ANTA, founded in 1991 by Ding Shi Zhong, is the world’s third largest sportswear company by market capitalization. In 2007 ANTA was listed on the Hong Kong stock exchange. It has a sixth of the Chinese sportswear market, but revenues have grown by 40% in each of the past two years, double the rate of the industry. In 2018 they sold 60 million pairs of shoes and operating profits hit 1.2 billion dollars in 2019. All looks rosy, but this was only half the sum made by Nike in the same period.
The ANTA Group has over 12,000 stores in China and are mass-market kings. We will explore below how ANTA became so dominant in the mass-market segment and how, using strategies ANTA Group will attempt to carve themselves a bigger portion of the high-end market.
ANTA’s Profits and Revenues from 2009 to 2019
Source: ANTA Annual Financial Reports, daxue consulting analysis, ANTA profits and revenue from 2009 to 2019
Where did the perception of ANTA being cheap come from and what does ANTA do to counter this negative brand image?
In China, the general feeling about ANTA is that it is cheap. Damning as this may sound for ANTA’s marketing strategy, it is actually part of it.
The perception stems from a setback the company experienced in 2011. An overly rapacious expansion led to the company opening too many stores and stocking too many products. To save costs, over 600 stores were closed in one year. But this didn’t solve the problem of the massive backlog of ordered goods. In order to rid themselves of this stock, ANTA dropped their pricing strategy and entered the low-end market in an attempt to flog all remaining stock. They cut the costs and cleared stock, but having fought the price war and come out the other side, their foothold on the footwear market was weak. It caused the brand long term reputational damage. What had once been a famous domestic brand “国产名牌” had in the eyes of consumers, become a market stall.
How ANTA pulled themselves up by Klay Thompson’s bootstraps
ANTA managed to turn this weakness into a strength. Instead of attempting to leave the battlefield of the price war, ANTA decided to change their tactics. They signed with very high-profile NBA basketballers Rajon Ronda, Luis Scola, Kevin Garnett, and more recently, Klay Thompson to their brand. This would solidify their position in the eyes of many Chinese basketball fans, which is still China’s most popular sport in terms of interest.
Their player branded basketball shoes are priced in the affordable range at 399 RMB, generally about half the price of their Nike counterparts. This was a shock move to many, to have a high-profile NBA player whose own branded shoes would be sold at half the price of those of his teammates. Some also predicted that ANTA was shooting itself in the foot with this strategy. Signature model basketball shoes generally sell between 30,000 and 80,000 pairs a year. However, in the first 2 quarters after the release of KT Fire (Klay Thompson affiliated) shoes, sales had surpassed 100,000 pairs.
Source: ANTA, ANTA uses NBA players as celebrity endorsements
Getting off their knees and back onto their feet
With these celebrities on board ANTA introduced a new slogan “实力无价” (Which would translate to something along the lines of “you can’t put a price on somebody’s strength and ability”). The concept is to show that ANTA still offers a level of quality good enough for elite NBA players, but at a lower price, and that ANTA’s product quality has always been high. However, one downside for the brand is that this marketing campaign limits their ability to sharply raise prices in the future.
ANTA on the path to becoming mass-market royalty
In China, Consumption Upgrade refers to the way in which consumer demands of the middle class have changed since the country opened up. The middle class in China are accepted to be around 200 million strong. ANTA is targeting those below the middle class who have more modest amounts, but still have expendable income.
The problem that ANTA faces with this consumer group is in making them feel that what they are buying isn’t just ‘cheap’. Customers in China expect to pay around 120-300 RMB for domestically produced sneakers. Carefully, so as not to garner a reputation of selling cheap shoes, ANTA sets its price at a slightly higher value within the range while special models are priced higher than expected but within the affordable range. This allows customers to feel they are buying a product in good taste while still getting it at a good price, thus they can distinguish between cheap shoes and the shoes that they are buying.
ANTA fights perception problems in the middle-class market by acquiring competitors
According to Wu Ge, of the Beijing Institute of Fashion Technology, ANTA is not seen as cool in the eyes of young Chinese people and is virtually unheard of in the west. In general, those living in Tier 1 and 2 cities also think the brand is cheap and are unlikely to buy from them. However, the company has a very large sports apparel distribution network in China, which it can leverage to sell some of the “cool brands” it has acquired in the past, such as FILA in 2009. FILA’s gross profits grew 75.4% in 2019 on 2018 levels. In the same period ANTA’s profits grew 19.6%.
More recently under a consortium, Amer Sports, a Finnish sporting goods company that owns brands such as Wilson and Solomon. These cooler brands will attempt to compete in the higher end market while ANTA itself can focus on the mass market. ANTA’s sponsorship of the 2022 Winter Olympics will help market the brand domestically and internationally.
To cater to various fast-growing, middle-class markets, they have taken over different high-end brands such as Descente, a Japanese Winter sports brand to cover the burgeoning winter sports market in China. Kolon Sport, a Korean outdoor-wear brand. Sprandi, a stylish sneaker brand from India that uses technology to make ultra-comfortable shoes. KingKow, a Hong Kong company that makes fashionable clothing for kids and whose stores offer a boutique-like experience.
In 2019 there were
- 10,516 ANTA stores in mainland China.
- 1,915 FILA stores in Mainland China, Hong Kong, Macao, and Singapore.
- 136 DESCENTE stores in Mainland China and Hong Kong.
- 185 KOLON SPORTS stores in Mainland China and Hong Kong.
- 41 KINGKOW stores in Mainland China, Macao, and Hong Kong.
- 114 SPRANDI stores in Mainland China.
ANTA’s large distribution network can help with selling its more high-end, acquired brands.
ANTA still largely relies on offline distribution
According to Chen Shao Zu, General Manager of ANTA’s Fuzhou branch, about 70% of ANTA sales are through brick and mortar stores with only 30% of sales happening across online platforms such as Tmall.com, WeChat, JingDong (JD), and WeiPinHui (VIP).
However, through cooperation with these platforms, ANTA has boosted sales by over 40% year-on-year. On one day, online orders peak at 8 million. During the Tmall Double-11 Shopping Festival, ANTA and FILA ranked third and fifth respectively in terms of sales, under the sports and outdoor category. And ANTA KIDS ranked third in sales under the kids’ clothing and footwear category. The large reservoir of data that ANTA holds on its consumers (250 million) will help reveal consumer insights and will generate precision marketing tactics.
How ANTA got through the Covid-19 Crisis
ANTA took an unorthodox approach to low sales figures during the coronavirus pandemic of 2020. The CEO asked his 30,000 employees to use their own personal WeChat accounts to flog ANTA clothing and shoes to their contacts.
What does the future hold in store for ANTA?
ANTA Sports are in a fortunate position. The sports market in China is on fire. Sports giants Adidas and Nike both reported online sales in excess of 1 billion RMB on lasts years 11.11 shopping holiday. This made them one of only 8 companies in the country that managed to do so and put them in the same bracket as mobile behemoths Apple, Xiaomi, and Huawei. Clothing giant Uniqlo. And two Fortune 500 home electronics providers Midea and Haier.
Fortunately for ANTA’s plan, the sports market is not showing any signs of slowing down, and is being bolstered by apps like KEEP and gyms like SUPERMONKEY. As part of a successful brand strategy, ANTA have tied down the mass market and despite being recognized as being a cheap brand in Tier 1, Emerging Tier 1 and Tier 2 cities, they are simultaneously perceived to be decent in terms of quality. ANTA has done well in diversifying its portfolio by purchasing prestige foreign brands in order to cater to new markets and to high-end consumers.