Crossing wholesalers directly to open shop, this Finnish sporting goods company learns from Chinese netizens

Less than 10 years ago, Amer Sports had no online stores or retail channels in China, let alone popularity.


Amer Sports is a sporting goods brand management company from Finland. It owns several sports equipment brands such as Salomon, Arc'teryx, Wilson, and Suunto. Today, Amer Sports' global sales of 4% come from China, Asia's largest economy.


Amer Sports and its brands


Amer Sports CEO Heikki Takala hopes to double or even triple sales in China in the next few years. Takala said in an interview that China will soon surpass Germany as Amer Sports’ second largest global market, followed by the United States.


Amer Sports is transforming into a global online retailer. It is not the others who guide them. It is the young Chinese netizens. In 2016, Amer Sports' sales in China reached 100 million euros (about 106 million US dollars), and in 2009 their sales were only 13 million euros. By the end of 2016, Amer Sports had 69 online stores worldwide.


"China's market is very advanced," Takala said. "They basically skipped the learning process of several generations and went directly to the digital age."


Takala hopes to create a seamless consumer experience for consumers: With only mobile phones and networks, consumers can access brand flagship stores or local retailers and buy anything they want.


The change of the distribution model means the need to establish a logistics center, which will increase the cost and increase the pressure on the stock. Amer Sports' reforms reflected the company's stock price. After Takala became the CEO of the company in early 2010, the company's share price has been on the rise, but Amer Sports shares have fallen 8.6% this year.


Amer Sports' current CEO Takala took office in 2010 and the company's share price has risen


According to Mika Metsala, an analyst at FIM, a market analysis firm based in Helsinki, “(Amer Sports) has a very good outlook in the long term. Their digital strategy shows that the company is very ambitious.” Metsala also stated that Amer Sports China sales Double "is not difficult, because of the rapid growth of the Chinese market and the rapid growth of China's middle class." Recently, FIM listed Amer Sports as one of Finland's five best stocks.


The wallet of China’s middle class is getting more and more drums, and the Chinese government is vigorously advocating the development of the sports industry, so in the future China’s spending on sportswear equipment may usher in a surge. According to a Bloomberg Intelligence survey, more than 10% of retail sales in China are completed online. Correspondingly, in 2016, online sales in the United States accounted for only 8.1% of total sales in the country. Bloomberg's survey results also show that about 61% of Chinese mobile phone users will use their mobile phones for online shopping.


So, in China, Amer Sports had to learn from scratch how to run its own online business instead of selling it to wholesalers.


“You must first digitize,” and “you have to be in touch with the consumer and keep the freshest content at all times,” Takala said. “In China, most of our online stores are operated directly by us. In a market that lacks a sound wholesale mechanism, we have established a huge self-selling model.”


Amer Sports' outdoor sports equipment brand Salomon


As the disposable income of Chinese consumers grows, Chinese consumption has gradually shifted from local brands to international big names such as Adidas, Nike and Anderma. Compared with these industry giants, Amer Sports has a long way to go.


In the most recent quarter, Nike’s sales in Greater China grew to US$1.06 billion, while Adidas’ sales reached 741 million euros (about US$790 million). Anderma also had $215 million in overseas revenue in the most recent quarter.


Takala said: “We are still a small player in China. We still have a lot of room for growth – we haven’t reached the point where we need to push for more demand.”


Unlike many consumer brands, beverage brands and apparel brands, Amer Sports has not yet felt the pain of the slowdown brought by the slowdown in consumption in China. The Chinese government’s crackdown on official anti-corruption actions by officials has also caused some brands to reduce their demand.


Amer Sports' high-end outdoor sports equipment brand Archaeopteryx


Under Takala’s leadership, Amer Sports’ sales increased by more than 70% in 2016 to 2.62 billion Euros, and the company’s market value doubled to 2.7 billion Euros. Takala said that Amer Sports will achieve five billion euros of net sales in 2020 through five "acceleration areas" plans. The five "accelerated growth" plans include:


Overall clothing and footwear sales increased by 50% compared to 2015 to 1.5 billion euros;


US sales increased to US$1.5 billion;


Doubled revenue from self-operated stores and outlets to approximately 400 million euros;


Sporting equipment, such as Songgo sports watch, Precor fitness equipment, doubled sales to reach about 600 million euros;


Each year, 25 direct-operated stores are opened (compared to the previous year, Amer Sports opened 15 to 20 stores each year. Takala revealed that last year, Amer Sports’ sales in its own retail business increased by 27%).


"Now we already understand how to run the retail business," Takala said.



Reprinted Source: Lazy Bear Sports



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