Due to challenging business conditions in 2022, the FILA management team faced a tough year. In 2022, FILA achieved a revenue of 21.5 billion yuan, a year-on-year decrease of 1.4 percentage points. This marked the first decline in performance for FILA after more than 10 years of continuous growth.
The storyline of declining growth was not uncommon among consumer brands in 2022. However, when it happened to the “star student” FILA, both attention and pressure were amplified. Voices questioning “FILA’s slowdown” and the need for ANTA to find new growth engines became prominent.
Acquired for 4.6 billion yuan in 2009, under the operation of the ANTA Group, FILA’s performance soared. From just over 50 stores and annual losses of tens of millions at the time of acquisition, FILA expanded to nearly 2,000 stores with annual revenue surpassing 20 billion yuan. FILA even became regarded as a golden case of a domestic company acquiring a foreign brand.
Facing business pressures, the FILA management spent nearly a year engaging more frequently with the ANTA Group’s management committee and external experts to rethink FILA’s future path.
According to Chinese media outlet Huxiu, the decision made by the FILA management after careful consideration is to adhere to the unchanged strategy of “high-end sports fashion” while making some tactical adjustments based on the overall environment and industry changes.
Yao Weixiong, President of FILA Greater China, told reporters that in the past two years, they have been focusing on professional products and launching niche sub-brands such as golf.
In 2023, FILA once again experienced growth in performance. According to Yao Weixiong, this is mainly because they anticipated changes in the consumer environment and made some advance preparations. However, according to an analyst who has been tracking ANTA Group for a long time, beyond these grand frameworks and layouts, the finer details of operations also play a crucial role in FILA’s development.
Increased Management Granularity
Yao Weixiong is known for two distinct traits. On one hand, he is enthusiastic and humorous, often joking in front of employees that he is an “old man” and following a cold joke with a “bad joke.” On the other hand, he manages his time rigorously, frequently checking his watch when there are ten minutes left in a scheduled conversation.
The precise time management is due, in part, to his close control over FILA’s operational activities, resulting in a tightly packed and specific daily schedule.
On the day of the interview, Yao Weixiong first conducted a two-and-a-half-hour product preview meeting, followed by two more meetings with FILA’s global headquarters in the afternoon. He mentioned that for the entire year, his main focus was on refining products and studying consumers.
For every FILA garment that goes public, Yao Weixiong personally oversees it. On November 15th, he attended the Autumn 24-Year Product Preview at the top floor of the Feile Square. New products for the season were brought together, and dozens of employees from the product team accompanied Yao Weixiong to inspect each item. If Yao Weixiong picked up a piece of clothing, it meant he had questions about it and needed to discuss it with the product team.
As the final “gatekeeper” for FILA products, Yao Weixiong must possess a high degree of fashion sensitivity. To better grasp market trends, he often goes “shopping” around the world, visiting luxury stores, high-end fashion stores, trendy brand stores, sports brand stores, and even children’s clothing stores. He goes in to look around, and if possible, tries on the clothes.
The collaboration between FILA and many internationally renowned designers is also personally handled by Yao Weixiong. For example, he worked with David Tourniaire-Beauciel (referred to as David.T), who created popular “dad shoes” for Balenciaga.
Speaking about the collaboration with David T, Yao Weixiong shared the details. He mentioned that in the end of 2022 and July 2023, he visited Europe twice, not only for store visits and meetings at FILA’s global headquarters but also to visit David T’s home and studio.
“These big designers are not short of money. To convince them to collaborate with FILA, I need to know what they want and how FILA can provide what they want. For example, David T needs a platform where he can unleash his creativity with fewer restrictions,” Yao Weixiong said.
This year, David T and FILA launched the joint dad shoe “FILA Space.” When Yao Weixiong talked about it passionately, he even took off the unreleased “FILA Space” shoes from his feet to show the unique “FILA” logo on the sole.
Store visits are also the most common way for Yao Weixiong to observe products and consumers up close. Since taking over the FILA brand in 2009, he has maintained a weekly store visit frequency.
Areas where performance is not ideal become the focus of Yao Weixiong’s store visits. His iPad shows the sales situation in each major region. In theory, Yao Weixiong can accurately know the operating conditions of each major region, and even each store, every hour.
During store visits, Yao Weixiong’s attention to detail is extremely fine, from product displays, arrangements, lighting, and music in the store to the appearance of the store staff. If something does not meet FILA’s standardized store criteria, he will point it out on the spot. “Even the store’s fragrance is customized by FILA, and we change the music every month.”
To understand market feedback, Yao Weixiong likes to randomly ask store employees questions during store visits, such as which clothing sells the best, or how business has been after changing brand ambassadors.
In fact, not only Yao Weixiong but also other executives at FILA frequently go out for store visits. After each store visit, the management team reviews the content. At the weekly big brand merchandise meeting and the monthly meeting, they discuss what they observed during store visits.
In fact, the entire management team of the ANTA Group values store visits. Ten years ago, when the sportswear industry in China was struggling with inventory crises, ANTA Chairman Ding Shizhong frequently led the management team on store visits. According to media reports at the time, he visited over 500 prefecture-level cities in China within two years. As a result, ANTA became the first domestic sportswear brand to emerge from the inventory crisis.
The significance of store visits is that it allows the management team to delve into the “capillaries” and understand the real situation at the end of the market and the brand.
“High-End Sports Fashion” – Can It Still Work?
Above products and consumers, there is brand positioning. Many industry insiders believe that the key to FILA’s previous growth was its brand positioning as “high-end sports fashion.”
The logic behind this judgment is that around 2010, when FILA introduced the concept of sports fashion, most domestic sports brands were still pursuing “professionalism,” with marketing mainly focused on sports event sponsorship, paying little attention to the fashionability of products. In this situation, FILA took a
different path, avoiding the most competitive areas, completing a “blitz” through a unique competition strategy.
However, to some extent, the positioning of “high-end sports fashion” seems to be a double-edged sword.
One of the points that outsiders are most worried about is “fashion.” Fashion is always changing rapidly, and whether sports fashion trends, and the once-profitable FILA, will become outdated is a question that Yao Weixiong has been asked by numerous media and investors for more than ten years.
In 2022, FILA’s performance was not ideal, and coupled with changes in the overall environment, many began to question FILA’s brand positioning as “high-end sports fashion.” After all, in the current consumer market, the question of whether high-end can still be viable is a concern. Last year, there were even rumors circulating in the market that FILA was planning to enter the low-end market.
It’s not just a pricing issue; in recent years, the consumption trend and competitive landscape of sportswear have also been rapidly changing.
FILA’s “home turf,” the sports fashion track, has become increasingly crowded. International giants and fashion brands are adopting sporty styles, and even the original professional sports brands are competing in terms of product aesthetics and fashion.
Moreover, consumers are placing more emphasis on functionality, and demands are becoming more refined. In this situation, professional sports and various niche brands are also entering the sports fashion market.
Given the industry changes, in early November, the question of whether “sports fashion is outdated” was once again posed to Yao Weixiong. This time, he gave the same consistent answer: “Sports fashion is always there; it just changes its form.”
Although Yao Weixiong gave a firm answer, it does not mean that there was no hesitation within FILA regarding the positioning of “high-end sports fashion,” especially under the pressure faced last year.
In fact, according to reports, the decision to stick to the unchanged positioning of “high-end sports fashion” was made by the FILA management after a year of careful consideration. An important reason for this choice is that after more than ten years of development, FILA already has a massive user base in the tens of millions, and consolidating the existing user base is also an important way to achieve future performance growth.
In simple terms, in the future, FILA still wants to do business for the middle class. Around this core target group, the FILA management aims to achieve growth by more precisely deploying and operating products, brands, and channels.
Tactical Adjustments at FILA
While the overarching strategy remains unchanged, Yao Weixiong told reporters that in the past two years, they have made some tactical adjustments based on changes in the market and consumer behavior.
Regarding prices, based on the current segmented consumer environment and changing consumer demands, although FILA’s main price range has not changed, Yao Weixiong told reporters that the overall price range has actually widened. On one hand, FILA will continue to move upwards, insisting on refining high-value products. On the other hand, they will also open up new price ranges based on consumer demands.
The impact of niche brands on comprehensive sports brands is also a focus of industry attention in recent years.
Emerging categories such as yoga wear and outdoor gear are gaining market share, impacting comprehensive brands like FILA. Some industry insiders believe that FILA, like other comprehensive brands, has been a bit slow in transitioning to focus on niche brands.
However, Yao Weixiong denied this claim to reporters. A representative from FILA mentioned that the company internally began preparing to focus on niche brands a long time ago. For example, three to four years ago, FILA’s global headquarters discussed outdoor trends with the Chinese team. The idea of creating a golf niche brand at FILA has also been around for several years.
Regarding the push into niche brands, FILA’s specific approach is to closely align with the needs of high net worth users in first and second-tier cities, focusing on several elite sports, including tennis, golf, and elite running. (Note: Elite, originally meaning the best talent, is the official term used by FILA.)
What does FILA mean by the “elite sports” it wants to focus on? Yao Weixiong’s criterion is that the sports loved by elites align with the elegant lifestyle advocated by FILA.
Among all the categories of elite sports, FILA’s current strategy is to establish golf as an independent brand, while most other niche products remain within the main brand.
Shi Rui, Vice President of FILA Greater China and Head of the Golf Business Unit, told reporters that as early as the end of 2021, FILA began preparing to establish a separate golf business unit. It was officially established in 2022, and “FILA GOLF” also became an internal sub-brand of FILA.
Shi Rui admitted that the reason for elevating golf to a sub-brand status is because golf is of significant importance to FILA’s development in the next 5 to 10 years. “For FILA to maintain its high-end fashion positioning, the contribution of golf will be the greatest.”
The decision is partly based on Shi Rui’s frequently shared “melting iceberg theory”: all melting icebergs start from the top. Therefore, to maintain FILA’s high-end sports positioning, the tip of the pyramid must hold up, and the higher-end golf is the tip FILA wants to build.
Professionalism and functionality are also crucial points that consumers currently pay a lot of attention to. As a sportswear brand positioning itself as fashionable, FILA’s previous brand professionalism was not prominent, and consumers’ perception of FILA was limited to the fashion and aesthetics of its products. For example, in the highly competitive category of sports shoes, where functionality and technology competition is fierce, FILA gained attention not through professional running or basketball shoes but with the design and fashion-forward “dad shoes.”
Next, professionalism and functionality will also be a lesson that FILA needs to gradually catch up on.
Yao Weixiong told reporters that FILA is doubling down on this aspect. In 2021, FILA established the FLAME Development Laboratory and equipped it with several Ph.D. and master’s degree researchers dedicated to related scientific research. This fall, FILA released a 10km running shoe, and the super running shoes set to be launched next year are the results of the FILA Development Laboratory.
For FILA, the good news is that the effects of strategic adjustments are slowly becoming evident. Recently, FILA’s shoe product turnover surpassed 10 billion yuan for the first time, compared to just 1.5 billion yuan in 2018. In 2023, the overall performance of the FILA brand also achieved growth once again.
However, looking at the longer term, the competition and market environment FILA faces have changed significantly. “Now our competitors have changed from the original big competitors to many niche competitors,” Yao Weixiong said.
This year, at the ANTA Group Investor Day, Yao Weixiong set a target for FILA: to achieve a turnover of 40 to 50 billion yuan in the next three years. On the road to the 50 billion target, facing more niche competitors, FILA wants to gain an advantage in the competition, not just in fashion but by creating more professional and boutique products.