswear company is in collaboration with a local footwear retailer, Belle International Holding BELLY, with seven stores already opened in several Chinese cities this year.

China’s sports market has been expanding faster than ever. Chinese consumers start to look for activities in sports and cultures as they gain more spare time and income at their disposal.

“In China, consumers want to do fitness activities to be more healthy and more successful,” said Chad Wittman, General Manager of Reebok Greater China. “There are a lot of opportunities to offer Chinese consumers a better life through fitness activities.”

Adidas’ 2016 annual report showed Reebok with slow growth in sales. Reebok’s sales only grew 6% from a year-ago, but Adidas saw at least 16% sales increase in every region except Russia/CIS.

Adidas looks to deliver $2 billion in profits by 2020, and Reebok’s performance will be a key factor for Adidas to reach that goal. (To learn more about Adidas’ annual performance, check out this article: Adidas (ADDYY) Stock Jumps 9% on Strong Earnings and Upbeat Guidance)

Strategy

Slightly different than Adidas, Reebok has positioned itself to focus on fitness, where Adidas focused on athleisure. Reebok will be focusing on running, training, and classics, with running being the main category due to its overwhelming popularity in recent years.

Reebok looks to repeat its parent company’s success in China with the same strategy, choosing the right athletes for the relevant market. The sports brand wanted a different face to represent its latest campaign, “Be More Human,” and the face belongs to Wang Deshun, also known as China’s hottest grandpa.

China’s hottest grandpa came into the spotlight as he walked the catwalk at Beijing Fashion Week in 2015 at age 80. Wang, an actor, model and artist, who started taking fitness seriously at the age of 70, offers not only a new perspective on aging in China, but also motivation in fitness.

“Our ‘Be More Human’ message is one that resonates incredibly well today with Chinese consumers eager to live healthier lifestyles,” Wittman added.

Bottom Line

According to Research and Markets, the revenue in China’s sports market is expected to be more than $100 billion by the year 2020.

Besides global sportswear giants like Nike Inc. NKE and Under Armour UAA competing in China’s market share, there are also many local brands that Reebok has to overcome.

Adidas showed strong 2016 annual earnings with an 18% currency-neutral growth in sales for the full year of 2016 and expected sales to increase 11% to 13% for this year. If Reebok can strengthen its foothold in China’s sports market, there is no reason that Adidas won’t see a greater sales growth than expected.

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