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adidas Strategy
adidas strives to be the leading sports brand in the world – an ambitious yet realistic goal. One major lever to achieve this is the brand’s broad and unique product portfolio spanning from apparel and footwear for professional athletes to premium fashion. It allows adidas to address multiple consumer needs, tackle market opportunities from various angles as well as be less affected by one-dimensional market risks. This product portfolio as well as adidas’ commitment to excel in all relevant segments differentiates the brand from competitors and ensures solid market growth, while staying true to the brand’s values. Currently, the brand focuses on five global priorities: Football, Running, Training, Basketball and Originals.
Preparing the adidas business for the future
Like every world-class athlete, adidas is continuously trying to be faster, stronger and thus more competitive. To further focus on becoming a more efficient organisation, a comprehensive “Streamlining Complexity” programme commenced at the beginning of 2008. The objective is to increase the efficiency of how adidas brings concepts to market, defining clear responsibilities, and ensuring optimal external results in the marketplace. The programme is also designed to help adidas reduce costs. In 2008, for example, adidas already achieved a significant article reduction that will drive improvements in net sales per article. In addition, this will reduce workload in the creation area going forward, facilitating higher focus on key product initiatives. The Streamlining Complexity programme will continue in 2009, providing a platform to maximise future brand profitability and a more dedicated focus on the brand’s core strengths.
Innovation leadership through personalisation
adidas’ innovation philosophy encompasses every facet of the brand’s business – from product design and development to brand marketing, promotion partnerships and distribution. In this area, personalisation represents a key focus. Personalised product concepts at adidas include:
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Interactive product concepts such as miCoach – an individual training system launched in 2008, which can sense, understand and adapt to the consumer’s needs.
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Customised solutions such as the mi Originals platform or the TUNIT™ football boot concept, which offer consumers the opportunity to specify certain product features.
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A broad selection of well-defined product families such as adiSTAR®, adiZero™ and Supernova™ and technologies such as CLIMA, TECHFIT™, FORMOTION™ and BOUNCE™, offering consumers extensive choice, according to their individually defined needs and requirements.
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In marketing and distribution, personalisation includes providing tailor-made offerings – be it online or in stores. Personalisation will be the brand’s lead innovation concept and a driving force of the adidas business going forward. It will guide all efforts in product design and development, (digital) marketing and distribution and it is adidas’ goal to be the most personal sports brand by 2015.
Partnership network strengthened
The utilisation of promotion partners such as federations, teams, leagues, events, individuals and designers is an important part of the brand’s strategy. This not only serves to showcase the credentials of adidas products in the performance arena, but also to facilitate the extension of the adidas brand in the sport-inspired lifestyle market. In 2008, the Sport Performance division further strengthened its promotional partnership network. In November, adidas announced a long-term partnership with the IAAF. Under this agreement, adidas will be the official IAAF athletic sponsor and licensee product supplier, a partnership that incorporates every aspect of athletics, and makes adidas the Official Sponsor of the 2009 IAAF World Champion ships in Berlin. The brand extended contracts with two of the world’s most recognised football clubs: AC Milan and Ajax Amsterdam. Furthermore, the Russian Football Union was added as a partner – an important step for the brand’s future success in the Russian market. Also, the sponsorship deal with the All Blacks, New Zealand’s iconic rugby team, was extended. In the Sport Style division, adidas has created a new platform – Originals by Originals – to increase its collaboration with some of the world’s leading designers. Season after season, this programme will allow adidas to offer consumers cutting-edge footwear and apparel that reflects the diversity and creativity of the designers who work close to the brand. Jeremy Scott, Alyasha and Kazuki have each created mini collections for the launch of this initiative in spring 2009.
Increasing cooperation with retail partners
Success in both Sport Performance and Sport Style requires an effective distribution strategy and a solid network of reliable retail partners. The right presentation and availability of consumer-relevant products as well as excellent customer service at the point-of-sale are critical in this respect. adidas currently generates around 82% of its business with its retail partners. Two of the highest strategic priorities to drive future business growth with the brand’s partners are:
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Consumer-oriented range segmentation today forms the foundation for closely targeted brand activation plans. In this, adidas is working very closely with its main retail partners to fully align consumer propositions and to develop unique selling propositions in line with the partner’s target audience. In 2008, an example of this was the collaboration with the Intersport Group around the UEFA EURO 2008™. adidas also seeks to broaden its distribution network with the addition of new partners, in particular sports specialist or fashion specialist customers, as the product offering is expanding continuously.
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Retail space management (e.g. shop-in-shops) is becoming the most dynamic business model for adidas and is a key part of the brand’s controlled space expansion. In this, the brand is cooperating with retailers along the entire supply chain all the way through to the point-of-sale. Replenishment models secure high levels of product availability throughout the season, allowing for quick adaptation to demand patterns. In addition, by increasing control over point-of-sale presentation, regular brand statements and product updates give adidas higher flexibility to generate consumer awareness.
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To support these initiatives, during 2008 the brand extended the reach of its innovative web portal services and added attractive new features to its CRM platform in many countries around the world. Going forward, adidas is ready to invest into new forms of cooperation to remain at the forefront of customer collaboration and partnership.
Own retail and e-commerce
Own-retail expansion is an important strategic driver for adidas brand growth. While serving as a mechanism to expand distribution where retail infrastructure is under-developed (such as in many emerging markets), own-retail activities also give the brand valuable insight into consumer trends and product positioning in all markets where adidas operates its own stores. In addition, improving own-retail presence and processes will – in the long run – also be beneficial for enhancing other controlled space initiatives as best practices in presenting brand image can be incorporated in these concepts.
2008 marked a milestone in adidas own-retail history with the opening of the first adidas Brand Center in Beijing a month before the Beijing 2008 Olympic Games. As the largest adidas own-retail store in the world with 3,170 m2, the Brand Center offers products from all adidas categories under one roof. Other retail initiatives carried out in 2008 included refining the women’s and kids’ areas and a revised, more customer-friendly footwear department in adidas Sport Performance stores. The Sport Style division released new concepts for the Originals stores called Atelier and Studio. Furthermore, a refreshed Y-3 store concept has been launched and is already exceeding expectations. To fully exploit the potential of the new Style Essentials range, adidas has opened numerous dedicated stores via the adidas franchise partners in China.
In 2008, adidas also successfully launched its e-commerce platform in four major European markets (Germany, the Netherlands, France and the UK). In 2009, the United States and selected European countries will welcome mi Performance online as part of the mi adidas® customisation solution.
Sport Performance: divisional overview
No other brand has a more distinguished history or stronger connection with sport than adidas; not only where the best meet the very best, like at the Beijing 2008 Olympic Games, but everywhere around the globe where sports are played, watched, enjoyed and celebrated. Everything at adidas reflects the spirit of its founder Adi Dassler. That means adidas intends to inspire, support and equip all athletes in the best possible way to help them achieve their optimal performance. Therefore, adidas Sport Performance remains the brand’s primary focus both in terms of product and brand initiatives. The division will continue to generate at least 70% of adidas brand revenues going forward. Although the adidas Sport Performance division offers products in almost every sports category, the key priorities are:
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Football
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Running
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Training
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Basketball
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In all these areas, adidas strives to be the leading global brand in terms of sales. Additionally, adidas plans to intensify its activities in the outdoor market and to further extend its strong global market position in the tennis category going forward.
adidas aims to consistently present the brand attitude “ Impossible is Nothing” in targeted and relevant consumer communication. The “Impossible is Nothing” brand campaign encourages consumers to achieve their own personal “ impossible” goals – no matter what they might be – and underlines that adidas will help them in their pursuit of these goals.
Sport Performance – Football: expanding market leadership
Being the most popular sport worldwide, football is clearly one of adidas’ key strategic priorities. For over 50 years, adidas has led all major developments in football boot technology and balls. Building on its success around major sporting events such as the FIFA World Cup™ and the European Football Championship, the brand strives to increase its leadership position by continuously creating the industry’s top products and fully leveraging its outstanding portfolio of promotion partners.
Promotion partners include leading football associations (e.g. FIFA, UEFA), national federations (e.g. Germany, Russia, Spain, Romania, Greece, Argentina, Mexico, Japan), leagues (e.g. Major League Soccer in the USA), clubs (e.g. Real Madrid, AC Milan, Chelsea FC, Liverpool FC, FC Bayern Munich, River Plate Buenos Aires) and individual players (e.g. Kaká, Lionel Messi, David Beckham, Michael Ballack).
In 2008, adidas continued to grow its market leadership in football markets around the world, thanks to the brand’s strong presence at the UEFA EURO 2008™. Going forward, the football category will concentrate on the lead-up to the 2010 FIFA World Cup South Africa™. In addition, the FIFA Confederations Cup in South Africa and the UEFA Champions League serve as important platforms to showcase new products and marketing concepts throughout 2009.
Sport Performance – Running: building credibility with high-performance athletes
Running continues to be one of adidas’ highest category priorities and is critical to the brand’s success moving forward. Because of the category’s global importance, the brand is committed to support running with a substantial portion of overall marketing spend.
The brand’s philosophy is to inspire and enable runners on all levels. First and foremost, adidas focuses on building credibility with the high-performance athlete. This credibility is the foundation for eventually tapping into the broader opportunity in the running category, the casual runner.
In 2009, running will focus on personalisation as well as more exciting and feminine products for women runners. Using the marketing mantra “Because Every Runner Is Different”, adidas Running will introduce the exciting new family Gazelle in addition to current product families such as the adiSTAR® and Supernova™ offerings. The huge track and field support that adidas provides its athletes with will also become apparent on the world’s biggest sporting stage in 2009, at the IAAF World Championships in Berlin.
Sport Performance – Training: leading in innovation
At adidas, training is the biggest category for both men and women. Training supports the preparation needs of serious athletes across all sports disciplines and is the industry’s largest apparel category. Innovation continues to be an important strategic priority in this category. In September 2008, adidas purchased Textronics, Inc., a specialist in integrating high-tech heart rate, moisture and blood pressure monitoring technology into performance apparel. This acquisition will help strengthen adidas’ leading position in the intelligent product category. Furthermore, adidas will continue to deepen its relationship with other key partners, providing athletes with insights, advice and training programmes, which will be delivered on the adidas miCoach platform.
In addition to new innovations, training continues to evolve and develop its existing industry-leading technologies. Updated gender-specific body mapping enables CLIMA to stay at the forefront of delivering optimal solutions for moisture management and body temperature control. TECHFIT™ compression, led by the unique TECHFIT PowerWEB proposition, will further broaden itself as a cross-category technology featuring on athletes in sports as wide-ranging as football and athletics to basketball, swimming, rugby and boxing.
We believe one of our major existing growth areas and key long-term opportunities for the brand is women’s training. In 2009, a campaign entitled “Me, Myself” featuring tennis player Ana Ivanovic and basketball star Candace Parker will be launched, recognising the personalised and individual needs of women who want to be “fit to win” and “fit for life”.
Sport Performance – Basketball: the “Brotherhood” grows
adidas is one of the leading basketball brands worldwide with a strong presence outside of North America. Increasing its footprint in basketball, in particular in the critical North American market, therefore represents another key component of the adidas brand strategy. adidas intends to strengthen its position in the category by emphasising the brand’s unique positioning – with a clear focus not only on individual but also on team performance.
In 2008, adidas Basketball continued to leverage its unique NBA partnership and developed the “Brotherhood” campaign which will continue in 2009. Due to the NBA’s increasing visibility and popularity around the globe, the partnership represents an important vehicle to drive the adidas basketball business in Asia and Europe. With basketball overtaking football as the most popular sport in China, adidas brought the NBA to Shanghai in 2008. With the NBA live and 5IVE grassroots events, and the introduction of TECHFIT PowerWEB as the official compression apparel of the NBA, adidas Basketball will continue to excite consumers in 2009.
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Sport Style: divisional overview
The market for streetwear and lifestyle fashion represents a unique opportunity for sporting goods companies as it is more fragmented and larger in size than the market for products used in sports activity. In addition, profitability in the sports lifestyle market is typically higher as a result of lower R&D expenses.
adidas was the first brand to credibly leverage its sports assets in the lifestyle arena and as a result is regarded as a legitimate sports lifestyle brand. What started as a niche business has developed into a significant contributor to the brand’s top line with potential to represent up to 30% in the medium to long term. To best tap the potential of the sports lifestyle market, adidas created a dedicated Sport Style division primarily focused on its Originals and Fashion businesses (e.g. Y-3, Porsche Design).
Sport Style – adidas Originals: from niche to fashion mainstream
The cornerstone of the Sport Style division is adidas Originals: the original lifestyle brand, born in sport heritage but living in contemporary lifestyles. adidas Originals is uniquely positioned amongst its competitors in that it unites and touches diverse pockets of popular culture around the world. Its biggest strength and point of difference is the ability of the Trefoil to be a relevant part of people’s lives – in whatever lifestyle they have: skater, rocker, artist, musician, sneakerhead, sports fan, etc.
With a holistic offering in products and communications, adidas Originals speaks to and engages the youth audience in authentic, creative and new ways with the “Celebrate Originality” philosophy.
To address the needs of its diverse consumer groups and maximise business opportunities, adidas Originals takes a two-tier strategy to brand and product marketing: Statement and Core. Statement product concepts aim to generate buzz and to add freshness to the brand. Core product concepts aim to generate sales volumes by presenting a constant collection that is uniquely adidas. In essence, Core is the bread and butter of adidas Originals and includes all collections that consumers have come to depend on.
The brand marketing focus is with the core consumer, so in 2008 the marketing efforts behind adidas Originals were also increased significantly with the first global campaign including television and cinema, the “Originals House Party”, featuring entertainment icons like Missy Elliott and Katy Perry, or sports icons from Ilie Nastase to David Beckham celebrating “60 Years of Soles and Stripes”.
In 2009, adidas Originals will complete the full transition from niche marketing to mainstream with the largest global Originals brand campaign ever, coinciding with the 60th anniversary of the brand.
Sport Style – adidas is fashion: Y-3 and the adidas SLVR Label
Since 2002, adidas has rapidly expanded Y-3, a collaboration with one of the most innovative and highly regarded global designers: Yohji Yamamoto. Y-3 successfully combines the worlds of fashion and sports and makes adidas a true pioneer in the field of sport-inspired high-end, premium fashion. adidas is the only sports brand with a greatly anticipated and well-regarded show at each New York Fashion Week.
Controlled space will be the main strategic priority for Y-3 in the upcoming years. By the end of 2010, adidas targets to have 40 Y-3 stores (including franchise and own-retail stores) located in the world’s top shopping destinations. Furthermore, a Y-3 online store has been launched in the USA in 2008, with the extension of e-commerce to other markets following in the future.
The opportunity or “new-ness”, however, will come through leveraging what has been created through Y-3 and Originals to expand the brand’s fashion lifestyle offer to more and different consumers. In 2009, adidas will bring the Sport Style division to another level with the launch of the adidas SLVR Label, a pure fashion brand for the modern cosmopolitan consumer, offering “simply perfect” garments, shoes and accessories. The adidas SLVR Label celebrated its premiere at the New York Fashion Week in February 2009, which will be followed by the opening of its first store worldwide.
Sport Style – extending brand reach through adidas Style Essentials
In 2008, adidas took a big step forward with the expansion of the Sport Style division through the introduction of adidas Style Essentials. adidas Style Essentials is a complete offering of footwear, apparel and accessories which takes its design inspiration from the entire brand, both Sport Performance and Sport Style, but offers it up in different distribution channels and at more accessible price points. It capitalises on existing trends and brings them to market more rapidly than traditional sporting goods timelines. adidas Style Essentials is primarily distributed through mono-branded stores in Asia and through key account partners in North America and Europe.
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