|Name||PUMA SE (ETR:PUM.DE)|
|Industry||Footwear, Apparel & Accessories|
|Founded||In 1924 by Rudolf and Adolf Dassler in Germany.|
|Revenues||€ 5,235 million, 2020; € 5,502 million, 2019.|
|Net Income||€ 78.90 million, 2020; € 262.50 million, 2019.|
|Competitors||Reebok, Converse, Nike, Adidas, FILA, ASICS, New Balance, Under Armour, Brooks Sports|
PUMA SE (2021) designs, sells and markets sports and sport life products, including footwear, accessories, and apparel under the brand name of PUMA and Cobra. Puma business activities are reported based on three regions (the Asia Pacific, EMEA, and America) and three product divisions (footwear, accessories, and apparel). The company issue licenses for eyewear, fragrance, watches, and gaming accessories to independent partners to develop and sell these products (Bloomberg, 2021). In 2020, the company was ranked 50th in Top 100 Brands for Millennials and 13th in Global 100 Brands(Comparably, 2021).
Table of Contents
Puma Strengths 2021:
- Global revenue streams:
In 2020, Puma generated revenues of $5.2 billion globally. The sales for Puma three reported segments were; (1) EMEA (Europe, Middle-East and Africa) $1,982 million (38%), America $1,775.2 million (34%), and Asia share was $1,476 million (28%).
- Branding partners — International sports stars, celebrities, and sporting clubs
Puma has developed a brand partnership with famous sports athletes, football clubs, and celebrities for keeping brand credibility and visibility to the highest level. The famous athletes include Lewis Hamilton, Usain Bolt, Boris Becker, Maradona, and Neymar Jr., and fashion and culture-icon such as Dua Lipa, Selena Gomez, and Winnie Harlow. Finally, Puma partners include Manchester City, Valencia CF, and AC Milan (PUMA SE, 2021).
- International supply chain
Puma sells products in 120 countries through its subsidiaries and distribution agreement. Rogers (2021) stated that Puma’s global sales and distribution network enables extensive access to international markets. For instance, the company has opened a new, highly automated distribution in Indianapolis. Products reach the customer in the US within two days. The central warehouse for the European market in Geiselwind, Germany, will be operational in 2021.
- Persistent product innovation (Ansoff matrix)
In 2020, Puma continued product innovation in all three segments for competitive advantage. In footwear, it developed NITRO, Puma ULTRA and XETIC technology platforms. In apparel and accessories, the portfolio development includes basketball and motorsport products offering. The classic pillar developments include RALPH SAMPSON and SPEEDCAT, and sport-style products are CALI and RIDER (Puma, 2021).
Puma Weaknesses 2021:
- Supplier concentration in Asia.
Puma sourcing concentrates in Asian markets with 96% of total volume. Puma sources 35% of production in Vietnam, 25% in China, 14% in Bangladesh, and 13% in Cambodia. The supply concentration has resulted in labor controversies and disruptions in the supply chain during Covid-19 (Puma, 2020).
- Increasing costs and declining profitability.
In 2020, company sales reduced from € 5,502 million to 5,235 million. However, the cost ratio had risen from 41.3% in 2019 to 43.4% in 2020. The higher cost attributed to logistic and warehouse and higher inventory write-downs has reduced company profitability from € 262.50 million in 2019 to € 78.90 million in 2020.
- Product imitability and counterfeiting.
Product imitability and counterfeiting is a weakness for Puma in global markets. Dhurup and Muposhi (2021) stated that the weak regulations against counterfeiting in developing countries mean Puma copies are readily available, affecting the company’s brand and sales. The counterfeit product containing the company logo results in losing consumers’ faith in Puma products after a bad experience.
- Limited accessories market.
Puma focused on the footwear and apparel market with 82% of sales compared to a low level of sales of 18% in the accessories segment. The lower revenues highlight the risk to sporting products and the inability to exploit the targeted market opportunity for business expansion and growth.
Puma Opportunities 2021:
- Omnichannel strategy.
Berthiaume (2021) analyzed that there are opportunities for Omni-channel retail strategies with remote working, Covid-19 waves, and e-commerce. For Puma, the new digital systems include virtual shopping events, curbside pick-up, and live streaming.
- Smart clothing.
With rapid development in clothing production technology, Puma has the opportunity to develop and offer smart clothing. The smart clothing market will be $ 7.64 Billion with a CAGR of 25% by 2026. Thus, Puma has an opportunity to design and develop Smart clothing that allows the customer to monitor health through offering apparel based on customer preference (Cision US, 2021).
- New social media platform marketing.
Businessinsider (2021) discussed that with the rapidly changing social media landscape, there is a need to stay at the top in current brand engagement, visibility, and impression trends. Puma has the opportunity to leverage platforms like TikTok and Instagram to engage with customers through photos and videos for brand equity development.
- Expansion to the South American market for sporting footwear.
According to Statista (2021), the demand for footwear will be $1,362 million with a CAGR of 19.5% by 2026. The region has a sporting culture, and football is played among a large segment of the market. Puma expansion to Brazil offers new business opportunities in the sports footwear market.
Puma Threats 2021:
- Global event sponsorship risk.
Puma sponsors international events like the Olympics, Football World Cup, Motorsports and many other sports. However, the pandemic presents a new threat for sponsorship of global events for considerable investment in marketing sponsorship. For instance, Covid-19 delayed Olympic 2020 for more than one year (Reuters, 2021).
- High threat of substitutes (Port five forces).
The loyal customer base is essential sportswear industry because multiple brands offer better-price products. Bowden (2021) evaluated that Puma has competition for price and choices with numerous competitors such as Reebok, Converse, Nike, Adidas, FILA, and New Balance. Aggressive marketing strategies can reduce Puma revenues and market share.
- Limited market revenues and share.
In 2020, Puma’s total revenues were $5.2 billion only in footwear, apparel, and accessories when compared to Adidas sales of $19.8 sales and Nike sales of $33.6 billion, as shown in the diagram below. Moreover, Puma has a market share of 7% compared to Adidas’s share of 16% and Nike’s share of 31%.
- Backlash in China.
The customer backlash in China and port congestion have hit company sales in the second quarter of 2021. Puma has experienced online attacks because of statements about the sourcing of cotton from Xinjiang. Before the backlash, the sales were going 40% at the start of 2021 (Reuters, 2021).
Puma SWOT Analysis Conclusion:
Puma has a global presence and revenues, marketing partners, and product innovation capabilities. However, the company has multiple issues such as increasing cost, sourcing risk, limited market share, and high threat of substitutes. Nonetheless, Puma has the resources, innovation capabilities, and market knowledge to tackle the business challenges and exploit new opportunities to maintain brand equity and market position.
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- Cision US (2021). Global Smart Clothing Markets, 2019-2020 & Forecast to 2027.
- Berthiaume, Dan (2021). Global footwear brand steps into omnichannel order fulfillment.
- Bloomberg (2021). Puma SE.
- Businessinsider (2021). Teen Sneaker Reseller Makes Thousands Using TikTok and Instrgam.
- Comparably (2021). PUMA is ranked #63 in Global Top 100 Brands.
- Dave Bowden (2021). The World’s Top 25 Nike Competitors.
- Dhurup, Manilall and Asphat Muposhi (2021). Stemming the sportswear counterfeit tide: Emerging market evidence of rational and normative drivers.
- Puma (2020). Combined Management Report for 2020.
- Puma (2021). Puma Family – Annual Report 2020.
- PUMA SE (2021). Puma Timeline. 2021. 2021.
- Reuters (2021). Puma sees sales hit from China backlash and freight delays.
- Reuters (2021). Tokyo’s delayed and disrupted 2020 Games.
- Rogers, Christopher (2021). Puma leaps logistics challenges — S&P Global. 2021. 2021.
- Statista (2021). Athletic Footwear — South America.
- Statista (2021). Net sales of adidas and puma worldwide.
- Statista (2021). Puma sale and sgements worldwide.