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GLOBAL 2016: Leisure and sportswear brands drive value growth

Digital innovation influences manufacturing and marketing

The BrandZ™ Apparel Top 10 increased 14 percent in value, the highest annual increase of the 13 categories ranked in the BrandZ™ Top 100 Most Valuable Global Brands. The increase followed flat results a year ago, and was driven primarily by the strong performance of sportswear brands, propelled in part by the World Cup.

The appearance of Under Armour in the Apparel Top 10 for the first time and the value increase of Lululemon, following its decline in the 2015 BrandZ™ ranking, reflected consumer interest in health and fitness and the strength of leisure sportswear as a global fashion trend - a  preferred attire for millennials with appeal across generations.
Victoria’s Secret also appeared in the ranking for the first time, illustrating the power of a well-defined brand. The fast-fashion brand Zara increased in value for another consecutive year, although fast fashion generally experienced mixed results, partly because of a growing consumer inclination to spend prudently and favor new experiences over more things.
Meanwhile, apparel brands increased digital innovation in manufacturing and marketing, increasingly selling direct to consumers through their websites or branded stores in an attempt to increase customer engagement, access to customer data and profit margins.
Innovation and digital
Nike advanced its focus on technology and innovation, key components of its brand strength, with the introduction of self-lacing sneakers. The brand continued its online customization program, NIKEiD, which enables customers to select the colors along with certain performance and design features of their sneakers and other products.
Both Adidas and Nike were among the athletic shoe brands investing in 3-D printing technology, in anticipation of a future when footwear is manufactured on demand and customized. Nike appointed a Chief Digital Officer as part of its plan to drive e-commerce sales and build customer relationships with social media and Nike fitness apps.
Under Armour invested heavily in wearable technology, purchased several fitness apps, and partnered with IBM Watson to yield richer health, fitness, and nutrition insights using artificial intelligence. Along with cutting-edge technology, sports celebrity endorsements remained an important brand communication tool.
Nike continued its relationships with leading athletes across sports, such as Kobe Bryant and Serena Williams, who acted as design consultants as well as brand ambassadors. And Nike won rights to take over as the official uniform supplier of the National Basketball Association after the NBA’s contract with Adidas expires in 2017.
In a strategy shift, Adidas decided to build its presence in basketball by developing partnerships with specific players rather than the league. Under Armour benefitted from its association with Stephen Curry, star of the Golden State Warriors, a winning NBA team based in Oakland, California.

Looking to China
Adidas rebounded after several weak sales years, primarily because of brand strength in Western Europe, China, and Latin America. As it sought to gain momentum in the US, the Germany-based brand also broadened its sports appeal beyond its well-established link with soccer. To help position the brand as cool and trend-setting, Adidas linked with rap performer Kanye West.
Adidas expected to open 3,000 more stores in China for a total of 12,000. Aligning with a Chinese government plan to increase China’s presence in international soccer competitions, Adidas signed a deal to provide soccer programs in thousands of China’s elementary and middle schools. 
Nike also planned to drive sales from fast growing markets, especially China, which it predicts will become its second-largest market after the USA. In addition, Nike intends to market more intensively to women and has opened several stores specifically for women, in China, the U.S. and UK. Lululemon, which had marketed primarily to women, focused on building its sales to men. The brand restructured the organization, unifying its sales and marketing to women and men, functions had been split between two executives.
Flagships and e-commerce
Uniqlo planned to expand aggressively in Greater China, adding around 100 stores annually to its current store count of about 470. The brand collaborated with Disney to develop a range of clothing and other products featuring Disney characters. The collaboration is an example of Uniqlo moving to be more fashion driven. It associates Uniqlo with the iconic Disney brand, and it helps position Disney merchandise somewhat more as fashion than simply souvenir.
Uniqlo launched the collaboration by devoting a floor of its Shanghai flagship store to the new merchandise. The Disney Shanghai Resort was scheduled to open in Shanghai during June 2016. A Uniqlo Disney store was scheduled to open in Walt Disney World in Orlando, Florida, during 2016.
To improve its U.S. performance, Uniqlo closed underperforming suburban mall stores and focused instead on urban flagship locations, opening one on Chicago’s Michigan Avenue. It also expanded its e-commerce activity, which accounts for 15 percent of U.S. sales. The brand also opened a flagship store in Antwerp, Belgium and renovated its Oxford Street site in London.
Uniqlo continued to differentiate the brand with technology. Its’ LifeWear uses technology to combine fashion and function, including comfort of fit and temperature. Uniqlo also announced digital innovations that would enable customers using a mobile app to order clothing that would be semi-customized according to measurements they had submitted. The company plans to increase the e-commerce portion of global sales to 30 percent over time, from 5 percent currently.
Known for building its brand through its physical store presence, with over 7,000 locations worldwide, Zara slowed its store opening pace slightly, and shifted attention to driving online sales, with plans to increase its presence in Europe from 22 countries to 35. Still, the brand opened a flagship store of almost 50,000 square feet in Manhattan’s trendy Soho neighborhood, and is expected to open as many as 360 stores this year, including locations in five new country markets: Aruba, New Zealand, Nicaragua, New Zealand and Vietnam.
Refocusing for changing times
The Victoria’s Secret brand, which operates over 1,000 stores in North America and the UK, added to its international reach, opening a flagship store in Shanghai. The intimate apparel specialist, renowned for brand building with video and print content, announced plans to refocus its marketing on loyalty programs and customer engagement, even eliminating the catalogs featuring lingerie models, which had become synonymous with the brand.
Perhaps evolving the brand to remain relevant as consumer attitudes change and notions of female beauty become more diverse, Victoria’s Secret intended to benefit from the sportswear trend by promoting its range of sport bras.
A new CEO from the world of fast fashion launched a review of the Ralph Lauren business, after taking over from founder Ralph Lauren, who now serves as Executive Chairman and Chief Creative Officer. The strong dollar impacted overseas sales and sales to tourists visiting the US.
Competition from fast fashion and other retailers hurt Next, which operates around 500 stores in the UK and 200 international stores, along with an online business that offers clothing for men, women and children. The brand also operates a mail-order catalogue business, which it intended to continue while expanding e-commerce and introducing a new iPad app. In 2015, almost two-thirds of Next consumers used mobile devices for online ordering. Just five years ago, 95 percent of consumers placed online orders using a PC. 

Brand Building Action Points

1. Be social media savvy.
Young people select the social media platforms they use based on the situation. When a GenZ customer in a try-on room snaps a selfie of herself in a new outfit, she is not going to post it on Facebook. Instead, she will choose a “velvet rope” network and send the photo to a limited number of friends whose opinions she values.

2. Use data to deepen relationships.
Many consumers will want to learn more about a brand, about what the brand stands for and how the brand relates to them. In a time of the “quantified self”, when people are eager to learn more about their potential and to measure their health or physical fitness, apparel brands have an excellent opportunity to engage with customers and deepen relationships.

3. Protect the data.
Be open and clear with customers about how you expect to use their data and protect their privacy. Explain how you will use the information to create personalized and beneficial experiences for customers, and how you will guard against misusing personal information or using it in ways that annoy customers.