Growing economic prosperity coupled with the
trend towards leading a healthy lifestyle as well as the increasing
popularity of activities such as cycling and running makes Latin America
an attractive market for Amer Sports.
Juan
Carlos Aziz, General Manager for Amer Sports Latin America, discusses
the potential and Amer Sports’s strategies to tap into the full
potential of the region.
“We added Salomon to our brand portfolio at the end of 2006, and since
then we have expanded our footprint to most Latin American countries and
all relevant capitals. We have chosen two different business models to
develop our growth plans: directly, like on the Mexican market or
through our distributors, which we have done in basically five regions
within Latin America. We have strong distributors and partners covering
the region. One way of developing the brand has been through Salomon and
Wilson Brand Stores. We are proud to have at least one brand store in
most major capitals in Latin America.”
“My primary
responsibilities lie in pursuing every single opportunity that will
yield brand positioning, brand recognition and improving revenues in a
profitable way”, Juan Carlos sums up.
Growth driven by expanding middle class and development of retail business
According
to Juan Carlos, there are four main factors behind Latin America’s
business potential: consumer spending, increasing interest in sports and
wellness, retail development and e-commerce.
Economic and
demographic growth can be regarded as one of the main drivers in Latin
America during last five years. For example in Peru and Brazil, poverty
has decreased dramatically. Moreover, the growing middle class is more
and more interested in a healthier lifestyle in terms of sports and
wellness activities.
“Brazil will soon be hosting the World Cup
and Olympics, so there is a boom in the sports apparel and equipment
industry. This means Amer Sports needs to be at the top of the game in
this region”, Juan Carlos adds.
Retail business is developing
fast with big investments in the largest countries, especially in Brazil
and Mexico. Apparel, electronics, sporting goods and luxury brands are
growing aggressively in own retail, providing an outstanding opportunity
to project an upscale brand image and increase sales and margins. Also
e-commerce is growing rapidly, especially in Brazil. For example, today
the largest sporting goods retailer in the region with more than 120
stores gets more than 15% of their total revenue via e-commerce.
Opportunities and challenges
To
succeed in Latin America, Amer Sports focuses on own retail and
especially developing its Apparel and Footwear business. Growing the
number of Wilson and Salomon brand stores provides the company an
excellent opportunity to present its brands as a whole concept in the
mass merchant driven market. This is particularly important for Wilson,
because of the diversity of various sports the brand is involved in, and
also an excellent opportunity to develop the Apparel and Footwear
business.
The biggest challenges that need to be taken into
account in Latin America are increasing competition and economical
factors. The competition is particularly fierce in Brazil, with a
growing economy, fast growing consumer spending and sophistication. “We
support our distributors and develop more local sourcing to compete in
this high duties and high taxes market”, Juan Carlos explains.
“Two
years ago, we changed our business model in Brazil from an Amer Sports
subsidiary to a business run by distributors. This new business model
allows us to increase our EBIT in the region with a better brand
development”, Juan Carlos Aziz explains.
The biggest challenges
are currently in Venezuela and Argentina. Venezuela is currently facing
deep social, economic and political problems which limit business
opportunities, and Argentina, one of Amer Sports’ main markets, is also
facing imports restrictions and a high inflation process, which makes it
more difficult to grow the business. Also increasing protectionism
could be a critical factor in the future years in the region.
“Mexico
is a rapidly growing, mass merchants driven market with a stable
economy and high team sports participation. Our own retail for Wilson
and Salomon has been a tremendous success there. We have been able to
improve brand perception and grow our Footwear and Apparel business. For
example, the special Inflates collection has brought us to a dominant
position in this extremely competitive market.”
For Wilson, most
potential lies in own retail and apparel and footwear. Retail is
developing and growing fast as a business opportunity and we have strong
brand concepts. Apparel and Footwear are growing faster than hardgoods,
and the market size is very attractive.
For the mountain brand
Salomon, the biggest potential lies in the Andean countries, led by
Peru. Also Colombia and Costa Rica represent good opportunities as well
as Chile, which has a very solid economy.
Driving scale and synergies
Salomon
has a solid retail platform to develop the business in Latin America,
while Wilson has a strong brand concept. For Wilson, retail has been
successful in terms of sales but also bringing a better brand perception
as an upscale sports brand. Multibrand stores have been a success for
both brands. At the same time, having distributors in main countries
provides synergy benefits, allowing to maximize market opportunities
with a controlled opex budget.
The operations and marketing of Amer Sports’ brands in Latin America are led from Mexico City.
“Strong
cooperation between our regional marketing and commercial teams and our
local distributors is key to participate in major sports events such as
ATP Tournaments in Acapulco, Buenos Aires, Sao Paulo and Rio de
Janeiro, just to name a few”, Juan Carlos Aziz highlights.
“Our
region is rich in talented baseball, soccer and tennis players, so we
need to work closely with our local marketing teams to find the next
Juan Martin del Potro, Carlos Beltran or Miguel Cabrera. Moreover, we
are working with a new online training program to assure good knowledge
about our products and technologies and a consistent communication with
our regional and local commercial teams.
“In the end, the most
important ingredient for our continued success in this challenging
market is our great team. Without these professionals, we would not be
where we are today.”
Source
Amer Sports
More news about amer sports or Brands ? Use the search engine at the right top of the site.