Anta Sports' Big Layout: How Does Anta's Single-Focus, Multi-Brand, Omni-Channel Strategy Achieve Nearly 100 Billion Market Cap? ...

Breaking 100 million in just 8 minutes and 300 million in 100 minutes, by 12:00 AM on the night of the 11th, Anta delivered sales of 670 million yuan within 24 hours. On the Tmall 11.11 Global Shopping Festival’s outdoor sports category leaderboard, the Anta brand under the Anta Group ranked third. Meanwhile, according to the Anta Group’s stock market performance on November 15, the Anta Group’s market cap reached as high as 95.838 billion Hong Kong dollars. The Anta Group has further solidified its position as a benchmark in China’s sporting goods e-commerce market and reinforced its standing as the country’s leading sporting goods company.

With the arrival of the “Globalization 4.0” era, Anta Sports proposed the strategic vision of “Single-Focus, Multi-Brand, Omni-Channel” in its 2016 financial report. Around this strategy, Anta Sports has laid out a more systematic approach to the sports industry. What kind of strategic thinking is reflected behind Anta Sports’ rise from a market cap of 18.7 billion Hong Kong dollars at its initial listing in Hong Kong to nearly 100 billion today? What sports businesses has Anta Sports laid out?

Steady revenue growth, market cap approaching 100 billion, building a respected sports brand

In 2007, the Anta Group successfully listed on the Hong Kong stock market with a market cap of 18.7 billion Hong Kong dollars. Then, driven by the 2008 Beijing Olympics and the post-Olympic effect, China’s sporting goods manufacturing industry experienced unprecedented growth. From 2007 to 2011, an average of two new Anta stores opened every day, increasing the total number of Anta stores nationwide from 4,716 to 7,778. Domestic sportswear brands, including Anta, actively expanded into third- and fourth-tier markets. In 2011, through its own strategic layout and marketing efforts, Anta Sports surpassed Li-Ning for the first time to become China’s top sporting goods brand.

With the development of the sports industry, Anta Sports achieved steady growth in both revenue and market cap. According to Anta Sports’ semi-annual financial report, the company’s revenue grew from 5.11 billion yuan in 2015 to 7.323 billion yuan in 2017, an increase of 43.3%.

An analysis of Anta Sports’ financial reports shows that its business revenue mainly comes from three sources: sportswear, sports shoes, and sports accessories. Among these, footwear and apparel have become the main sources of income for Anta Sports. In the first half of 2015, footwear and apparel accounted for 95.35% of the group’s revenue; in the first half of 2016, they accounted for 95.95%; and in the first half of 2017, they made up 96.57% of the group’s revenue.

An analysis of Anta Sports’ recent financial reports shows that the term “multi-brand” appeared once each in the 2013 and 2014 reports. In 2015, it was mentioned four times. By 2016, Anta’s financial report formally introduced the “Single-Focus, Multi-Brand, Omni-Channel” strategy. This has become a key strategy for Anta Sports to consolidate its position as the top player in China’s sporting goods industry and to advance into the forefront of the global sporting goods market.

Focusing on the mass market, laying out multiple brands, and creating diversified sports products and services

In recent years, with China’s economic development, the sports manufacturing industry has grown rapidly. At the same time, as the sports industry has expanded and national fitness has been elevated to a national strategy, public enthusiasm for participating in sports has continued to rise. Leveraging the market of nearly 1.4 billion people in China, Anta Sports has adhered to a strategy focused on the mass market for its brand users. Regarding the concept of “single-focus,” Ding Shizhong, Chairman of the Board of Anta Sports, once said in an interview, “We don’t sell high-end products. We want more people to be able to afford sports shoes and to enjoy the joy of sports. That is the value of our business and the mission of all Anta people.”

Nike and Adidas, which entered China in the 1980s and 1990s, have maintained a strong presence. With the expansion and segmentation of the sports market, there is a higher demand for equipment from both the sports fashion sector and professional athletes. Market players are no longer simply categorized as “sports brands” but are segmented by price range (low, mid, high), different sports, sport-lifestyle or professional performance features. At the same time, with the globalization of economic development, Anta, as a local brand, has also set its sights on the international market. And Anta Sports’ globalization strategy is being realized through the practice of “multi-brand.”

1. Successfully Acquiring Fila and Achieving Profitability Becomes a Key to the Multi-Brand Strategy

Unlike Nike and Adidas, which target high-end consumers in first-tier cities, Anta Sports initially positioned its market in second-, third-, and fourth-tier cities. To gain a foothold in the mid- to high-end segment, the fastest and most effective approach is to introduce a new brand.

In August 2009, Anta announced that it had acquired the Italian sport-lifestyle brand Fila (FILA) from Belle International. Thus, the Italian brand Fila, founded in 1911, became a springboard for Anta to enter the high-end sports goods market. According to Sports BANK, Fila began to turn a profit in 2014, and by the first half of 2016, Fila’s revenue had reached 20% of Anta Sports’ total income. Building on the success of Fila, Anta found a tool to break through its ceiling. At the same time, Fila’s success affirmed Anta’s attempt to lay out a multi-brand strategy.

2. Partnering with Descente to Establish a Joint Venture, Targeting the Winter Sports Market

With Beijing’s successful bid for the Winter Olympics, interest in winter sports, especially snow and ice events, has been growing. The domestic ice and snow industry market is still in its infancy, and related sports equipment and facilities are almost in a “blank” phase. Under the goal of getting 300 million people involved in winter sports, the demand for snow and ice equipment and apparel is enormous. Anta Sports is leveraging the Olympic opportunity to continue expanding its business layout horizontally.

In February 2016, Anta Sports announced that it would invest 150 million yuan to establish a joint venture with Descente Global Retail Limited, a subsidiary of Descente Japan, a Tokyo-listed company, and Itochu Corporation’s subsidiary Itochu. The joint venture introduced “Descente,” a well-known Japanese functional sports apparel brand specializing in skiing equipment. Descente will also embark on Anta’s journey into the next niche market and presents a great opportunity for Anta to catch up with and surpass international giants.

3. Continuing to Expand into the Mid- to High-End Market, Acquiring Sprandi, and Establishing a Joint Venture with Korean Brand Kolon

To better penetrate the mid- to high-end market and join the ranks of international sports brands, after acquiring Fila and forming a joint venture with Descente, Anta continued to make significant moves in its multi-brand strategy. In September 2016, Anta successfully acquired the internationally renowned sportswear brand “Sprandi.” It aimed at the growing hiking and running segments. Sprandi launched a sports comfort technology system tailored to the characteristics of popular walking and running activities in China and developed several product series.

On February 22, 2017, Anta made another move in its multi-brand strategy. ANKO, a wholly-owned subsidiary of Anta Sports, along with Kolon and other joint venture partners, signed a joint venture agreement to establish a joint venture group. The group’s primary business is to exclusively operate, market, sell, and distribute certain categories of products bearing the Kolon Sport IP and trademarks within the region. Kolon’s product line includes men’s and women’s outdoor wear, children’s outdoor wear, footwear, bags, and accessories such as hats, trekking poles, and trekking socks. This will further expand Anta’s range of sports products.

4. Targeting the Vast Children’s Market

In addition to targeting the adult sports market, Anta has developed three brands: Anta Kids, NBA, and SPRANDI. On January 1, 2008, the Anta Kids division was launched, and the “Anta Kids” brand (ANTA KIDS) was created, with product lines divided into ages 3–6 (young children) and 7–14 (older children). ANTA KIDS maintained rapid growth in channel development in 2011 and 2012. By the end of 2012, it had approximately 700 stores, with annual sales of 250 million yuan and an average monthly store sales of 30,000 yuan. The target sales for 2013 were 400 million yuan, with a total of 700 children’s clothing stores. According to Anta’s 2017 Q1 financial report, the retail sales of Anta Kids products increased by over 30%. Anta’s 2017 mid-year report showed that the number of independent Anta Kids stores grew to over 2,100, nearly ten times the number in 2009.

In addition, while achieving strong growth in the mass children’s market, Anta Sports has also begun to lay out its children’s business in the high-end sports market. After acquiring the mid- to high-end brand Fila, it developed the children’s fashion sports brand FILA Kids. Meanwhile, Kolon, part of the multi-brand family, has also made moves in the children’s brand segment. In August 2017, Anta acquired the Hong Kong-based mid- to high-end children’s wear brand Little Yeehoo for 60 million Hong Kong dollars. Through this acquisition, Anta Sports further strengthened its capabilities in the mid- to high-end children’s wear market and improved its segmentation in children’s apparel.

Omni-Channel Marketing, Achieving Multi-Dimensional Online and Offline Sales Models in the New Retail Era

In its marketing, Anta has consistently adhered to an omni-channel marketing philosophy. Anta has achieved full coverage of offline stores, shops, and department stores in second-, third-, and fourth-tier cities. At the same time, leveraging the internet model, in addition to operating its official brand malls, it has also partnered with major domestic e-commerce platforms such as Tmall, Taobao, JD.com, and Vipshop to integrate online and offline channels.

An analysis of Anta’s 2015–2017 semi-annual financial reports reveals that the number of Anta Sports offline stores increased from 7,340 in mid-2015 to 9,041 in mid-2017, a growth of over 23%, expanding at a rate of over 10% per year. The number of offline stores in mainland China, Hong Kong, Macau, and Singapore also grew from 544 in mid-2015 to 869 in mid-2017, an increase of 59.7%, averaging nearly 30% growth per year. Meanwhile, the newly established Descente stores had reached 21 by mid-2017.

In terms of offline event marketing, Anta Sports has signed NBA star Klay Thompson and leveraged his star power to conduct a series of branded and international marketing campaigns. Utilizing a diverse brand portfolio, it has laid out strategies in different niche markets. At the same time, to actively capture the children’s sports goods market, Anta has conducted a series of offline promotional activities, hosting the Wannian Games and establishing the Anta Growth Academy.

In practicing corporate social responsibility, as a leading enterprise in China’s sporting goods industry, Anta has consistently fulfilled its social responsibilities. From the 2008 Wenchuan earthquake to the 2010 Yushu and Zhouqu earthquakes in Qinghai and Gansu, the 2013 Ya’an earthquake in Sichuan, and the 2014 Qujing earthquake in Yunnan, Anta has been present. Additionally, in 2013, Anta Sports, together with the Chinese Olympic Committee, the Samaranch Foundation for Sports Development, and the Champions Foundation, launched the Olympic Charity Alliance to contribute to the development of sports in underdeveloped western regions. On July 10, 2017, on the 10th anniversary of Anta’s listing, Anta Sports launched the “Grow Stronger Public Welfare Plan,” supporting underprivileged youth in achieving their sports dreams through equipment donations, quality education, and the promotion of sports courses. Anta Sports also co-established Dream Centers with the Shanghai True Love Dream Public Welfare Foundation to support the healthy and happy growth of youth in underdeveloped areas. According to Sports BANK, Anta has currently built three Dream Centers in Changting, Fujian, and four in Midu, Yunnan. From next year through the next 10 years, it aims to build 500 Anta Dream Centers.

In e-commerce, during last year’s Double Eleven, Anta Sports achieved online sales growth of over 100%. While peers still use e-commerce primarily as a means to “clear inventory,” Anta’s e-commerce business has evolved into a platform offering a wide range of online flagship products, including exclusive online models for Anta, Anta Kids, Fila, Fila Kids, and the NBA series. In 2017, e-commerce sales reached 670 million yuan, a 66% increase compared to the same period in 2016.

Hand in hand with the Olympic Committee, sponsoring the Winter Olympics — Anta becomes the 'synonym' for China's national sports teams

On September 28, 2017, Anta Sports reached a strategic cooperation agreement with the Beijing 2022 Organizing Committee for the Olympic and Paralympic Winter Games, becoming an official sportswear partner and joining the highest tier of sponsors for the 2022 Beijing Winter Olympics. Its sponsorship involvement with national teams and the Winter Olympics, however, has been a long-term commitment.

Since its first signing with the Chinese Olympic Committee in 2009, Anta has engaged in deep and long-lasting collaboration with Chinese sports. In 2010, Anta signed an agreement with the Winter Sports Administration Center, and in August 2014, it became the first partner of the 2022 Winter Olympics Bid Committee. Then in April this year, Anta further became the sportswear sponsor for thirteen national teams under the management of the Chinese Winter Sports Administration Center, including the National Short Track Speed Skating Team, National Speed Skating Team, National Figure Skating Team, National Curling Team, National Ice Hockey Team, National Freestyle Skiing Aerials Team, National Snowboard Big Air and Slopestyle Team, National Snowboard Parallel Giant Slalom Team, National Luge Team, National Bobsleigh Team, National Skeleton Team, National Cross-Country Skiing Team, and National Alpine Skiing Team. Anta has now established strategic partnerships with 24 national teams, and its apparel has become synonymous with China’s national teams.

Source: SportsBANK