With the nation preparing to host the Soccer World Cup in 2014, Brazil is estimated to welcome 5,00,000 soccer crazy fans from across the globe over the month-long sports bonanza, which will result in the economy to snowball, increasing by five times the total amount invested directly in event-related activities and in-turn impacting various industries. The retail segment, especially related to sports-inspired products and clothes will only add a boost to the already expanding retail scenario with many international retailers continuing to expand in São Paulo and Rio de Janeiro, as retail spreads across Brazil and into larger interior cities.
For an economy, which is already benefiting from the growth typical of current emerging countries, the upcoming FIFA World Cup will only help boost the Brazilian economy further. In addition to the R$ 22.46 billion spent by Brazil on the World Cup to ensure an adequate infrastructure and organization, the tournament is projected to bring in an additional R$ 112.79 billion to the Brazilian economy. In total, an additional R$ 142.39 billion has/will flow in the country from 2010 to 2014, generating 3.63 million jobs/year and R$ 63.48 billion of income for the population. The tourist inflow directly and indirectly induced by the World Cup is expected to account for additional income of up to R$ 5.94 billion for Brazilian companies.
Over the four weeks of the soccer tournament, fans will stay in hotels, eat in restaurants, shop and visit Brazil’s many attractions. Most importantly, they will attend soccer matches and move between the 12 Brazilian host cities. Hosting a major international sporting event is challenging, especially for a developing country such as Brazil, but it’s far more than a challenge – it’s also an opportunity for growth and growth is what many retailers are looking at as Brazil’s leading retailers are already adding sales area. Major players such as Walmart, department store Riachuelo, apparel retailers Hering and Lojas Renner, and supermarkets Pão de Açúcar and Polishop are investing billions to open new stores, expand current ones, and improve technology. Also, Chilean retailer Falabella has already acquired a controlling stake in Brazilian DIY chain Dicico, which operates 58 stores in the state of São Paulo.
On the other hand, luxury malls such as JK Iguatemi in São Paulo and Village Mall in Rio de Janeiro, have served as a platform for the launch of several international brands, including Valentino, Miuccia Prada, Diane Von Furstenberg, Missoni, Chanel, Louis Vuitton, Burberry Miu Miu, Goyard, Lanvin, Van Cleef & Arpels, Bare Minerals, Topshop, Dolce & Gabbana, and Nicole Miller. Also Gucci has opened its first men-focused store, Mont Blanc is opening its 10th store, and Tiffany & Co. will open its fifth in Curitiba, while Sephora recently opened at JK Iguatemi and plans to open four more stores in São Paulo and Rio de Janeiro. In addition, the FIFA World Cup in 2014 is drawing important investments in travel retail as Brasília International Airport plans to add more than 50 retail stores, and Dufry, the country’s duty-free leader, will add retail space at São Paulo’s Guarulhos International Airport.
Apart from international and domestic brands, the runway also witnessed the influence of the upcoming World Cup with designers showcasing inspired collections. Oskar Metsavaht’s new Fall 2014 collection for his brand Osklen showcased Brazil’s love for soccer as soccer balls replaced clutch bags and Metsavaht turned the runway into a fashionable soccer file, calling it the ‘Brazilian soul.’ The NYFW Spring 2014 also saw designers such as Rag & Bone, Billy Reid, Sally LaPointe, Houghton showcase collections inspired by the 2014 Brazil World Cup, with garments such as boxy jackets and low slung midi skirts.
Sportswear brands such as Nike, Puma, Adidas, etc. are benefiting most from the upcoming World Cup craze. These brands have implemented aggressive marketing and advertising plans including specific product launches, concept store openings and online sales to win over Brazilian consumers. Adidas AG Chief Executive Officer Herbert Hainer expects a significant revenue increase in 2014, boosted by sales of national team shirts and official balls for the Soccer World Cup in Brazil. The world’s second-largest maker of sporting goods is on track to reach a target of 17 billion Euros (US $ 23 billion) in annual revenue in 2015, spokeswoman Katja Schreiber, Adidas confirmed in a recent statement. Analysts expect revenue to rise about 7 per cent to 15.7 billion Euros in 2014 from 14.6 billion Euros in 2013, according to estimates compiled by Bloomberg. “The Brazilian people and Adidas have something very much in common, it’s called ‘football first’. They’re the football nation and we’re the football brand and that shared passion is something we’re really trying to tap into for 2014,” claimed Nicole Vollebregt, Senior Vice-President of Global Brand Marketing at Adidas.
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Currently Nike owns 14.6 per cent of the global sporting goods market to Adidas’ 11.4 per cent, and is whittling away at the German brand’s No. 1 position in Europe. According to Euromonitor data, Adidas held 13.2 per cent of the Western European sporting goods market in 2012 to Nike’s 12.4 per cent.
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In an attempt to create a clout of supremacy, Adidas who are the official partners of FIFA World Cup have recently launched their new ‘Samba collection’ Brazilian inspired football boots, especially designed to celebrate exuberance and vibrancy of the ‘World Cup’ host nation Brazil. The Samba collection launch marks the start of the Adidas ‘All in or nothing’ 2014 FIFA World Cup Brazil Campaign while Adidas star players like Lionel Messi, Chelsea’s Oscar, Arsenal’s Mesut Ozil, all will be involved in the campaign. Recently, Adidas has also announced that it had extended its sponsorship agreement with FIFA to 2030, to supply match balls, kits for officials and volunteers and to advertise at World Cup venues.
In the meantime Adidas’s tough competitor Nike also has its strategy in place for the World Cup to attract maximum sales. It has recently introduced a newly designed kit for Brazil’s national football team, celebrating the fact the country is to play host to the biggest football tournament in the world. Not only that, the sportswear giant is continuing its concerned effort towards protecting the environment, by making shirts, shorts and even socks from eco-friendly fabrics. Nike is already celebrating an early victory in the kit war as the supplier to 10 of the tournament finalists, while Adidas and Puma each have deals with 8 teams. Yet the top 4 teams in the FIFA – Spain, Germany, Argentina and Columbia – all wear Adidas.
While Brazil gets ready to host three major sporting events back-to-back – the FIFA World Cup this year, the Copa America in 2015 and the Olympics in 2016, what remains to be seen is who benefits most from this World Cup. Although Nike is predicting group sales of up to US $ 30 billion by 2015 – suggesting it thinks it can put in a sufficiently strong performance during the World Cup to stretch its global lead over the German company – and maybe beat it at home too. Retailers say the
US brand has gained market share this year thanks to well designed, comfortable products such as the top-selling Nike Free sneaker – and getting its performance-enhancing shoes on the feet of the biggest sports stars. While the teams battle for supremacy over the field, sportswear rival Nike and Adidas will be battling for supremacy over the 5 billion Euros Soccer kit market.
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