Skechers Company Analysis by nienke_ijtsma@hotmail.com

SKECHERS COMPANY ANALYSIS

WORDS: 3944 NUMBER OF PAGES: 17 AUTHOR: NIENKE IJTSMA (M2B)

TABLE OF CONTENT Unit 1 – Introduction 1.1 Scope & Limitations

3 3

Unit 2 – Internal Analysis 2.1 Strategy 2.2 Systems 2.2.1 Product Development Strategy 2.2.2.1 Planning 2.2.2.2 Sourcing 2.2.2.3 Making 2.2.2.4 Delivering 2.2.2.5 Returning 2.2.3 Sales & Marketing Strategy 2.3 Skills 2.4 Structure 2.5 Staff 2.6 Style 2.7 Shared Values

4 4 4 4 4 5 5 5 5 5 5 6 7 7 7

Unit 3- Financial Analysis

Unit 4 – Consumers & Competitors 4.1 Consumer Profile 4.2 Competitors

9 9 9

Unit 5 – Industry analysis 5.1 Porter’s five forces 5.2 Consumption

10 11 12

Unit 6 – Social Economical analysis 6.1 Demography 6.2 Economy 6.3 Social-Economic 6.4 Technology 6.5 Ecology 6.6 Political

13 13 13 13 13 13 13

Unit 7 – SWOT Analysis & Conclusion 7.1 SWOT analysis 7.2 Conclusion

14 14 14

Unit 8 – Sources

UNIT 1 – INTRODUCTION SKECHERS is a lifestyle footwear brand, which started in 1992 by Robert Greenberg in California. He started off by making unisex skate shoes and boots for young urban adults, actually to import dr. Martens into the United States. Nowadays, the core of the business to design, market and making two types of shoe: sport shoes and casual shoes. The product range is for male, female and kids and has a very wide age scope. The organization is hierarchically organized into 9 departments. The mission statement for SKECHERS is “to become the first choice of casual and active footwear by providing an exceptional and exciting customer experience for the entire family, while ensuring the longevity of both the company and the

SKECHERS brand name through controlled, well managed growth” (SKECHERS, 2016). The main competitor is Nike. SKECHERS uses celebrities and athletes to advertise their products. Last year, international sales amounted to $3,1 billion and the growth in international retail store sales was 64%, compared to 2013 (SKECHERS annual report, 2015). This report analyses SKECHERS internally by using the McKinsey 7’s model and externally, in an industry and socio-economic analysis, focused on Europe and Asia. The results will be funneled into a SWOT analysis, which examines Strengths, Weaknesses, Opportunities and Threats that came out of this report. The purpose is to make another report for SKECHERS with new business model options and recommendations for the future strategy of the company.

1.1 Scope & limitations This report focusses on describing SKECHERS international. However, the report was completed in only four weeks using limited resources.

UNIT 2 – INTERNAL ANALYSIS 2.1 Strategy Figure 1 shows the corporate strategy of SKECHERS. The company strives to compete on the experience footwear market through their aggressive marketing strategy, in order to stand out and be positively associated by as many people as possible. They try to keep on growing to surpass their biggest competitor Nike in the future, but therefore, they need to improve their technological skills (Lutz, 2015).

MISSION

To become the first choice of casual and active footwear by providing an exceptional and exciting customer experience for the entire family, while ensuring the longevity of both the Company and the SKECHERS brand name through controlled, well managed growth. (SKECHERS, 2016) and (Tina Grant, 2000)

REWARD

GOAL

To become global market leader of performance footwear (Blueshift, 2016).

ACTIONS

- The different design departments come up with styles for new customer needs; - the Greenberg’s know the market very well and already found their pricing sweet spot; - product development works together with OSI Consulting to stay innovative in modern technologic solutions; - licencing director John Freeman is responsible for the licencing agreements and - The SKECHERS performance division develops active footwear with an own aesthetic. (LexisNexis Academic, 2016) and (Birthday Divisions, 2014)

Figure 1: Corporate strategy.

2.2 Systems This section is about the functional strategy of SKECHERS, which includes three main areas: product development, supply chain and sales & marketing. 2.2.1 Product Development Strategy The main target for SKECHERS’ product development is to divide the development time as efficiently as possible. Therefore, SKECHERS uses two external consultancies. One is called ‘OSI-consultancy’ and it helps in the field of modern technological solutions. The other is called ‘IBM-cloudant’ and it enhances

OBJECTIVES

- Earning 50% of the total sales from outside the domestic market by 2020 (Seeking Alpha, 2015) and - The ROI of the flagship distribution facility, which is able to process 17.000 SKU per hour, will be completed in 2016 (MMH, 2011).

STRATEGIES

- Developing and offering a balanced assortment of basic and fashionable merchandise across a wide spectrum of product categories and styles; - maintaining a diversified, low-cost sourcing base; - controlling the growth of its distribution channels (Tina Grant, 2000); - cultivating its own aesthetic (Business Insider, 2015); - adding features + technology; - keep on using aggressive marketing; - expanding globally through licencing agreements and - operating a high-performing, customer-driven business that sets the standard in every market SKECHERS serve (SKECHERS, 2015).

customer experiences and develops products directly for the needs of the customers via online data. 2.2.2 Supply Chain Strategy The supply chain strategy explains the five stages of planning, sourcing, making, delivering and returning (Wefers, 2016). 2.2.2.1 Planning SKECHERS uses a system of ‘planning and review’ by style. This smart system uses data from the inventory of the retail stores and helps to make the right decisions in ordering and production (Matt Powell, 2015).

2.2.2.2 Sourcing The SKECHERS performance division is a small team led by Rick Higgins (V.P. of marketing), David Rayesse (V.P. of design) and Kurt Stockbridge (V.P. of technical development). They source new materials and work together with runners, walkers and subject matter experts to develop performance footwear (Birthday divisions, 2014).

to the athleisure trend, because it sets the image that active sport shoes are for everyone. SKECHERS sponsors multiple famous people to get the attention of their different types of target groups. According to Business Wire, they have already signed deals with Christina Aguilera, Britney Spears, Kim Kardashian, California Chrome (which is a race horse), Mark Cuban, Joe Montana, Ringo Starr, Kelly Brooke, Demi Lovato (who collaborated on a collection of sneakers as well) and Meghan Trainor.

2.2.2.3 Making SKECHERS’ products are produced by independent manufactures in Vietnam and China. They don’t own manufacture facilities (SKECHERS, 2015). ‘Rank a Brand’ gave SKECHERS the lowest label ‘E’, because of their unclear policies for environment and labor conditions.

2.3 Skills SKECHERS’ unique selling points are listed in figure 2. Every USP is divided by the three competitive strategic options: Operational excellence, product leadership and customer intimacy.

2.2.2.4 Delivering SKECHERS has two central distribution facilities in California and Belgium and 30 other distributors in Asia, South- and Middle America and Africa. The lead certified center in California serves the whole of North America, and the second biggest distribution location in Belgium serves Europe and the rest of the world. SKECHERS sell their footwear on multiple geographical markets via multichannels, consisting of wholesalers, other retailers and consumers via online orders. (SKECHERS , 2014) 2.2.2.5 Returning Unworn goods may be returned within 45 days, in SKECHERS retail stores or per mail with UPS. The customers’ confirmations will be processed within 1-3 weeks. (SKECHERS, 2014) 2.2.3 Sales & Marketing Strategy In his blog ‘Sneakernomics’ on Forbes.com, Matt Powell wrote that SKECHERS makes a wide variety of shoes that appeal to multiple types of customers. A lot of product categories sell very well because of their use of targeted sponsorships. In 2014, SKECHERS sponsored Meb Keflezighi when he won the Boston Marathon. Furthermore, they have been the title sponsor of the Los Angeles Marathon since 2015. Powell also wrote about the athleisure trend contributing to the success of their active footwear division in the last couple of years. People want to look like they are working out, even if they are not. So, next to athlete endorsement, SKECHERS uses celebrity endorsement as a great method of reacting

USP’s

COMPETITIVE STRATEGY

- Globally lower prices than competitors through an efficient supply chain system.

- Operational excellence

- Unique brand image, through celebrity and athlete endorsement.

- Operational excellence

- One-stop-shop: large variety in product lines.

- Operational excellence

- Technology: Special insoles, which give efford to a.o. diabetic patients, older people, people who care by health care.

- Product leadership

Figure 2: SKECHERS global Unique Selling Points and competitive strategy. (Business Insider, 2015) In the model of figure 2, which was explained by Supply Chain Management teacher, Yolet Wefers, it is clear that SKECHERS competes with their operational excellence. The company strives to offer the best products for a cheaper price than their competitors. In his financial analysis for SKECHERS, Alexander Appugliese explains this more in depth. The competitive strategy is actually based on three focus points. Firstly, SKECHERS outsources almost all the manufacturing to Asian countries where the cost of production is considerably lower. Secondly, SKECHERS’ achieves brand image through large advertising campaigns and hiring celebrity and athletes to endorse the brand. Lastly, SKECHERS focuses on product differentiation by offering special insoles and a large variety of product lines. The brand is absolutely not the most innovative product leader but their aggressive marketing strategy keeps the brand value high.

2.4 Structure SKECHERS’ top management is based in the head office in California. CEO, Robert Greenberg, is the chairman of the board. Together with his son, Michael Greenberg, he takes the most important decisions about the company (brown boxes in figure 3). Andrew Greenebaum is their investor relations officer. He cares about a consistent investment strategy and is responsible for presenting the company’s performance to the investment community (third box from above in figure 3). Robert and Michael Greenberg have three executive vice presidents who specialize in finance, operational efficiency and product development (pink boxes in

figure 3). One of them is the head of the general council and leads the independent directors. They do not own shares in the company and provide an independent view on the benefit of the company. They lead the nine executive departments of SKECHERS, consisting of: design, financing, human resource, information technology (I.T.), (international) operations, licensing, marketing & communication, merchandising & product development and production (nine beige boxes in figure 3). The senior vice president of active electronic media is responsible for SKECHERS’ advantage of electronic technology, like on television, radio and Internet (big green box in figure 3).

Robert Greenberg Chief Executive Officer

Figure 3: Organization chart of SKECHERS (LexisNexis Academic and Thomson Reuters, 2016).

Michael Greenberg President, Director Andrew Greenebaum IR Contact Officer

David Weinberg Executive Vice President, Chief Financial Officer, Chief Operating Officer, Director

Geyer Kosinski Independent Director

Philip Paccione Executive Vice President, Business Affairs, General Counsel, Corporate Secretary

Mark Nason Executive Vice President, Product Development

Morton D. Erlich Lead Independent Director

Jeffrey Greenberg Senior Vice President , Active Electronic Media, Director

Richard Rappaport Independent Director

Richard Lee Siskind Independent Director

Licencing

(International) operations

Information Technology (I.T.)

Design

Financing

Human resource

\ Merchandising & product development

Production

Thomas Walsh Independent Director

Marketing & communication

2.5 Staff SKECHERS is a result oriented, democratic, innovative and relatively big company with a lot of hierarchical layers. Those four factors are the KPI’s (Key Performance Indicators) of the company. According to talent acquisition manager, A. Lopez, the core competences of the staff are: - Being result driven; - Being visual minded / creative; - Being original and innovative; - Being marketing strategic; - Being a good communicator and - Being ethical and integer. Most of the references from (ex-) employees do fit in the community-based representation that SKECHERS describes (Indeed, 2016). SKECHERS has a lot of benefits that improve the wellbeing of the employees (SKECHERS Career, 2016). 2.6 Style The management style is based on a top-down division (Figure 3). Management is divided in many layers and most of the employees feel their pressure to perform well, in order to consider the business needs. Only the full-time managers receive SKECHERS’ healthy benefits, which increase the hierarchy inside the company. But, the working atmosphere is fun and informal, even though the managers are strict (Indeed, 2015). At the website from ‘Smart Recruiters’, Ryan Conley wrote a job description for a management function at SKECHERS. He says that managers are expected to demonstrate teamwork by working cooperatively with others toward common group objectives. They need to have respect for new idea’s and contributions of other team members. 2.7 Shared Values The mission of SKECHERS is to become the first choice of casual and active footwear by providing an exceptional and exciting customer experience for the entire family, while ensuring the longevity of both the company and the SKECHERS brand name through controlled, well managed growth (SKECHERS, 2016). The vision is to develop and offer a balanced assortment of basic and fashionable merchandise across a wide spectrum of product categories and styles, while maintaining a diversified, low-cost sourcing base and controlling the growth of their distribution channels (Tina Grant, 2000). “SKECHERS thrives on growth, passion for footwear and development capabilities”, is what A. Appugliese wrote in his Financial Statement Analysis.

UNIT 3 – FINANCIAL ANALYSIS least over the past ten years (Morningstar, 2016). Nike’s net profit margin might be higher but SKECHERS is about to grow faster and should pass Nike by in 2016, if the increase continues at the same rate.

SKECHERS is one of the fastest growing footwear companies in the United States and expects to double their business over the next five years (Run, 2015). Sales are growing rapidly and are expected to grow even more in the future, both on domestic and foreign markets. The aim is to become a leading source of contemporary casual and active footwear, but at the moment their biggest competitor, Nike, takes the lead (Funding Universe, 2015).

Looking at the solvency of the companies, 35% of SKECHERS’ total assets are debts. For Nike this ratio is 42%. It is clear that these debts come from investments that the companies make, since the sales are doing very well. SKECHERS for instance invested in a better marketing strategy and an upgrade in distribution channels and factories (Lutz, 2015). Nike invested in backyards, key markets and manufacturing communities (Nike Corporate, 2016). The returns on these investments are 18,4% for SKECHERS and 25% for Nike (Morningstar, 2016). Currently, the investments of Nike are more efficient than SKECHERS’.

The company’s revenue has grown since 2012, up to $3.1 billion at the end of 2015. The return on capital employed has also grown from just 2% in 2012 to 24% in 2015. The company makes more money now than ever; last year, the net income increased by over 67% (Durante, 2016). Since 2012 SKECHERS has had a higher profit margin than Nike. But in 2015 Nike beat SKECHERS with a 1% higher gross profit margin. The key ratios at Morningstar also show a bigger potential growth of Nike’s gross profit over the coming years. It is the other way around with the net profit margin. SKECHERS’ net profit margin increases rapidly from 0,6% in 2012 up to 7,3% in 2015. While Nike’s net profit margin sticks consistently at around 10%, at

-Nike-

Also in the broader conception of efficiency it is clear that SKECHERS has a longer operating cycle and financial period, which consists out of three parts: the receiving part, the paying part and the inventory part (figure 4).

-SKECHERSINVENTORY 90 DAYS

PAYABLES 45 DAYS

INVENTORY 100 DAYS RECEIVABLES 40 DAYS

PAYABLES 117 DAYS

-OPERATING CYCLE 130 DAYSFINANCING PERIOD 85 DAYS 0

RECEIVABLES 45 DAYS

-OPERATING CYCLE 145 DAYSFINANCING PERIOD 56 DAYS 130

145

Figure 4: Operating cycle and financing period, information from (Google Finance, 2015) and (Morningstar, 2016).

The receiving part shows that SKECHERS earns more directly in cash than Nike. This is because of their physical retail stores and through partners (wholesale) and this takes more time in the cycle. The paying part shows that SKECHERS has an average of 73 more days than Nike to pay their suppliers. The inventory part explains that SKECHERS needs an average of 10 more days to sell their inventory than Nike, which means that Nike’s inventory is converted faster into money.

In brief, SKECHERS has taken the right decision to use Nike as their big inspiration, because Nike is a valuable leader in the performance shoe market. SKECHERS grew enormously in the past few years and it has a growing perspective for the future, but it will be a big challenge to overtake Nike within a certain amount of time. For now, there is enough room for improvement to come closer to their goal.

UNIT 4 – CONSUMERS & COMPETITORS 4.1 Consumer Profile The direction of SKECHERS describe their core consumer group as follow in the SKECHERS annual report: “We seek to offer consumers a vast array of stylish and comfortable footwear that satisfies their active, casual, dress casual and athletic footwear needs. Our core consumers are style-conscious men and women attracted to our youthful brand image and fashion-forward designs, as well as athletes and fitness enthusiasts attracted to our performance footwear. Many of our best-selling and core styles are also developed for children with colors and materials that reflect a playful image appropriate for this demographic.”

competitors of SKECHERS’ children’s shoe line are Payless Holdings and Stride Rite by Wolverine. SKECHERS’ also competes with manufacturers, importers and distributors of footwear for the limited shelf space available for displaying such products to the consumer. Many of the company’s competitors are larger, have been existence for a longer period of time, have achieved greater recognition for their brand names, have captured greater market share and have greater financial, distribution, marketing and other resources than SKECHERS (SKECHERS annual report, 2015).

There are different SKECHERS product lines. The lifestyle line is meant for 12- to 24-year-old consumers. The other lines are meant for 5- to 50year olds. However, according to the theory of Sean Gardner at Seeking Alpha, the company choose for the young and casual image, with an over-all target on the Millennial Generation/Generation-Y (born between 1981-1995).

Figure 5: Millennials wearing sportive clothes, with a unisex outlook, in their daily life (Pinterest, 2014). 4.2 Competitors SKECHERS has a lot of indirect competitors because of their diverse product range. They compete with other brands within their own product category and with private labels that sell their products in retail, including some of SKECHERS’ own customers. The main competitors of SKECHERS’ casual shoe line are Columbia Sportswear Company, Converse by Nike, Deckers Outdoor Corporation, Kenneth Cole Productions, Steven Madden, The Timberland Company, V.F. Corporation and Wolverine. The main competitors of SKECHERS’ athletic lifestyle and performance shoe lines are Nike, Adidas, Reebok, Puma, ASICS, New Balance and Under Armour. The

UNIT 5 – INDUSTRY ANALYSIS Since SKECHERS’ idea to expand their global networks and grow in Europe, the Middle East, Asia, Canada and Chile (Michelle Russell, 2016), they also made the decision to clarify their strategy. In his article ‘SKECHERS: Worth double by 2020?’ at Seeking Alpha, Sean Gardner explains that this strategy focuses on Generation-Y. According to ‘Advertising Age’ this age category counts for 28% of the world

population and has more disputable income up to $200 billion annually by 2017. With the perspective to target the Generation-Y, SKECHERS took the advantage of the trending athleisure stream. This, in combination with their excellent operational skills, which helps the company to apply their affordable prices, is SKECHERS’ strategy differentiation on the athletic footwear market, with big competitors such as Nike and Adidas.

TOTAL REVENUES IN THE FOOTWEAR INDUSTRY (Percentages from total footwear industry)

1,3% 12%

Total footwear industry

$240 billion

(Global Industry Analysts, 2015)

Athletic footwear industry $29,5 billion

(Statista, 2015)

SKECHERS

(Durante, 2016)

$3,1 billion

Figure 6: Circle diagram of the total revenues in the footwear industry. Figure 6 shows that SKECHERS has a global market share of $3,1 billion, or 1,3%, in 2015. To bring this in perspective, Nike has a global market share of 12,8% in the same year (Marketwatch, 2016). In the annual report from SKECHERS (2015) stands that 75% of the total sales came from both the domestic wholesale channels ($1,220 billion) and the international wholesale channels ($1,094 billion). In 2014, SKECHERS’ online sales decreased from $27,2 million in 2013, down to $26,9 million. The online sales are only 1,1% of the total sales, which is 6,1% lower then the average in the U.S. retail sector (US Department of Commerce, 2015).

To continue with SKECHERS’ goal of global success, the consultants and analysts from ‘Transparency Market Research’ expect that Asia Pacific will have 41,6% of market shares in the athletic footwear industry, by 2018. Thereby, Asia Pacific will be closely followed by Europe. It is likely that this also affects SKECHERS, since the annual report from SKECHERS (2015) already noted that the largest sale increases came from their join ventures in China and Hong Kong and from their subsidiaries in the United Kingdom, Germany and Spain. That is why the industry analysis mainly focuses on two specific continents in the world, namely Europe and Asia.

5.1 Porter’s Five Forces 1 - Supplier Power: Asian suppliers have the advantage of a high demand for production. This, in combination with low exit barriers, makes them less dependent from their buyers. That is why the production in this area will become more and more expensive. 2 - Buyer Power: The buyer power is high in the footwear industry because the increasing demand and the high competition at the footwear market. Thereby, trends are often unpredictable, so companies must take a very good time management in consideration.

NUMBER OF * COMPETITORS

+ _ 18

- Sometimes substitutes reposition themselves in the industry.

(2012 - 2018) * OVERALL FOOTWEAR MARKET GROWTH RATE

- Increasing competition on the sportswear and innovation market.

1,70%

- Low switching costs. - Big competitors with high brandvalue. + Wide variety of diversification.

THREAT OF SUBSITUTION

- Big demand.

- High buyer power, fast industry growth.

- Low exit barriers. + Independent (short term) contracts with manufacturers. + Big risks of miscommunications.

- Relatively high price sensitivity, since SKECHERS competes with lower prices. SUPPLIER POWER

- Creating new shoe designs and developing new idea’s; - Producing local/ somewhere else**; - Offering apparel for competitive prices in a specific price segment; - Reacting really fast upon ongoing and upcoming trends; and - Creating a strong brand value and experience***.

BUYER POWER

- Buyers become more powerful due to high market competition. - Dependency on customer traffic and tourism.

+ Higher costs in South-East Asia, particulary China.

STRATEGIES DIFFERENTIATION

COMPETITIVE RIVALRY

THREAT OF NEW ENTRY - New shoe designers have more ability to develop something very different. + Hard for new entrants to enter the market.

- Buyers determine whether products are trending or not.

SIZE OF COMPETITORS* (2015)

21%

+ Brands use patents/trademarks to keep powerful. + Capital intensive to compete to the big existing brands.

79%

+ Big companies have the ability to purchase in bulk, this will be hard for new entrants.

Transparancy Market Research, 2015. ** CBI, 2015. *** ISSUU, 2015.

Reebok, Nike, Puma, Adidas, and Asics. Others, including Sketchers, Converse, New Balance, K-Swiss, Vans, and Saucony.

Figure 7: Porter’s analysis of the five forces (Appugliese, A., Skechers Financial Statement Analysis from Slideshare, 2016)

3 - Competitive Rivalry: There are a handful of very strong competitors at the footwear market; innovative design trends and rising spending through the emerging and developing countries drive those. The competition is high. 4 - Threat of Substitution: Products on the market are quite similar. Brands try to improve their brand experience and the extent of innovation, in order to give their products extra value. The same here, the competition is high. 5 - Threat of New Entry: It is hard for new entrants to become a direct competitor of SKECHERS, because the company is one of the most increasing players on the footwear industry. New entrants should need a lot of money in order to become a bigger competitor for the brand. However, shoe designers with very outstanding ideas form a threat for SKECHERS, because the brand does not want others to penetrate the footwear market with great ideas, they want to come up with it by themselves. (A. Appugliese, Financial Statement Analysis, 2014). 5.2 Consumption Figure 8 and 9 show the classification of the apparel industry in Europe and China. In China, they spend

around 11% from the total consumption on apparel. In Europe, this percentage is considerably lower, namely 5,4% (measured from five years ago).

Figure 8: European annual expenditures (Eurostat, 2011).

Figure 9: Chinese annual expenditures in % per household (McKinsey, 2013).

12 Â

UNIT 6 – SOCIAL ECONOMICAL ANALYSIS 6.1 Demography At the website of ‘Population Pyramid’ a figure shows that the biggest European population group in 2016 is between 25-55. In 2030, this age will increase to 4070. Figure 10 shows the rise of the middle class Asian consumer in contrast with the other continents, which are expected to stay the same.

6.3 Social-Economic According to ‘Good Company Consultants’, there is a social concern about companies’ influences on the environment in Europe. Consumers express their concerns on social media, which makes it easier for companies to respond to the demand. Stakeholders share their interests for actions of different companies, in order to become better, help others and stimulate sustainability and nature. Companies measure the internal and external social aims by conducting surveys, filling in (self) reflection forms and holding (internal) group discussions. ‘Wetenschap Info Nu’ describes consumers who become more aware of the value of their personal data and what they share. This means that it will be harder to find useful data on the Internet in the future and, therefore, there will be more targeted market research. 6.4 Technology Technology is becoming smaller and smaller and the information technology systems used by (fashion) companies use micro-electronica that registries data. Some data will be accessible for consumers, so they will be able to get a more in depth knowledge. This will affect fashion, because nanotechnology will be built into garments and 3D print-techniques will be used for production (Shopping 2020).

Figure 10: Middle Class Population by Region, billion people (IEMS; Kharas and Gertz, 2010) 6.2 Economy In addition to the Dutch website ‘Wetenschap Info Nu’, which explains that the European incomes will gently increase from now, which will have a positive impact on the European B2C (Business-to-Consumer) market, ‘Shopping 2020’ writes that the purchasing power of European consumers will decrease. According to them, the consumers will save money with decreasing the buying volume, buying less luxury goods and being more cost conscious. So, Europeans will earn more money but, at the same time, they are not willing to spend more. This explains the growing success of big discount store-chains, like Action in the Netherlands. Consumers choose for cheaper products. Retail expert Huib Lubbers, agrees with that and says that there will become more international discounters in the future. Also the luxury market in Asia Pacific will increase (Woezel, J. T., 2015).

In fashion e-commerce, websites will use technology to register body measurements to create a personalized avatar. This avatar could also be made from a picture or through 3D body scanning. A computer will also save and compare previous sales figures (Verbeek, 2015). 6.5 Ecology With companies’ faster reaction cycles and an increasing demand for products, the environment will be negatively affected and this has an impact on the change of biodiversity, climate changes and changes on the living environment of human beings. 6.6 Political The Dutch newspaper ‘de Volkskrant’ wrote that the competition inside the EU increases, which will make the products cheaper. However, if there is more demand, the production costs in Asia will be higher, which creates more inequality in the Asian Pacific countries. Wikipedia News mentions that Europe is solving different problems, to really create a fair, equal, open market. There is also development in laws against misleading advertising, privacy invasion and unfair competition.

UNIT 7 – SWOT & CONCLUSION 7.1 SWOT Analysis POSITIVE STRENGTHS

OPPORTUNITIES - Aging population, growing demand for shoes for the health; - expanding purchases on cheaper products and - more accessible technological tools (3D scanning, 3D printing, data collecting via e-commerce).

EXTERNAL

INTERNAL

- High attendence through licencing agreements and an agressive marketing strategy; - Reacting on the athleisure trend; - product diversity and - huge distribution centers, designed with growth perspective for the future.

- Strong competition on the

- Lack of an own aesthetic;

performance shoe market and

- low prices; - technological limitation of

- higher wages in Asian countries,

knowledge and originallity and

where SKECHERS’ manufacuring

- untransparency.

takes place (China and Vietnam).

WEAKNESSES

THREATS NEGATIVE

Figure 11: SWOT Analysis. 7.2 Conclusion SKECHERS is a lifestyle footwear brand with a high diversity of different product lines. This has positive and negative effects, while it results in a lack of focus and own aesthetic. But, on the other side, it gives the company a stronger competitive position, while the wide product range makes the company less dependent on one specific product. However, SKECHERS is trying to get more market share on the athletic footwear market. Therefore, Nike is their biggest competitor. In 2015, Nike had a global market share of 12,8%, compared to 1,3% for SKECHERS. In the competition with Nike, SKECHERS has a lack of knowledge about innovation and technology. But, SKECHERS maintains a lower pricing policy and is more affordable than Nike. SKECHERS uses licensing agreements and an aggressive marketing strategy to get a lot of publicity and brand awareness. This is something that really

features the brand. It is their way to show their trendy image, because they use well-defined celebrity and athlete endorsement as a marketing tool. At the moment, they mainly praise their special insoles with memory foam, which is one step in the technological direction already. The memory foam could be seen as a USP, that offers the wearer positive features. It could also help people with health problems or older people. SKECHERS is one of the fastest growing footwear companies in the United States. They are continually expanding their enormous distribution centers because they expect to double their business over the next five years. The biggest disadvantages for the company, at the moment, are the increasing wages in Asia Pacific and the increasing appliance of sustainability laws. SKECHERS is not transparent.

UNIT 8 – SOURCES 1. American Dynamics. (2014, September 3). Skecherscase study. Opgeroepen op April 20, 2016, van American Dynamics: http://www.americandynamics.net/Mobile/illustra_mob ile/documents/Skechers-case%20study.pdf

2. Appugliese, A. (2015, Januar 22). Skechers Financial Statement Analysis. Opgeroepen op May 18, 2016, van Slideshare: http://www.slideshare.net/AlexanderAppugliese/skeche rs-financial-statement-analysis-43783581

3. Business Wire. (2016, Februari 24). SKECHERS Named Footwear Brand of the Year and Ladies Brand of the Year at the Footwear Industry Awards. Opgeroepen op May 7, 2016, van Business Wire : http://www.businesswire.com/news/home/2016022400 5528/en/SKECHERS-Named-Footwear-Brand-YearLadies-Brand 4. CBI. (2015). CBI Trade Statistics. The Hague: CBI Trade Statistics. 5. Dennis Green. (2015, September 16). Two sneaker companies are at war over this shoe from the '60s. Opgeroepen op April 21, 2016, van Business Insider: http://www.businessinsider.com/adidas-is-suingskechers-for-allegedly-ripping-off-the-stan-smith-20159 6. Dreier, P. (2014, June 25). Footwear Giant Skechers Can Run, but It Can’t Hide From Abusive Labor Practices. Opgeroepen op April 21, 2016, van Huffpost Business: http://www.huffingtonpost.com/peterdreier/skechers-abusive-laborpractices_b_5523742.html 7. Durante, N. (2016, March 18). Home > Stocks Market News - Articles & Analysis > Stock Valuation > Valuation Indicates Skechers Stock Has A Huge Upside Potential. Opgeroepen op April 21, 2016, van Amigobulls: http://amigobulls.com/articles/valuation-indicatesskechers-stock-has-a-huge-upside-potential 8. Gardner, S. (2016, May 24). Skechers worth double in 2020? Opgeroepen op June 1, 2016, van Seeking Alpha: http://seekingalpha.com/article/3977383skechers-worth-double-2020 9. Gertz, K. a. (2010, May 2). Footwear Consumer 2030. Opgeroepen op June 2, 2016, van ISSUU: https://issuu.com/joanavazteixeira/docs/footwear_cons umer_2030/10 10. Global Industry Analysts Inc. (2016, March 29). Footwear Market Trends. Opgeroepen op May 31, 2016, van Strategyr: http://www.strategyr.com/MarketResearch/Footwear_ Market_Trends.asp 11. Google Finance. (2015, December 31). Skechers USA Inc (NYSE:SKX). Opgeroepen op April 20, 2016, van Google Finance: https://www.google.com/finance?q=NYSE%3ASKX&fsty pe=ii&ei=a48YV7CTHse5U4v7iPAF

12. Grant, T. (2000). International Directory of Company Histories (Vol. 31). Pennsylvania: St. James Press. 13. Indeed. (2016, April 28). Skechers. Opgeroepen op May 3, 2016, van Indeed: http://www.indeed.com/cmp/Skechers/reviews?fcountr y=US&start=20 14. ISSUU, Indiana Series Secure Utilities Underground. (2014). Footwear consumer 2030. ISSUU, Indiana Series Secure Utilities Underground. Mexico: World Footwear. 15. Jenks, C. (2015, May 20). Skechers Pace Not Slowing. Opgeroepen op April 20, 2016, van Blueshift Idea's: http://blueshiftideas.com/reports/051508SkechersPace NotSlowing.pdf 16. LexisNexis Academic. (2016, May 3). SKECHERS U.S.A. Inc. Opgeroepen op May 3, 2016, van LexisNexis Academic: http://academic.lexisnexis.nl.rps.hva.nl:2048/ 17. Logistics Manager. (2013, November 28). Skechers invests in automated picking at European DC. Opgeroepen op April 21, 2016, van Logistics manager: http://www.logisticsmanager.com/2013/11/21721skechers-invests-in-automated-picking-at-european-dc/ 18. Lopez, A. (2016, March 2). Retail Store Manager Los Angeles. Opgeroepen op April 20, 2016, van Smart Recruiters: https://www.smartrecruiters.com/Skechers1/9152594 2-retail-store-manager?referrer=210 19. Lubbers, H. (2015, November 12). Waarom gaan we allemaal naar discount winkels? Opgeroepen op April 21, 2016, van RTL Z: http://www.rtlnieuws.nl/economie/home/waarom-gaanwe-allemaal-naar-discount-winkels 20. Lutz, A. (2015, April 30). Skechers Quickens Pace of Omnichannel Growth with Manhattan Associates. Opgeroepen op April 20, 2016, van Business insider: http://uk.businessinsider.com/skechers-shoes-areunderrated-2015-4?r=US&IR=T 21. MCM Staff. (2016, February 18). Skechers Quickens Pace of Omnichannel Growth with Manhattan Associates. Opgeroepen op April 20, 2016, van Multi channel Merchant: http://multichannelmerchant.com/news/skechersquickens-pace-omnichannel-growth-manhattanassociates-18022016/ 22. Media Corporate. (2015, August 17). SKECHERS U.S.A., Inc. Code of business conduct and ethics . Opgeroepen op May 3, 2016, van Media Corporate: http://media.corporateir.net/media_files/nys/skx/corpgov/codeofethics.pdf

23. MMH. (2011, December 3). MMH1112_SysReport_Skechers. Opgeroepen op April 20, 2016, van MMH: http://www.mmh.com/images/site/MMH1112_SysRepo rt_Skechers.pdf

35. Rank a brand. (2015, February 25). Skechers and sustainability: E-label. Opgeroepen op April 21, 2016, van Rank a brand: http://www.rankabrand.org/sustainable-shoesfootwear/Skechers

24. Mofang, T. (2014, November 4). Best selling brands Taobao Tmall September 2014. Opgeroepen op May 14, 2016, van China Internet Watch: http://www.chinainternetwatch.com/9650/best-sellingbrands-taobao-tmall-sep-2014/#ixzz4AETNH6aF

36. Redwood Shores. (2016, June 6). Skechers Leverages Oracle® Applications, Business Intelligence and On Demand Offerings to Drive Long-Term Growth. Opgeroepen op April 20, 2016, van Oracle: http://www.oracle.com/us/corporate/press/405864 37. Reuters, T. (2016, May 3). SKX. Opgeroepen op May 3, 2016, van Reuters: http://www.reuters.com/finance/stocks/insiderTrading ?symbol=SKX

25. Morningstar. (2016, April 21). Nike Inc B NKE . Opgeroepen op April 21, 2016, van Morningstar: http://financials.morningstar.com/ratios/r.html?t=NKE &region=USA&culture=en_US 26. Morningstar. (2016, April 21). Nike Efficiency Ratio's. Opgeroepen op April 21, 2016, van Morningstar: http://financials.morningstar.com/ratios/r.html?t=NKE &region=USA&culture=en_US 27. Mr. Sudip, S. Footwear Market is Expected to Reach USD 258.22 billion and 12.11 billion units respectively in 2023. Opgehaald van Transparency Market Research: http://www.transparencymarketresearch.com/pressrel ease/footwear-market.htm 28. Nazario, M. (2015, October 25). I visited a Skechers store to investigate how it became one of America's most popular shoe brands. Opgeroepen op April 20, 2016, van Business insider UK: http://uk.businessinsider.com/skechers-lacksoriginality-2015-10?r=US&IR=T 29. Nike Corporate. (2016, April 10). Communities. Opgeroepen op April 21, 2016, van Nike biz: http://www.nikebiz.com/crreport/content/communities/ 5-1-1-our-approach.php?cat=overview 30. NUS National University of Singapore. (2010, May 11). Economic Analysis of Fashion Retail. Opgeroepen op April 21, 2016, van NUS National University of Singapore: https://wiki.nus.edu.sg/display/Fashion/Economic+Anal yisis+of+Fashion+Retail 31. Population Pyramid. (2016, April 21). Europe 2016/2030. Opgeroepen op April 21, 2016, van Population Pyramid: https://populationpyramid.net/europe/2030/ 32. Porter, M. (1998). Competitive Strategy. In M. Porter, Competitive Strategy (pp. 17-23). New York: Free Press. 33. Powell, M. (2015, October 15). Sneakernomics: How Skechers Became The No. 2 Sneaker Brand In The U.S. Opgeroepen op April 21, 2016, van Forbes: http://www.forbes.com/sites/mattpowell/2015/10/15/s neakernomics-how-skechers-became-the-number-2sneaker-brand-in-the-us/#6508ef893ca0 34. Ralph Stair, G. R. (2012). Fundamentals of Information Systems. In G. R. Ralph Stair, Fundamentals of Information Systems (Vol. 7, p. 504). London: Cengage Learning.

38. Rob. (2012, June 13). Shoe Innovation through Collaboration: Skechers Performance Division. Opgeroepen op April 21, 2016, van Birthday shoes: http://birthdayshoes.com/shoe-innovation-throughcollaboration-skechers-performance-division 39. Rosales, C. (Regisseur). (2016). Skechers Career [Film]. 40. Run, B. (2015, October 26). Skechers Is Even More Attractive After Earnings Release. Opgeroepen op April 20, 2016, van Seeking Alpha: http://seekingalpha.com/article/3603476-skecherseven-attractive-earnings-release 41. Russell, M. (2016, May 27). US Q1 in brief - Guess, Burlington Stores, Sears, Abercrombie & Fitch. Opgeroepen op May 28, 2016, van Just Style: http://www.just-style.com/news/us-q1-in-brief-guessburlington-stores-sears-abercrombiefitch_id127724.aspx 42. SKECHERS . (2014, July 30). SKECHERS.com Returns. Opgeroepen op April 21, 2016, van SKECHERS : https://www.skechers.com/en-us/helpcenter?path=/app/answers/list/p/2 43. SKECHERS. (2016, January 4). About Skechers USA. Opgeroepen op April 20, 2016, van Skechers Careers: http://www.skecherscareers.com/#!about/c1et 44. Stewart, S. L. (2015, September 9). Skechers' Battle to Become the #2 Shoe Brand in the U.S. Opgeroepen op May 7, 2016, van Outside Online: http://www.outsideonline.com/2014076/how-skechersgot-its-groove-back-again 45. Thompson, J. W. (2016, March 4). Worldwide footwear revenue of athletic footwear vendors in 2011 (in billion U.S. dollars). Opgeroepen op May 31, 2016, van Statista: https://www.statista.com/statistics/246496/athleticapparel-companies-ranked-by-athletic-footwearrevenue/ 46. Transparancy Market Research. (2016, May 20). Europe Footwear Market. Opgeroepen op May 31, 2016, van Transparancy Market Research: http://www.transparencymarketresearch.com/europefootwear-market.html 47. Vaughal. (2014, July 3). Pin. Opgeroepen op June 2, 2016, van Pinterest: https://nl.pinterest.com/pin/390124386444459526/

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