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- Annual Report 2019
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- en At a Glance
- At a Glance Targets – Results – Outlook
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Creating innovative concepts to meet the needs of athletes and consumers is a prerequisite to strengthening our market position in the sporting goods industry and a premise to being the best sports company in the world. We therefore remain highly committed to maintaining a full and innovative concept pipeline, bringing new groundbreaking technologies and processes to life, investing into sustainable enablers and exploring the possibilities of digitalization across our entire value chain. True to the vision of creative collaboration, our innovation approach is widely based on our Open Source mindset.
MEETING THE NEEDS AND EXPECTATIONS OF OUR CONSUMER
The modern innovation landscape extends beyond product and increasingly requires innovation teams to consider the development of experiences and services, as well as the provision of greater levels of transparency and direct integration of our consumer through co-creation.
In partnership with our trend and cultural insights teams, foresight and trend analysis are shared on an ongoing basis, documenting shifts in society and culture. This provides the starting point to build concepts of relevance.
The FUTURE team at adidas is tasked to develop a strong portfolio of innovation capabilities such as new materials, production processes and consumer-centric scientific research to provide a platform for meaningful concept development. Projects are incubated within the company and aligned to the broader sourcing, marketing, creative and strategic functions across the organization, ensuring a robust and impactful innovation pipeline.
INNOVATION APPROACH BASED ON OPEN SOURCE MINDSET
Our approach to innovation reflects our commitment to the Open Source mindset, where we seek to build value together with athletes and consumers, universities and innovative companies as well as national and international governments and research organizations. In addition to opening up our doors to valuable feedback, we also get inspired by the input from knowledgeable partners:
- BASF: Together with BASF, we manage and enhance BOOST, a cushioning technology designed to deliver maximum energy return, responsiveness and comfort to athletes.
- Carbon: Together with Carbon, a Silicon Valley-based tech company, we are revolutionizing product creation through hardware , software and molecular science, and have enabled mass production of additively manufactured components, coming to life with adidas 4D.
- Fashion for Good: Together with Fashion for Good, a global cross-brand initiative to make all fashion sustainable, we are accelerating sustainable innovation in the apparel industry through, among other things, mentorship of and collaboration with circular start-ups.
- Oechsler: Together with Oechsler, an expert in high-tech automated manufacturing of technical components and assemblies, we operated our Speedfactories in Ansbach, Germany, and Atlanta, USA. However, in 2019 we decided to deploy the Speedfactory technology at Asian suppliers. Our collaboration with Oechsler will continue in other manufacturing areas.
- Parley for the Oceans: Together with Parley for the Oceans , we are developing products partially created from upcycled plastic waste, intercepted before it reaches the ocean from beaches and coastal communities.
- Platform A at Station F: In January 2019, we launched our global sports accelerator program Platform A. Station F is the biggest start-up campus in the world, based in our key city Paris, France. The accelerator aims to use the innovative power of the global start-up scene to create the best digital innovations in sport. The first generation of start-ups started the program in January and presented their digital pilots in September 2019. In the meantime, adidas onboarded a second generation that will develop new concepts and identify opportunities in the areas of women empowerment, sustainability, retail and e-commerce.
FIVE PILLARS OF INNOVATION
Within our innovation principles, we identified five strategic pillars which enable us to develop the best products and experiences for athletes and consumers, while at the same time drive game-changing innovations in the fields of manufacturing, digital and sustainability.
Athlete innovation
Our clear focus is to produce the best and most innovative products for athletes to enable them to perform at their very best. To achieve this, we work closely together with athletes and teams as well as numerous universities and innovative companies, to deliver against the needs of our target consumer.
Manufacturing innovation
To simplify manufacturing, enable product innovation and increase speed-to-market capabilities, the company’s innovation activities are also focused on new manufacturing technologies. Our goal is to combine state-of-the-art information technology with new manufacturing processes and innovative products. For this reason, we commit ourselves to long-term cooperation with innovative companies and organizations to take a leading role in manufacturing innovation.
Digital and experience innovation
The adidas brand was amongst the first in the industry to comprehensively bring data analytics to the athlete. With decades of continuous investment in sports science, sensor technology and digital communication platforms, adidas has already taken a leading role in terms of changing the sporting goods industry through technology. With the increasing speed of digitalization, this field will remain one of our core areas.
Sustainability innovation
Our commitment to manage our business in a responsible way has long been one of the company’s principles. To stay at the forefront of sustainable innovation, adidas is pursuing a proactive approach to establish internationally recognized best practices and achieve scalable improvements. As part of our sustainability roadmap, we have set ourselves the target for 2020 to invest in materials, processes and innovative machinery which will allow us to upcycle materials into products and reduce waste. In 2019, we further focused on taking responsibility for the entire product life cycle and established a clear game plan for moving toward a circular business model. see Sustainability
Female athlete innovation
Our long-term commitment to the female athlete continues to be a focus for the company. To fuel the growth of our women’s business, we have taken a holistic approach to understanding the female athlete’s performance and non-performance needs throughout her active life. We therefore look at this target group as an integrated part of our business but from a separate and unique angle. With a focus on the female consumer, it is crucial to fully understand the specific product needs of the female athlete to help unlock her full potential. To enable this, we are working to establish a robust network of industry leaders and academic experts with our ‘Path to Expert’ approach, which will help to accelerate the building of insights and foresights that keep us at the forefront of product innovation.
COMMERCIALIZATION OF INNOVATIONS
We believe developing industry-leading technologies and consumer experiences is only one aspect of being an innovation leader. Equally important is the successful commercialization of those innovative concepts:
- Parley Ocean Plastic: Products made of Parley Ocean Plastic focus both on the needs of our athletes, by living up to their performance promise, and on the needs of the world, by helping to protect our oceans from marine plastic pollution. We have taken sustainability to the product level and continue to roll it out across our product portfolio. In 2019, we made more than eleven million pairs of shoes containing Parley Ocean Plastic , across various footwear franchises in both Sport Performance and Sport Inspired . In addition, nearly three million pieces of our 2019 apparel offering featured Parley Ocean Plastic, including jerseys for high-profile teams such as Real Madrid, Bayern Munich, Juventus Turin and Manchester United.
- Futurecraft Loop: Futurecraft Loop is our first 100% recyclable performance shoe made entirely from one material (TPU), using no glue or solvent. The first generation of the shoe was rolled out in April 2019 as part of a global beta program with consumers from across the world’s major cities. They were asked to test and return the shoes to start the recycling process. In November 2019, we introduced the second generation of Futurecraft Loop. We will take the learnings from the recycling process to further develop the concept and to prepare for the commercial release in 2021. Futurecraft Loop was recognized by Time Magazine as one of the ‘Best Inventions 2019’.
- adidas 4D: The high-performance footwear produced under the adidas 4D concept features midsoles crafted with light and oxygen using Digital Light Synthesis, a unique technology developed by Carbon. The midsole pioneers a digital footwear component creation process that eliminates the necessity of traditional prototyping or molding. With the new technology, adidas brings additive manufacturing in the sports industry into a new dimension. After having produced more than 100,000 pairs of this high-performance footwear in 2018, we continued to increase volumes in 2019 and intend to further expand production in the future. In the past two years, adidas 4D has gone from a conceptual innovation to a running shoe that has been made available in larger quantities and multiple variations.
- Creators Club: This new digitally enabled membership program rewards loyal consumers with invitations to exclusive events and access to limited-edition products. In addition, it enhances the e-commerce shopping experience for members through an even faster checkout process and new order-tracking options. The program allows us to deepen the relationship with our consumers and to gain valuable insights into their expectations and needs. Creators Club launched in the US toward the end of 2018, and is now live in France, Germany, Japan, the UK and Singapore.
- adidas by Stella McCartney Infinite Hoodie and Biofabric Tennis Dress: With the adidas by Stella McCartney Infinite Hoodie, we presented the first commercially produced 100% recyclable performance garment made of 60% NuCycl lyocell and 40% organic cotton, which are completely recyclable fabrics. We have also already taken the first steps toward exploring solutions to create products that are made with nature, and can, at some point, also return to nature. The adidas by Stella McCartney Biofabric Tennis Dress is a prototype concept made with a cellulose blended yarn and certified Microsilk, a protein-based yarn that is made of completely renewable inputs, which has the ability to fully biodegrade at the end of its life. see Sustainability see Adidas Brand Strategy
- Forever Floatride Grow: At the end of 2019, Reebok announced Forever Floatride Grow – the brand’s first plant-based performance running shoe and latest example of sustainability innovation. The shoe is made with castor beans, algae, eucalyptus trees and natural rubber and thus builds on Reebok’s successful Cotton + Corn lifestyle collection of footwear.
- Infinite Play: Building on learnings from take-back pilots in Brazil, Canada, and some of our key cities in Europe and the US, adidas is exploring infrastructure for product bring-back and recycling, with partners, governments and regulatory bodies. 2019 saw the launch of ‘Infinite Play’ in the UK to extend the useful life of products by passing them on to new users, thus avoiding waste. The initiative engages consumers in returning used items by rewarding them with gift cards and Creators Club points.
- AM4 Series: The ‘adidas made for’ (AM4) products were created at the adidas Speedfactory facilities in Ansbach and Atlanta. In 2019, we continued to deliver launches jointly with creators supporting moments that matter for our consumers, e.g. limited editions around the Marvel universe and for Bayern Munich. The concept was included into the adidas offerings to Footlocker and exclusive launches with our Creators Club. Going forward, Speedfactory technologies will be used at two of our suppliers in Asia that will allow for more variations of Speedfactory footwear models in the future.
NEW PRODUCT LAUNCHES GENERATE THE MAJORITY OF SALES
As in prior years, the majority of sales were generated with products newly introduced in the course of 2019. New products tend to have a higher gross margin compared to products which have been in the market for more than one season.
In 2019, brand adidas and Reebok sales were again driven by the latest product offerings. At brand adidas, products launched during the course of the year accounted for 77% of brand sales (2018: 74%), while only 3% of sales were generated with products introduced three or more years ago (2018: 3%). At Reebok, 67% of footwear sales were generated by products launched in 2019 (2018: 67%), while 11% of footwear product sales relate to products introduced three or more years ago (2018: 11%).
R&D EXPENSES deCREASE 1%
Expenses for research and development (R&D) include expenses for personnel and administration, but exclude other costs, for example costs associated with the design aspect of the product creation process or the majority of costs related to company-wide Open Source initiatives. In 2019, as in prior years, all R&D costs were expensed as incurred. The company’s R&D expenses decreased 1% to € 152 million from € 153 million in the prior year.
R&D expenses
€ 152 m
In 2019, R&D expenses as a percentage of sales equated to 0.6% (2018: 0.7%). The number of people employed in R&D activities at December 31, 2019, was 1,007 (2018: 1,041).
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R&D expenses (€ in millions)
R&D expenses (in % of net sales)
R&D employees
A product category which comprises equipment that is used rather than worn by the consumer, such as bags, balls, or fitness equipment.
Speedfactory
Speedfactory stands for an accelerated manufacturing process of high-performance sports shoes enabled by latest manufacturing technology that was tested at the adidas Speedfactories in Ansbach, Germany, and Atlanta, USA. adidas opened both factories together with Oechsler in 2017. At the end of 2019, adidas started to deploy its Speedfactory technologies to produce athletic footwear at two of its suppliers in Asia. Production at the Ansbach and Atlanta Speedfactories will be discontinued by April 2020. This will enable adidas to continue to respond to short-term trends in demand while using production capacities more flexibly and economically and expanding the range of products with short production times faster. Manufacturing processes will continue to be developed, improved and tested in the adiLab at the adidas production site in Scheinfeld.
Parley for the Oceans
Parley for the Oceans is an environmental organization and global collaboration network. Founded in 2012, Parley aims to raise awareness for the beauty and fragility of the oceans, and to inspire and empower diverse groups such as pacesetting companies, brands, organizations, governments, artists, designers, scientists, innovators and environmentalists in the exploration of new ways of creating, thinking and living on our finite, blue planet.
Parley Ocean Plastic
Parley Ocean Plastic is a material created from upcycled plastic waste that was intercepted from beaches and coastal communities before reaching the ocean. Parley for the Oceans works with its partners to collect, sort and transport the recovered raw material (mainly PET bottles) to our supplier who produces the yarn, which is legally trademarked. It is used as a replacement for virgin plastic in the making of adidas x Parley products.
Sport Performance
‘Sport Performance’ stands for the categories training, running, football, basketball and heartbeat sports such as outdoor, swim, tennis and US sports.
Sport Inspired
‘Sport Inspired’ stands for fashion inspired by sport – also known as ‘sports lifestyle’. It draws inspiration from adidas’ rich archives and legacy. Sport Inspired stands for Originals, Y-3, Statement and Yeezy.
Creators Club
Creators Club is a membership program that helps us deepen the relationship with our consumers. Linking all adidas apps, events, communities and channels into one single profile, the program rewards members with points for interacting with the brand, e.g. when making a purchase or using the ‘adidas Running by Runtastic’ or ‘adidas Training by Runtastic’ apps. Depending on the number of points, exclusive benefits are unlocked, including access to hype sneaker and apparel drops or invitations to special events.
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- Assignment: RC TOM Challenge 2017
Adidas “Speedfactory”: Delivering what customers want, when and where they want it
Adidas, the giant sportswear manufacturer with more than $ 19.0 Billion in revenues, sold 360 million pair footwear in 2016 and produced 97% of total footwear volume in Asia. [1] However, “Speedfactory” project that Adidas initiated under the umbrella of German Government’s “Autonomic for Industry 4.0” program seems that it will innovate supply chain operations in sportswear industry soon. [2]
In last years, with the increased penetration and higher service level of e-commerce customers in consumer goods market has become more used to expedited deliveries. Change in customer expectations does not only affect delivery operations, but also increased the pressure to manufacture faster and adopt to changes in customer demand more quickly. Furthermore, competition in fast moving fashion market incentivized companies to offer customized products, which required complex inventory management and production processes, to differentiate. At the end of the day all of these challenges led companies to focus more on supply chain operations.
A pioneer technology and process design
Adidas, who appeared to be the first player in sportswear market to come up with a solution to rapidly changing trends and long supply chain processes, developed “Speedfactory”, a new plant design, to manufacture footwear in local markets with robots and additive manufacturing such as 3D printing to enable speed, precision and responsiveness. [3] “Speedfactory” has multiple advantages. First, it decreases setup time significantly by eliminating retooling of conventional machines and instruction of manual workers in design changes. [4]. Secondly, it decreases number of units kept in inventory because “Speedfactories” will be located in local markets and will eventually shorten shipping time. Today even for a popular design in the market it can take two or three months to replace inventories in stores. [4] Third, “Speedfactory” project includes a digital virtual a computer model to simulate footwear’s production in order to speed up production preparations. Therefore, “Speedfactory” will allow Adidas to customize faster and smaller batches of products and offer customers a broader product range. [5] For example, Mi Adidas, online sales channel which allows product customization, currently requires 4-6 weeks for delivery and Adidas targets to decrease delivery to 4-5 business days with “Speedfactory”. [6]
Journey to create a network of connected “Speedfactories”
In October 2017, Adidas announced its first product series AM4, which would be produced in first “Speedfactory” facility in Ansbach, Germany. [3] In an industry where shipping of a new footwear design from the initial design sketches might take up to 18 months Adidas plans to release individually designed and manufactured shoes in six key cities around the world in 2018. [4][5] Paul Gaudio, Adidas Global Creative Director, defines “Speedfactory” as an enabler to co-create unique product solutions based on individual athlete needs and desires, delivering what they want, when and where they want it. [3] In short term another “Speedfactory” facility will be opened in Atlanta, US in 2017 as a next step and each facility will have production capacity up to 500,000 pairs of footwear per year. [1] According to the current information in the market Adidas plans to use “Speedfactories” to complement current production facilities instead of replacing them. [4] On the other hand, in an interview Gerd Manz, senior innovation director in Adidas, stated their vision to create a network of connected “Speedfactories” in key markets to integrate information exchange in terms of production techniques, local trends, material or capacity availability. [7]
Footsteps of an innovation or disruption
Regarding the role of current manufacturing facilities in Asia and product development cycles in the market there are two key concerns which should be addressed by Adidas management. One concern is the effect of new manufacturing methodology on company’s internal processes and the other concern is effect of rapid manufacturing on first mover advantage and barriers to copy a product. To begin with company’s internal processes, first the transition from current manufacturing methodology and plants requires a detailed transition plan and the most challenging issue is to make this transition without a disruption in operations. Secondly, giving too many customization opportunities to customers might create an undesired confusion in customers and lead to decrease in sales. Third, effect of using robots and additive manufacturing on variety of materials which can be used in production should be evaluated. On the other hand, Adidas should seek ways to protect itself from copy cats when automated manufacturing methodology becomes ubiquitous in the market in the long run.
In my opinion one important question to answer about “Speedfactory” is how to position it in supply chain operations both to create a competitive advantage today and preserve it when this technology becomes ubiquitous in the market tomorrow. (748 words)
Pathways to Just Digital Future
[1] Adidas AG, 2016 Annual Report, p 65-68, https://www.adidas-group.com/media/filer_public/a3/fb/a3fb7068-c556-4a24-8eea-cc00951a1061/2016_eng_gb.pdf , accessed November 2017
[2] Adidas AG, “Speedfactory/Future of Manufacturing”, https://www.adidas-group.com/media/filer_public/2013/11/27/adidas_speedfactory_factsheet_en.pdf , accessed November 2017
[3] Adidas AG, “Adidas Launches AM4 Project in Landmark Moment for Speedfactory Facility”, https://www.adidas-group.com/en/media/news-archive/press-releases/2017/adidas-launches-am4-project-landmark-moment-speedfactory-facilit/ , accessed November 2017
[4] “Adidas’s High Tech Factory Bring Production Back to Germany”, The Economist , January 2017, https://www.economist.com/news/business/21714394-making-trainers-robots-and-3d-printers-adidass-high-tech-factory-brings-production-back , accessed November 2017
[5] Stephanie Pandolph, “Adidas Uses Speedfactory to localize Shoe designs”, Business Insider , October 2017, http://www.businessinsider.com/adidas-uses-speedfactory-to-localize-shoe-designs-2017-10 , November 2017
[6] Man Mohan S. Sodhi and Christopher S. Tang, “Supply Chains Build for Speed and Customization”, MIT Sloan Management Review , June 2017, http://sloanreview.mit.edu/article/supply-chains-built-for-speed-and-customization/ , accessed November 2017
[7] “Interview to Gerd Manz, Adidas Group: Customers want to be part of creation process, Sustainable Brands Madrid , http://sustainablebrandsmadrid.com/blog/interview-gerd-manz/ , accessed November 2017
Student comments on Adidas “Speedfactory”: Delivering what customers want, when and where they want it
This is a very interesting Cenk, as many other companies making products will face a similar challenge in the coming years. First, as customization is trend becoming more trendy every day, I do believe that Adidas will have a competitive advantage by being the first to address this issue. In fact, not only Adidas will be able to offer a customized product faster, but they will also reduce costs, from inventory up to labour costs. To answer the question you’re asking, there are 2 things to consider: the first one is to really understand where Adidas finds today a competitive advantage: is it by reducing the labour cost in its factories? not having to ship products worldwide? or delivering faster the product to the customer? I believe their biggest advantage is the responsiveness they are able to provide for any given product: if a product is not well received by the market, they are able more quickly to adjust it and deliver the products its customers want. Regarding the expansion of the technology in the future, Adidas will have to come up with more exclusive and limited edition product that Speedfactories will make profitable to produce.
Thank you for this article Cenk, really enjoyed reading about an application of 3D printing that was less obvious to me. I generally agree with your concerns around (i) a smooth transition towards a speed-factory model, (ii) possible consumer confusion due to ‘over-customization’ and (iii) the impact on raw material choices. I would like to add one more concern and slightly push back on your fourth concern (risk for copy cats if automated production picks up speed). One additional concern is that Adidas needs to build a sound business case to pressure-test the assumed financial gains of its speed factory model – machines or suitable raw materials might be very costly to procure. Second, I feel that the risk of copy cats is present regardless of the technological manufacturing platform: even without access to advanced automation, it is feasible to counterfeit Adidas and other fashion wear in a low-cost manner. In the European Union alone, the fashion industry loses around 28 billion USD annually to counterfeited clothing and footwear. [1]
‘Fighting the $450 Billion Trade in Fake Fashion’, The Business of Fashion, https://www.businessoffashion.com/articles/intelligence/fighting-the-450-billion-trade-in-fake-fashion , accessed December 1, 2017
Really interesting article Cenk. This “Speedfactory” will certainly help Adidas to better serve the increasingly changing customer demands in a more quickly way, creating a differentiating competitive advantage in this age of fast fashion. On the other hand, I agree that it could build a cost advantage in terms of labor and handling lower inventories. Your concerns on the internal impact and the potential consequences at the customer level make a lot of sense, too.
Nevertheless, I wonder to know if this capital-intensive model would be profitably scalable. Considering that Adidas’ intention is to develop several Speedfactories in local markets, I am skeptical about the real savings this project could deliver to Adidas as a whole company (transportation costs and labor are typically much lower than this kind of technology).
My other concern is how Adidas will maximize the connectivity between these automated factories and the customers’ demand. While e commerce is a well developed distribution channel in the US, I am not so comfortable with this model to attend lower develop economies, such as Latin America and SE Asia, where internet and electronic payment methods have little penetration. Likewise, how Adidas will manage this issue with current distributors and retailers in a market where product trial and touch and feel is so important?
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70 Years of Adidas – A Brand Built On Innovation 8 min read
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“A minute faster” – that’s how fast Haile Gebrselassie would have run had he worn a pair of Adidas Energy Boost Sneakers. Gebrselassie won the 2008 Berlin Marathon with a world record time of two hours three minutes and fifty nine seconds and broke his own previous record. Speaking at the international launch event for the Adidas’s new line of sneakers and the path breaking “Boost” technology, the Ethiopian long distance running icon went on to explain how technology and material used in the shoes would have allowed him to cover the same distance at a greater speed and in less time.
The Olympic gold winner was right because, in 2014, Kenyan long distance runner Dennis Kimetto ran the fastest marathon in Adidas Adizero Adios Boost shoes and created a world record .
In a competitive sport like running, world records are set and smashed in a few seconds. Needless to say, Adidas’ Boost and its upgraded versions like Pure Boost, and Ultra Boost, revolutionized the running industry, the fashion industry and the history of athletics. The innovative foam cushioning technology that is built around the concept of energy changed the game of sneaker s.
When Boost was launched, Adidas had already completed more than six decades in the business and was an industry leader across the world. Yet, the German company pooled its resources to invent a pair of performance stylish sneakers that could easily transition from running tracks to the global fashion stage.
It is Adidas’ focussed efforts on innovation, technology, and style that have helped the company to maintain its brand value and legacy. It is the largest sportswear manufacturer in Europe and sits at the number two position on the world ranking chart. In 2019, the company has already posted double-digit growth, in terms of sales and expansion in emerging & existing markets like Russia, Asia-Pacific, and Greater China. Therefore, it comes as no surprise that the Zacks Rank stock-rating system recently declared Adidas as a ‘Strong Buy’ . The company’s shares have outperformed by gaining 21.87% in 2019 , so far.
From Dassler Brothers Shoe Factory To Adidas
The multinational corporation that we know today was started as a humble shoe business in 1924 in Bavaria, Germany by two brothers Adolf aka Adi and Rudolf aka Rudi Dassler. They named their spiked athletic footwear business ‘Dassler Brothers Shoe Factory’.
Right from its inception, the brothers’ craftsmanship, mastery, and business acumen helped the company to stand out from the competition in shoe business.
In her book ‘ Sneaker Wars ’, author Barbara Smit writes about the Dassler brothers and their shoe factory, “They had persisted with such drive that their factory was drawing sports enthusiasts from all around Germany, generating unprecedented hustle and bustle in their small town of Herzogenaurach, not far from Nuremberg, in the northern part of Bavaria.”
In the post World War economy with limited means, Adi searched for leather pieces torn from army helmets & bread pouches to make shoe soles and pieces of parachutes and army haversacks to make slippers in his workshop.
The company’s fate changed when German track and field athlete Josef Waitzer joined the business as an advisor. He became a close friend of Adi Dassler and helped him to gain entry into the Berlin Olympic Village. After convincing American athlete Jesse Owens to wear their spike shoes at the 1936 Summer Olympics, Dassler shoes steadily climbed the popularity ladder in the sports industry. Before World War II started, the company was selling 200,000 pairs of shoes every year.
Dassler Brothers Shoe Factory transformed into Adidas after the brothers split in 1949. They went their separate ways and Adi renamed the company as ‘Adidas’ after him.
Adidas became a household name after helping the German national football team to win the 1954 World Cup final against Hungary with its screw-in-studs lightweight football shoes. In 1967, the company launched its clothing line. And with each passing year, the visibility of Adidas’ three stripes continues to grow through acquisitions, innovation, expansion, and technology.
Adidas’s Act of Genius – Strategic Partnerships
One of the key differentiators that has helped Adidas to stay relevant is their strategy of collaborating with cultural influencers from all walks of life. The company believes in building meaningful, well-thought-out and profitable long-term partnerships.
Take, for instance, the brand’s association with American hip hop group Run-DMC. Hip hop has fuelled the growth of sneakers and sneakerheads. And Run-DMC is one of the first and most powerful figures within that circle. The sportswear leader used this to their advantage by signing a $1.6 million deal with DMC in the 80s. It was this strategic move that helped Adidas to cement its position in the sneaker culture and the footwear industry driven by it. Run DMC also released a classic song ‘ My Adidas’ in 1986 that further solidified their partnership.
Adidas’ partnership with English footballer David Beckham is another great example for other brands & businesses to understand how brand collaborations with celebrities should be designed and executed. A collaboration spanning over two decades , Beckham is still one of the most powerful faces of Adidas, even after retiring from professional football. His endorsement worked wonders for the brand.
“The repercussions were invaluable. Once he joined Real Madrid, the Spanish team clad in Adidas, Beckham was covered in three stripes. Thousands of young players badgered their parents to buy ‘Beckham boots’. Shirts featuring his name could be sold to millions of self-declared Madrid supporters around the world… ”,
writes Smit in her book while talking about the phase when the footballer joined hands with Adidas.
Beckham turned out to be the superstar that Adidas was looking for, who featured in their massive international campaigns and improved their stakes in the sports marketing business.
In 2019, it is American rapper Kanye West and his ‘Yeezy’ brand, which is helping Adidas to take over the sportswear and footwear industry. West’s billion dollar Yeezy is by far the fastest selling sneakers brand in the market. It amalgamates the rapper’s eccentric aesthetics and Adidas’s Boost technology.
Be it Run-DMC, Beckham or West, Adidas has made these partnerships work by opening its design lab to its ambassadors and giving them free reign to share their ideas.
Technology and Innovation with Style
Adidas was able to pick the right celebrity partners because they are deeply connected with their consumers. They valued Run-DMC, Beckham, West, and others as customers and individuals first.
Case in point: Beckham signed his first contract (years before he came onboard as a Real Madrid club player) with Adidas in the early 90s when an employee spotted him as a teenager playing in the soccer field, according to Barbara Smit’s book Sneaker Wars. Another employee had gone to one of Run-DMC’s concerts, where they witnessed the moment when the band held up their three stripes Adidas sneakers in front of the crowd, which served as the start of their unique partnership.
Whether it is bringing back the classics or 3D printing soles for personalization , the company is leaps and bounds ahead, when it comes to understanding what sneakerheads want.
In 1984, Adidas introduced a shoe called Micropacer that had a micro-sensor embedded into it, which could record caloric consumption, pace, and distance. Smart shoes and active wearables are now the norm. But back in the early 80s, it was rare and futuristic. The company also introduced the first intelligent shoe with a microprocessor in 2004. When they noticed that fashion is taking precedence over everything, the company revived its iconic Sam Smiths , the sneakers that go with everything!
Adidas’ 15 years old partnership with fashion designer Stella McCartney is also an excellent example of how to keep a finger on the pulse of the latest market trends. As the concept of sustainability in fashion is picking pace, Adidas along with McCartney recently launched a limited edition sustainable hoodie collection made from textile waste. The 100% recyclable collection illustrates the benefits of blending environmental consciousness with tech, style, and sports.
Seventy More Years Of Innovation
Adidas evolved with time and that’s why its shares are considered as valuable as it was 70 years ago, when the Dassler brothers went their separate ways. From inventing a leather trimmer using a bicycle frame and its pedal mechanism to creating miniature energy balls from thermoplastic polyurethane (TPU) for Boost sneakers, Adi Dassler deeply infused innovation in the company’s veins.
The first seventy years of Adidas has been all about perfecting sportswear with the help of technology and innovation. The German MNC plans to continue doing the same in the years to come. Adidas’ latest breakthrough innovations include a 100% recyclable performance footwear using Loop Creation Process . This is also aligned with their pledge to preserve the oceans. The brand also intends to add more pages to its celebrity partnerships success story by joining forces with Beyonce .
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Is Design Thinking the Secret behind Adidas’s Comeback
- A Brief Overview of Adidas’s Journey
- The Secret behind Adidas’s Comeback
- How did Adidas Use Design Thinking to Drive Innovation?
Adidas is one of the leading manufacturers of sportswear in the world today – being the largest manufacturer in Europe and second-largest in other regions of the world. However, this rise to success hasn’t always been easy, especially with competitors like Nike around. In 2017, Adidas overtook Nike’s Jordan’s – a feat previously thought to be unachievable. It was the same year when the US sales for Adidas sneakers went up too 11.3%, almost double the amount from the previous year. High-performing sports shoes from Adidas have now become a benchmark for sports fashion. This series of success sealed Adidas’s fate as a leading global brand in sportswear. So what did the company do differently that year? What new strategies did they implement to reach their target? And most importantly, how did they outperform their competitors?
Right from its inception, the brand has always channelled innovation through its products. However, driving innovation is no mean feat – it requires constant work. Unlike popular opinion, innovation need not always be inspiration struck. Rather, it can be strategised and Adidas did that quite well.
In 2006, right after buying out Reebok, Adidas had to restrategize their approach to business. They were short of resource and were facing declining brand value at a time when they needed it the most to emerge as a global leader in innovation. Instead of compromising on their values and goals, Adidas started out by incorporating Design Thinking elements to optimise on available resource and deliver innovation.
The brand started changing their corporate culture to focus more on the collective human experience. Executives in the company started observing how their employees worked and learned new insights from their collective experiences which would bring radical changes to their product and marketing strategy. What they lacked in resources was made up by utilising the existing ones in creative new ways. They created more open workspaces to encourage free work styles and better interpersonal and interdivisional communication. This small yet significant change in the company culture led to efficient and effective communication which ultimately led to faster results.
Adidas also set up the “Learning Campus” to address knowledge gap and improve internal learning and knowledge sharing. The learning campus trained employees to become more aware of the company values, efficient at their jobs and contribute towards the company goals in a better way. The learning exercises also involved iterative experiments to discover new ways of doing things where even the failed attempts were shared and celebated to encourage creative outputs.
This new strategy was able to successfully drive more employee engagement and keep them motivated towards a collective company goal. The collective company consciousness was effective in reaching the targeted production numbers even with limited resources. This new strategy of “Create the New” was successful financially too as the sales increased by 18% with operating profits at 7.7% – a visible increase from the previous years business numbers. This success of Adidas resulted in a 67% increase in its market share prices.
Almost like a representative of this new change and success, the Adidas Superstar sneaker appealed to the customers with its retro trend and created a stir in the fashion world. Consumers didn’t mind paying the big bucks to become a part of this new fashion era. The company even revamped its marketing strategy to reach out to non-athlete representatives and social influencers as they resonated more with the young consumer base.
Learn about how design thinking revolutionized five industries .
As a strategy Design Thinking is based on four main concepts:
- Ambiguity: Design thinking aims at resolving the wicked or an ill-defined problem and it starts by accepting the obscurity of the problem.
- Creative : The crux of design Thinking is innovation – the ability to think like a creator rather than an executor and to create solutions that are predictive.
- Curiosity : A curiosity towards understanding the requirement is important to keep ideating along those lines.
- Iterative : Realizing that a non-linear repetitive process will work best to eliminate failures and reach towards an effective solution.
At the Adidas headquarters, design thinking is the power fuelling constant innovation.
Changing a corporate culture is not easy and takes a lot of time. Adidas did it nonetheless and it was made possible due to the company’s design thinking strategies. Design thinking always attempts to celebrate the human element in any kind of experience by innovating solutions accordingly. When Adidas connected with its employees and flattened the hierarchical structure of communication in the company, it was truly able to optimise its resources and emerge as a team committed to its goals.
Today, if you were to visit the company headquarters, you would find people working across departments, often blurring the lines between domains and areas of expertise. This exposure and free access to all the business elements not only nurtures ownership but also drives innovation.
Adidas identified the need to put people first, whether they were their consumers or their employees, and it definitely proved to be a successful strategy. To learn more about how design thinking helps you craft human-centric solutions, follow our design thinking category .
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The Mechanics of Innovation
What does “innovation” look like? The adidas Future team, which makes up the advanced research, design and development arm of the company, has been the source of countless game-changing inventions and innovations in the world of sports. Leadership wanted a clearer look into the group’s inner workings to understand how and why it was turning out its brilliant ideas.
A Glowing Reputation Future leadership approached Coraggio for support in exploring its innovation process from start to finish so that it could expand its reach and impact. The aim was to develop two documents: one highlighting the principles of innovation, and another outlining the mechanics of innovation. These would shed light on several key operational questions, including:
- How have our innovation processes evolved?
- How do the various product and functional teams within Future use the current process?
- How do our team’s best practices compare to one another?
Turning a Spotlight on the Team Coraggio engaged with the Future team to get a better grasp of its activities, operations and abilities. This exploration required us to analyze, document and redefine the mechanics of adidas innovation processes. We facilitated retreats, interviews and work sessions with leadership and staff from across the organization. These interactions showed us when and where mental lightbulbs were going off, and how the system facilitated or disrupted these moments of discovery.
The findings from our outreach were synthesized into a composite process map illuminating innovation at adidas from insight to product completion. Another deliverable codified the most current processes and project requirements.
A Bright Future Efforts shined light on what the Future team was already doing well, and where it could improve. We documented the team’s best practices, encouraged introspection and then helped it apply our findings. By analyzing what was similar, what had changed and what needed to be modified, Future not only improved its innovation processes, it also strengthened its team and organizational culture. The process map highlighted key opportunities and was available for future evaluation, teaching new team members and communicating across the company on a larger scale.
“ My team has worked with Coraggio for over ten years with great results. Coraggio has been instrumental in helping us with organizational strategy, process improvement, and team dynamics. They have led us through change management and helped make us a stronger team. We are looking forward to a solid working relationship for the years ahead. ” — Steve Vincent, Former SVP Global Head of Innovation
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Adidas Athlete Performance with the Right Emotional Fit in Footwear – featuring Jeff Goldblum
Featuring Jeff Goldblum
Footwear consistently holds the largest market share within the sports apparel industry and is expected to grow 15% over the next 5 years to $440 Billion . Boosted by popular events like the Olympics and World Cup, footwear companies are acknowledging the importance of innovation as a major factor of consumer brand perception and loyalty.
For iMotions client adidas, innovation and performance are at the core of their company values, with sport science and technology-supported products helping them become a top-50 Interbrand global brand . In a crowded market, 26% of athletic apparel consumers perceive adidas to be the most innovative brand in the market, so capturing and retaining these consumers requires new ways of understanding athletes.
Perception Research at an Emotional Level
At the Sport Science Perception Research Lab in Portland, Oregon, sports scientists are taking perception research to an emotional level. The team uses technology to help athletes tackle obstacles to improvement, which can be as much about their emotional relationship with their footwear as their athletic performance or even a shoe’s construction. Simply put, they are performing sneaker emotion research.
“Every athlete wants to be better, but not many want to change. Many times, the obstacle to change isn’t that they doubt the performance of the shoe, it just doesn’t look good and feel good. Not every athlete can articulate exactly what they’re feeling,” says researcher Paul Francis.
To detect how athletes feel about their athletic footwear, the researchers monitor their bodily responses to looking at apparel through measures such as facial expressions and visual attention. In a televised experiment featured on National Geographic’s The World According to Jeff Goldblum , Sport Science researcher Paul Francis had Jeff Goldblum act out some of the 7 core facial emotions to detect the probability that he was expressing contempt, joy, anger, sadness, surprise, disgust, and fear while examining an adidas sneaker. As Jeff Goldblum notes, “this is a technological way of assessing what they think about the look and feel of the shoe.”
Jeff Goldblum’s acting ability – as an indicator of athletes’ emotions
The results of the experiment? Turns out that he’s a great actor! His displayed emotions were identified correctly in iMotions while his visual attention was recorded with eye tracking glasses and correlated to the part of the shoe he was looking at.
These data give a more nuanced view of athletes’ emotions than what they are able to tell researchers in words. The implications of this type of research mean that finding an emotional fit for footwear could even improve athletic performance thanks to the athlete feeling ‘just right’ and more confident in themselves, thanks to their shoes.
As one of the biggest brands in the market, adidas understands that tapping into neurotechnology can give way to groundbreaking methods for understanding consumer perception. Leave it to Jeff Goldblum to reach a conclusion that we at iMotions fully support: “Sneakers are as much about the brain as they are about the body.”
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Carbon Lattice Innovation — The adidas Story
LATTICE INNOVATION Digital Light Synthesis™ is a breakthrough additive manufacturing technology pioneered by Carbon that uses digital light projection, oxygen permeable optics, and Carbon’s programmable liquid resins. Carbon’s technology is changing the way high-performance, durable, final polymeric components, and products are being created. Not only does our technology allow for the production of end-use parts, but it also delivers unmatched speed, up to 100 times faster than other additive manufacturing processes.
Carbon’s technology is inherently capable of printing high-resolution parts with an excellent surface finish and isotropic mechanical properties. Our software leverages our M-series printers and our wide array of programmable liquid resins to print unique lattices (Figure 1) that can replace materials such as foam in headsets, shoe midsoles, and seating applications. What is especially unique is Carbon’s ability to design and make tunable lattices depending on customer application needs. Engineers for the first time can 3D print multiple unique functional zones within the same monolithic part and tune the mechanical properties within each of these functional zones depending on the application requirements.
Figure 1: Examples of Carbon’s lattice printing capabilities
CASE STUDY – adidas Enthused by our ability to 3D print innovative lattice structures, adidas partnered with Carbon to develop a midsole that met the performance and comfort required by serious runners. adidas was seeking a platform that would enable them to tune cushioning properties throughout the shoe, and ultimately provide bespoke athletic footwear. With decades of experience and data on designing a midsole, adidas wanted to create something that would free them from the limitations of traditional footwear manufacturing. Traditional methods cannot deliver such complex, high-performance monolithic designs and typically require the assembly of multiple parts to create varying performance zones within a single midsole. This assembly approach leads to added cost, complexity, and quality concerns.
Carbon’s Digital Light Synthesis™ technology helped solve all these challenges and enabled adidas to move into a new era of footwear manufacturing. The result is Futurecraft 4D (Figure 2). Together, we created a digitized footwear component creation process that eliminates the need for traditional prototyping or molding. Our technology also allowed adidas to create a monolithic midsole that addresses precise needs related to movement, cushioning, stability, and comfort. Further, over the course of product development, Carbon’s technology enabled adidas to execute more than 50 design iterations, a substantial increase compared with what is achievable with traditional molding in the same amount of time. Moreover, engineers from both companies collaborated closely and tested nearly 150 resin iterations.
The final midsole material is made out of a blend of UV curable resin and polyurethane. It is a stiff elastomer that can be printed in a lattice structure to create a high-performance midsole that also offers excellent durability and is aesthetically pleasing. This level of speed in design innovation and materials iteration is unheard of in traditional manufacturing and a testament to Carbon’s philosophy of creating new 3D printing solutions that take into account the end-customer experience.
Figure 2: An adidas Futurecraft 4D midsole printing on a Carbon M-series printer to include varying lattice structures along the midsole
Together, Carbon and adidas have pushed the performance function of footwear to a new level with the launch of Futurecraft 4D. The newly launched shoe has precisely tuned functional zones within the midsole (Figure 3). Notice how the midsole has different lattice structures in the heel and forefoot, to account for different cushioning needs for these parts of the foot while running. Carbon’s technology addressed all of adidas needs in one simple high-performance monolithic component. As adidas scales the production of these midsoles, Carbon will play a pivotal role in providing a better experience for athletes. In the long run, adidas and Carbon will be able to provide each athlete with bespoke performance products tailored to individual physiological data and needs on demand.
Figure 3: Multiple functional zones showing varying lattice structures within the same midsole
CARBON’S LATTICE INNOVATION BENEFITS The Futurecraft 4D success is an excellent example of how Carbon’s approach to manufacturing is opening up limitless possibilities not only for adidas designers but also for product development teams in other industry verticals. For the first time, engineers designing for applications such as helmets, orthopedic cushions, car seats, bike seats, and headsets have access to a “tunable” lattice that can effectively replace or complement foam. Designers can now bring their most intricate lattice designs previously unachievable with traditional manufacturing into physical reality using Carbon’s tunable lattice innovation. Let us summarize some benefits of lattice structures possible using Carbon’s technology:
Design Simplicity Carbon’s ability to create varying lattice structures (Figure 3) within the same part or component results in unmatched design. Previously, engineers had to combine multiple components to create different properties within a final part. This complexity requires additional design, tooling, and assembly resources and often results in quality issues. With Carbon, as highlighted in the adidas midsole example, it is possible to rapidly engineer lattice structures with varying mechanical properties and aesthetics all in the same monolithic part. This unique capability opens up new product design possibilities that in turn enables the creation of differentiated final products.
Breathable Carbon lattice innovation and resulting open-cell structure (Figure 1) enables customers to create final products with improved thermal characteristics. In applications such as seats, armrests, headsets, crutch-pads, and orthopedic supports for the back and neck, this breathability is especially useful in maintaining a comfortable temperature. Thermal control in these applications is essential for ideal end-user experiences, and heat dissipation via open-cell structures helps with that.
Cleanability Cleaning materials such as foam is cumbersome. Additionally, water retention and slow drying with foam are not desirable. In contrast, applications using Carbon’s lattice structures are easy to clean, do not retain water, and can be utilized post-wash almost instantaneously.
CONCLUSIONS Our adidas relationship illustrates how we combined Carbon’s unique lattice printing capabilities with adidas’s desire to design and print lattices. Now we can bring precisely tuned functional zones into midsoles, addressing specific needs of movement, cushioning, stability, and comfort, into one simple, high-performance component. Other applications mentioned in this case study such as bike seats, orthopedic pads, and headsets should only serve as starting point when product development teams consider Carbon’s technology to design new parts and products. We are hopeful that our ability to print tunable lattices using a wide variety of resins will serve the existing need for some product development teams who were actively seeking similar material properties while challenging others to find applications where the end user experience could improve by incorporating lattice structures into their products.
If you would like to learn more about how Carbon lattice innovation could help you to design and make differentiated products, please email us at [email protected]3d.com.
Three Stripes Business Model of Adidas
One brand that dominates the mindshare while consumers think of Hip Hop and sporty brands is Adidas. So much so that Adidas is now one of the most desirable sportswear brands. Adidas produces various sports equipment across different types of sports. But then the question is what is the business model of Adidas that is helping the brand rule the sportswear industry across all the sports (obviously next to Nike).
As of 2020, Adidas had a turnover of €19.844 billion and has approximately 62,285 employees worldwide. From establishing itself as one of the best sportswear, it has also been working towards establishing itself as one of the best CSR companies globally (as of 2020).
How it all Began?
The foundation for Adidas was laid in 1920 by Adolf Adi Dassler , a 20-year old German who was an extremely passionate athlete. He started producing shoes outside his mother’s laundry room using limited materials available post WW1. Initially, he did not intend to sell sneakers and had completed his apprenticeship in a bakery before he started selling his sneakers to produce the best shoes for passionate athletes.
He understood the need for high-quality sports equipment and regularly visited the athletes to seek feedback on what these athletes truly desired. Such observations and a genuine desire to help athletes further encouraged Adolf to develop products that would better the consumers’ lives.
Currently, Adidas has products in the following category
- Accessories and Gear
In July 1924, the business was established as “Dassler Brothers Shoe Factory” (Gebrüder Dassler Schuhfabrik), which was later joined by his elder brother. It was only in 1936 that the brand found true success when Adi gifted shoes to the gold medallist Jesse Owen an American track-and-field star, who also made a world record in the 1936 Berlin Olympics. The business became quite successful and was selling 200,000 shoes each year until WWII hit.
After WWII in 1947, the brothers had a clash and they split. Rudolf formed another shoe company known as Puma, which is now considered one of the strongest rivals of Adidas.
Fun Fact: The complete form of Adidas is ‘All Day I Dream About Sports.’ Initially, in 1949 the logo was a spiked shoe hanging in between the letter ‘d’
Adidas logo developed its famous three strips from the original founder Karhu Sports, who was short on capital post-WWII. The owners decided to sell the trademark of their logo for €1,600 and two bottles of whiskey. As per Economic Times , The three-stripes of the Adidas logo represent a mountain, pointing out challenges and goals people need to overcome.
It was only in 1971 that the brand unveiled the three-stripe Adidas logo in the form of a leaf called the “trefoil.” This version was later replaced in 1990 by the current logo, shaped like a triangle for the Equipment Line but later became the corporate logo, though the trefoil logo can still be found on some Adidas original products.
Adidas Business Model is based on integrating hip hop culture and sports
In 1970 the brand delivered its football for the 1970 World Fifa Cup and designed the ball in such a way that it would increase the visibility on the black and white screen, and this soon led to one of the most successful and famous partnerships of Adidas providing footballs to Fifa World Cup after that.
In 1986, the brand expanded and entered the hip-hop culture and soon became a household name and a lifestyle. Unknown to Adidas, the hip hop group Run DMC wrote a song about their shoes, “My Adidas,” and held up the 3-Stripes shoes during the concert in front of 40,000 fans – amongst which was an Adidas employee, and it led to an unexpected partnership.
It was the first time that sport and art were merging, which led to the brand’s growth over a much larger audience and customer base. This led Adidas to develop new ways of marketing, which was considered as of the critical areas of the company, which led to its success and allowed it to achieve a competitive advantage.
Adidas Marketing Strategy
One of the most famous taglines of Adidas is ‘ Impossible is Nothing,’ which focuses on the importance of fitness and the importance of striving for something that a person truly desires and is also one of the primary marketing strategies for the company.
Furthermore, it has also sponsored many world sports events such as FIFA, UEFA, NBA, Cricket & Olympics. At the same time, it is also known to provide the best products which are comfortable, long-lasting, and beyond the ordinary.
Moreover, it also takes advantage of 6 major cities, which helps shape the trend and the buying decisions of the targeted customers. These cities are Los Angeles, London, Shanghai, New York, Tokyo, and Paris. In the UK, it primarily focuses on selling soccer products, whereas it focuses on basketball and baseball in the US. Adidas ensures that the marketing strategy meets the needs of consumers globally.
The collaboration of Adidas with various athletes and significant-tech companies has allowed it to enhance innovation with branding and marketing. This has led to the development of a more vital relationship with the customers ensuring customer loyalty. It also collaborates with celebrities which includes music and fashion icons. Thus, the strategy is to build must-have designs that reach out to more than just sports fanatics.
This can be seen when Adidas created Yeezy with Kanya West. It turned out to be one of the fastest-growing footwear lines and, in 2021, was valued between $3.2-$4.7 bn. This has allowed it to expand the customer base and reach out to those customers who are not sports fans.
Yeezy is worth as much as $3 billion, according to a Bank of America valuation. Kanye West made about $147 million from Yeezy shoe royalties last year. That's more than his entire music catalog is worth – valued at $110.5 million by the Valentiam Group. https://t.co/YJ90ZOvIbA — Kim Bhasin (@KimBhasin) April 27, 2020
Nike also has a powerful marketing strategy. Do check out!
Adidas’ powerful distribution network
Another competitive advantage that Adidas has is its distribution channel. Globally it has around 2500 stores. The global supply chain of Adidas extends to various tiers from manufacturing partners to raw materials such as cotton, leather, and natural rubber and the use of technology.
The majority of the products are produced by 132 manufacturing partners worldwide. At the end of 2020, 61% of the strategic suppliers had worked for more than ten years, and 30% worked for more than 20 years.
As of 2020, it outsources most production and has 500 independent factories globally that manufacture products in more than 49 countries. Its supply chain has different types of business partners and also has multiple layers. As of 2020, the top 4 countries in terms of sourcing volumes were:
How Adidas is adding sustainability to its business model
Back in 2015, Adidas collaborated with Parley for the Oceans, an environmental organization. One of the primary goals of Adidas is to double the number of recycled sneakers. In 2021, Adidas aims to produce 17 million pairs of shoes with recycled plastic waste collected from beaches and coastal regions, after more than 15 million in 2020.
Sustainability is an integral part of the Adidas business philosophy. We have continued to invest in sustainability initiatives during the coronavirus pandemic, and we will significantly expand our range of sustainable products in 2021. Adidas chief executive officer Kasper Rorsted in a press release.
Furthermore, it is also currently focusing on eliminating the use of fur and focusing more on using plant-based leather, recycled cotton, and eco-friendly shoes to achieve by 2050 complete global neutrality.
As per the company’s press release , six out of ten Adidas articles are made from sustainable materials. By 2025, nine out of ten will be sustainable as the company expands and further innovates its 3-loop system: recycled loop (made from recycled materials), circular loop (made to be remade), or regenerative loop (made with natural and renewable materials). adidas has been researching fully recyclable or biodegradable materials for some time already and aims to only use recycled polyester in every product from 2024 onward.
Moreover, the sustainability bond amounting to €500 million was issued in September 2020, which was five times oversubscribed. The proceeds from the offering are planned to be used in targets like achieving recycled materials, investing in renewable energy production, and supporting underrepresented communities.
Adidas 2021 Business Strategy- Own The Game
In 2021 Adidas released its next five-year strategic cycle where ‘ Own the Game ‘ puts higher preferences to the consumer than everything else by acknowledging the role they have in shaping the trends in the industry. The “Own The Game” strategy of Adidas centers around a shift towards a DTC-led business model.
As part of the new strategy, Adidas aims for its direct-to-consumer business to account for half of its total sales by 2025 and contribute more than 80 percent to the company’s targeted revenue growth until then. By 2025, Adidas aims to triple its members to around 500 million, all while doubling its e-commerce sales to around $10 billion. In addition, Adidas’ own retail stores will be digitized with fully-fledged omnichannel capabilities.
Furthermore, the successful delivery will also ensure brand credibility, improve the consumers’ experiences, and push the boundaries of sustainability. Another aim of this strategy was to begin the formal process of divesting Reebok, which was needed to ensure the independent growth of each other and exploit its capabilities.
In conclusion, Adidas surely has blended the culture of hip-hop and sports and has successfully captured the interests of the consumers, giving comfort its highest priority. Adidas has built a business model that observes consumer trends and maintains high-quality manufacturing and innovative materials. Adidas has already pledged to strengthen its innovation mindset across all areas of the company over the coming years in order to continue to enable ground-breaking innovations.
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Kashish M is an Undergraduate student from the Middle East. Apart from listening songs and learning new languages and exploring different culture over time she developed interests in writing and gained interest in exploring different parts of the accounting/finance world.
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With sport playing an increasingly important role in more and more peoples’ lives, both on and off the field of play, we operate in a highly attractive industry. Based on our deep understanding of our consumer and the authenticity of the adidas brand, we push the boundaries of products, experiences, and services. We do so according to our strategy, which allows us to fully capitalize on the acceleration of favorable long-term structural trends.
‘OWN THE GAME’
‘Own the Game’ is our strategy that guides us through to 2025 – a plan rooted in sport. Sport is adidas’ past, present, and future. ‘Own the Game’ puts the consumer at the heart of everything we do and is brought to life by our people. Our strategic focus is on increasing brand credibility, elevating the experience for our consumer, and pushing the boundaries in sustainability. The execution of our strategy is enabled by a mindset of innovation across all dimensions of our business as well as our digital transformation. We own the game and will drive significant growth.
Our consumers are at the heart of ‘Own the Game’. Consumers drive structural trends in our industry through their preferences and behaviors. They strive to live active and healthy lives, they wish to blend sport and lifestyle, and they are digital by default as well as sustainable by conviction. ‘Own the Game’ will be ready to capture those consumer-driven opportunities and carve out new ones for their benefit. In 2025, ‘Own the Game’ will not only have delivered overproportionate growth for adidas, but also deepened relationships with our consumer, as we continue to actively live our purpose ‘through sport, we have the power to change lives’.
OUR PEOPLE
To successfully deliver on our five-year strategy, we will support our people to truly own the game. ‘Own the Game’ puts the consumer at the heart of everything we do and is brought to life by our people. It’s all about creating a culture and environment where our people can consistently thrive, be successful, feel they belong, and ultimately enjoy coming to work.
We have developed the adidas People Promise to make it clear what we stand for as a company. The adidas People Promise will guide us as we strive to deliver our mission to be the best sports brand in the world and live our purpose – Through sport, we have the power to change lives. You will also see our attitude of ‘Impossible is Nothing’ reflected in our People Promise.
Diversity, Equity and Inclusion underpins everything we do. It is the glue that spans every country, department and team. We want to ensure that through our people actions, we create an equal starting line for everyone within adidas.
In addition to that, the people part of our strategy is built on 3 pillars:
- Leadership : We will develop leaders to own the game and act as role models empowering all people to realize their possibilities.
- Betterment : We believe in a mindset of continuous learning and improvement and are committed to providing relevant learning opportunities to upskill and reskill for the future.
- Performance : We build the best teams that play to win, recognizing and rewarding both individual and team performances.
OUR STRATEGIC FOCUS AREAS
CREDIBILITY
We are a leading brand thanks to our credibility in both sport and culture. To continue to excite our consumers with innovative concepts that support our mission, we will sharpen our brand, refine our product offering, and leverage partnerships to further enhance our credibility with consumers.
- Sport : We will focus on the most important sport categories: Football, Training, Running, and Outdoor. Football is the biggest sport in terms of viewership, while Running, Training, and Outdoor are the biggest participation sports. Our products in these categories are built for sport and worn for sport.
- Lifestyle : To tap into the biggest commercial opportunity for our brand, we will sharpen our brand architecture by introducing a new consumer proposition called Sportswear. These products are born from sport and worn for style. At the same time, we will extend Originals, which is inspired by sport and worn on the street, into the premium segment through top-quality manufacturing processes and materials.
- Women : We will execute on a cross-category plan to achieve product excellence and elevate the women’s experience through our membership program to become their indispensable sports brand. Our goal is to grow currency-neutral net sales for our Women’s business at a mid-teens rate per annum on average until 2025, thereby significantly increasing the Women’s share of our overall business.
- Partnerships : We will amplify our credibility through our partnerships by leveraging their power, authenticity, and reach. We will expand our portfolio of partners, which already includes Beyoncé, Stella McCartney, and Pharrell Williams, all of whom will continue to play a significant role in wowing our consumer on the lifestyle side. Likewise, we will continue to leverage our partnerships with the biggest symbols in sport, be it with teams like Bayern Munich or Real Madrid, athletes like Lionel Messi or Mikaela Shiffrin, or events like the Boston and Berlin Marathons.
EXPERIENCE
To grow long-term relationships with our consumer, we excite and empower them by creating personalized experiences in both digital and physical spaces. With this in mind, we will accelerate our transformation into a direct-to-consumer-led (DTC-led) business built around membership.
- Membership : With the launch of our membership program in 2018, we laid the foundation for offering personalized experiences to our most valuable consumers. We are now ready to take this to the next level with the goal of increasing our member base to around 500 million by 2025. Through membership, we reward engagement and purchasing activity by offering exclusive hype products, access to launches and special events, and more.
- DTC-led : e-com continues to be our most important store. Both adidas.com and the adidas app will see enhancements across the entire consumer journey. By 2025, our e-com business is expected to account for between € 8 billion and € 9 billion of our company’s net sales. While e-com is the pinnacle of our retail strategy, our physical stores will continue to play a crucial role in creating a physical and emotional connection with our brand. Retail formats will be digitized with fully-fledged omnichannel capabilities. The DTC business, comprising our e-com as well as our physical stores, is projected to account for around half of the company’s net sales by 2025. We will also continue to leverage our strong relationships with strictly selected wholesale partners and ‘win-with-the-winners’ to ensure a holistic experience for the consumer no matter the point of sale.
- Key Cities : We are building on our Key Cities portfolio of London, Los Angeles, New York, Paris, Shanghai, and Tokyo, by adding Mexico City, Berlin, Moscow, Dubai, Beijing, and Seoul. These cities represent the beating heart of our global consumer experience and exert influence on the rest of the world, while at the same time offering commercial opportunities as urbanization continues.
- Strategic markets : We will double down on Greater China, North America, and EMEA to bring exciting consumer experiences to life, pursuing a tailored approach that appeals to local trends. Our ambition is to gain market share in all three strategic markets.
SUSTAINABILITY
Our commitment to sustainability is truly holistic and deeply embedded into how we have done business for over two decades. It’s rooted in our purpose that, ‘through sport, we have the power to change lives’. As we continue to pioneer in sustainability, we will move from strong stand-alone initiatives to a scaled and comprehensive sustainability program.
- What we offer : We keep pushing the boundaries of our sustainable offering, so that our consumer will be able to choose from a uniquely comprehensive range. By 2025, nine out of ten of our articles will be sustainable. How we will do this revolves around how we expand and innovate our 3-loops: made from recycled materials, made to be remade, or made with natural and renewable materials. We define products as sustainable when they show environmental benefits versus conventional products due to the materials used or their respective production technologies.
- What we do : We are committed to reducing the CO2 footprint of our product offerings as we work to reach climate neutrality by 2050. We will achieve this through initiatives such as driving zero-carbon within our own operations and promoting environmental programs along our entire value chain in close cooperation with our suppliers.
- What we say : We will be vocal about our efforts that focus on creating low-impact products that are made to be remade. To guide our consumer to make more sustainable choices, we will also simplify our labelling strategy and scale up our product takeback program.
OUR ENABLERS
INNOVATION AND DIGITAL
Two enablers will set us up for success. The first is applying a mindset of deep and broad innovation across all dimensions of our business. The second is using the speed and agility of Digital throughout our entire value chain. These enablers will be particularly powerful when it comes to executing on the three strategic focus areas – Credibility, Experience, and Sustainability – that support us in intensifying our focus on the consumer and driving growth.
To watch a recording of the 'Own the Game' presentation, which happened on 10 March 2021, or to access more strategy related resources, please click here .
Own the Game 2025
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The adidas Sustainability Story – Leading the Change
Find out how the adidas sustainability approach will steer efforts to transform both our industry and our planet.
The adidas Sustainability Series
B eing in the business of sport for over 70 years has taught adidas many valuable lessons; lessons on winning, losing and adapting to our athletes’ needs, but most importantly we’ve learned to support all our athletes when the odds might be stacked against them.
The current state of the world might initially cause a lot of us to feel defeated and question the impact we can have. Climate change, pollution, plastic waste, water contamination, you name it, it’s happening to our planet.
But our mindset of providing support when an athlete is down and finding new ways to win together is what is driving us as a company to be a better corporate citizen.
We recognize that we are all part of the problem but that doesn’t stop us leading the solution, instead it makes us even more creative, innovative and determined.
“At adidas we don’t only want to change how we do business, but how our industry does business.”
adidas sustainability: changing our industry
For over 20 years, adidas has been a change leader in sustainability. We were the first to bring eco-innovations to the mass market , and we led the industry with the first sustainability report. We’re also a founding member of game-changing initiatives like Better Cotton , Leather Working Group , and Fair Labor Association .
Sustainability is one of the greatest expressions of our purpose, “Through sport, we have the power to change lives.” Because if we don’t protect the ground we’re on, we soon won’t have a space to play sport.
“We do have power in our industry beyond the amount of products we’re producing.”
While we raised the bar on environmental standards at our own sites, in our supply chain and for our products, the change is bigger than us. Sustainability is no longer a niche for specialized brands. It’s becoming an expected standard for how every company approaches its business. As a big company, we make a big impact in any action we take. This is why we speak up, not only to help our consumers understand why they should care, but our industry as well.
“The reason why I’m at adidas is that as a big company, we do have power in our industry beyond the amount of products we’re producing. We have a big voice, we sit on the right committees, we’re actively involved with them which gives us a better chance to shift the industry,” explains Erika Benz, Senior Manager Materials Footwear, Environmental Sustainability at adidas.
adidas sustainability: raising our voice
Athletes are surrounded by challenging and inspiring support teams, driving them to perform at their best and enabling others to do the same. We cannot raise our voice alone. Conscious collaborations are a must.
Change is a team sport and we’re teaming up with others outside and across our own company’s different functions, brands, and markets to change the way we approach sustainable solutions. Some of our most impactful initiatives have come from partnerships with the likes of the Parley network and Fashion for Good innovation platform, while others like the adidas FUTURECRAFT.LOOP and the Stan Smith Mylo are born from the materials challenges we set ourselves.
Making quality products is just as important as waste reduction, upholding decent labor, and health and safety standards, refining production methods, innovating recycled materials and activating communities to raise awareness of plastic waste . It’s about the whole sustainable picture, not only what you see on the shelves.
adidas sustainability goes beyond the shelves
“We are continually identifying ways for our employees and suppliers to actively contribute to our sustainability ambitions and goals. Our success is largely dependent on their collective support and actions.”
Sustainability is a uniquely holistic initiative for adidas, from our entire supply chain network, to the offices and stores we work in, to the innovative products we create for our customers.
Our foundations are strong, with clear processes in place to support our drive to become a circular company, not only in terms of what we produce, but how we produce and how we take back. This means all areas of the business are activated throughout the entire supply chain. It’s something that uniquely takes a team effort .
“Everyone approaches sustainability differently. What we tend to do is look into the details, make sure that we do things the right way and incorporate sustainability into everything we do. I’m looking forward to the time when sustainability is going to be the basic consumer ask,” continues Erika Benz.
Ultimately, the details may not be obvious in the end product, but leading sustainability isn’t only about crossing the finish line. It’s about all the unseen hours of training in-between.
A responsible and accountable supply chain
The sustainable solutions we develop target the entire life cycle of sport: how apparel, footwear or equipment is made, sold, played and eventually retired.
Before we even get to the starting line, open and transparent dialogue to set mutual expectations with our suppliers is a must. We have clear policies in place with them and measure their progress with the utmost transparency. For us, setting high standards means having the highest levels of accountability.
We manage our social and environmental impact specifically around water, chemicals, energy usage and workers’ rights.
- Water : Water is both essential for life and increasingly threatened. That’s why we set strong targets for our suppliers to reduce water consumption in our production. We also commit to water conservation practices like sourcing 100% of our cotton sustainably.
- Chemicals : Handling chemicals is often unavoidably part of creating high-performance products. That’s why it’s crucial we do so responsibly across our entire supply chain. We work together with chemical experts, environmental organizations and industry federations to upgrade our end-to-end approach to reducing chemicals.
- Energy : We already achieved our energy reduction targets of 20% by 2020 one year ahead of schedule.
- Labor : We have been ensuring fair and safe working conditions in our supply chain by setting our own standards for more than two decades. In doing so, we contribute to the respect of human rights and the improvement of living conditions in our supplier countries. We employ a team of 50 specialists mainly in the supplier countries, who work daily toward more sustainable business practices in our supply chain. Through more than 900 factory assessments last year, we reviewed and evaluated supplier conduct, work with suppliers to address issues and make improvements where necessary. We’ve been a Fair Labor Association member since 1999, we measure our factories with a rating system for social compliance (C-KPI) and all our strategic suppliers are disclosed and updated on our website. We achieve key rankings for fair working conditions in the Know The Chain and Corporate Human Rights Benchmark listings.
Starting the marathon
“Achieving a truly sustainable business model is a marathon, not a sprint. That’s why we remain committed to clear goals and deadlines.”
You can explore the adidas sustainability progress and commitments we’ve made for the future in the gallery below ( click here to download our sustainability infographic ) :
Sustainable workplaces
Global targets are well-known, but changes on our own doorstep are just as important. Sustainability is a shared commitment among colleagues in adidas offices, as well as in retail and distribution centers worldwide.
Plastic bottles are out and reusable cups are in at our restaurants and coffee shops. Sustainable commuting is encouraged and ongoing education on how to live greener lives is supported through our Green Company initiatives. Renewable energy sources for buildings are on the rise. At our HQ in Germany , for instance, we covered our building roofs in PV modules to generate electricity from the sun’s rays and we also built running tracks from recycled product samples.
Help end plastic waste
Plastic is a problem that has reached unfathomable proportions: for every person on the planet, there is one ton of plastic of which nearly 80 percent has become plastic waste. This waste is destroying the oceans. By 2050, seas will be filled with more plastic than fish .
We commit to help end plastic waste and, by 2024, we’ll eliminate virgin polyester in our products completely and go 100% recycled.
To achieve these goals, we foster open-source partnerships and put a high value on collaboration over competition to create sustainable solutions that go beyond our own business and influence.
We innovate to create change
To become a circular company where the products we make can be either recycled, remade or returned to nature we focus our innovation on our Three Loop Strategy.
We collaborate to create change
Being a leader means understanding that our purpose is bigger than ourselves. To make a real difference in creating industry change and developing a new future of fashion , we have to go beyond our own business and team up with creatives and innovators across the globe.
Imagine playing on a team with players who all have the same strengths. To win, you need both diversity of expertise and a complete view of the game. That’s why we work with partners whose expertise complements our extensive experience in sports innovation. Together we push the limits of eco-innovation in this space.
From established companies like Stella McCartney to thought leaders like the Parley network , to scientific start-ups like Carbon and open-source platforms like Fashion for Good , our spectrum of partners reflects our approach to sustainability in general: holistic.
We’re tapped into a strong start-up network as part of our sponsoring and mentoring role in Fashion for Good. Here, we collaborate with other companies to accelerate or create pilot projects that benefit our industry’s environmental outlook. Some of our partnerships include those with Pond , Infinited Fiber , and Spinnova focused on developing regenerative materials for use in our products going forward.
Another innovative initiative is Choose to Give Back , a resale program designed to extend the life of products. In the United States beginning in October 2021, used shoes, clothes, and accessories, made by any brand and in any condition can be sent to us. Our collaborator, thredUp will resell any products that in good condition. The idea is that if gear is in play, it’s out of landfill and ocean waste. Based on the learnings from the initial chapter of this program, we plan to expand the offer to other markets.
Like every good athlete, we are always keeping an eye on the competition and some might be surprised to learn that we don’t exclude teaming up with them for the greater good of the industry.
Recommended reading
Collaborating with the Competition – adidas & Allbirds Partner Up
Running together into a sustainable future.
The promise of the world’s first sustainable running shoe made from marine plastic waste, presented at the General Assembly of the United Nations in New York in 2015, ignited the imagination of many.
Not only did this commitment result in some of the most innovative and sustainable sports products ever seen in our industry, it also brought to life in 2017 a running movement committed to ending plastic waste – Run For The Oceans . The worldwide digital run to coincide with World Oceans Day showed that everyone can make an impact – one runner, one company, one partnership at a time.
“adidas’ commitment to sustainability started way before the topic gained public attention. For 20 years, we have been a change leader in our industry. Our fight to end plastic waste is the best expression of our purpose that, through sport, we have the power to change lives. The increasing use of recycled materials is just one example of our sustainability activities. The spectrum ranges from waste prevention and new types of take-back programs for use products, to climate protection. This will contribute to our ultimate goal of carbon neutrality in all our activities as well as our supply-chain by 2050,” says Kasper Rorsted, CEO at adidas.
Explore more stories on innovation and collaboration.
- # Sustainability
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- Organisation Innovation for Adidas Company
Organisation Innovation for Adidas Company - Case Study Example
- Subject: Marketing
- Type: Case Study
- Level: Undergraduate
- Pages: 5 (1250 words)
- Downloads: 0
Extract of sample "Organisation Innovation for Adidas Company"
The paper "Organisation Innovation for Adidas Company" is a great example of a marketing case study. Adidas was established in 1924 and has continuously developed to introduced and improve customer products. The company brings together designers, innovators and managers in developing products and engaging the customers. In the footwear industry, competition is fierce and one of the solution to counter competition is innovation. Innovation takes different forms ranging from manufacturing facilities to the design of the footwear and other accessories. The aim of the report is to discuss Adidas organisation innovation, specifically, the shoe/footwear sector. Some of the areas discussed include innovative processes that Adidas implements, innovative lessons learned, the effectiveness of the lessons learned, competitor’s challenges in adapting to Adidas innovation, and how the competitors can counter the competitive advantage of Adidas.
- Organisation Innovation
Organisation innovation employs different approaches to creating products and services. The section discusses the Adidas innovative process, innovative lessons learnt, the effectiveness of the lessons in advancing Adidas requirements, the competitive advantage of Adidas innovation, and measures to counter the competitive advantage of Adidas.
2.1 Adidas Innovative Process and Implementation
Adidas Company continues to develop products and services that target the requirements of the customers. The principle of the company is “to make athletes better” and innovation is a core of all Adidas products. It includes choosing the appropriate materials and manufacturing process ensuring high-quality products are developed. Adidas Company creates and tests different products to suit the requirements of the customers. For example, Adidas Company partnered with singer Kanye West in developing the Pure Boost. The sneaker is commonly called Yeezy 750 Boost and utilises a technology in which more than 3,000 tiny foam pellets are glued together. It results in a shoe with pillowy shock absorbers on the feet of the customers (So, 2016). Adidas Company is furthering innovation through Futurecraft 3D technology. The aim of the technology is to allow customization of the shoe depending on the requirements of the customers (Materialise, 2016).
Adidas Company creates products while focusing on the requirements of the community. For example, the innovation process aims to champion the environmental footprint by avoiding oil-based plastics that are associated with emissions (Adidas Group, 2016). Adidas Company approaches the innovation process from an environmental perspective and employs strategies such as dry-dyeing clothes to save water, and use of lighter materials. Thus, the focus of innovation is the reduction of waste and emissions, low waste, Adidas Nodye strategy and Adidas dry dye strategy.
2.2 Innovative Lessons Learnt
Fulfilling the strategic requirements of the customers is important (Mahdi et al. 2015). Factors such as customer expectations, customer satisfaction and customer interaction are important in the innovative processes (Bhatti et al., 2011). Customer interaction enables identification of the customers’ requirements allowing Adidas to create the products. The customer expectations include identification of the needs and requirements of the customers, and turning these expectations into a reality. Customer interaction also raises aspects of conflict management and customer resolutions mechanisms.
Brand image and corporate image also contributes to advancing the requirements of the customers. For example, with a strong brand, it is possible to attract high-quality talent and a knowledgeable organisation (Aubrey and Judge, 2012). For instance, Kanye West partnered with Adidas Company in marketing newer products meaning the strength of brand image dictates the associates and partners. All these are premised on the quality of the brands, which depends on the innovative processes.
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theido mokhara
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Strategy is about the most crucial and key issues for the future of organizations. Strategy is also important to explore several strategic options, investigating each one carefully before making strategic choices. The study incorporates a rigorous and systematic effort to uncover the strategies and its impact on the company's performance by analysing case studies, articles and the annual report of Nike Inc. and Adidas Inc. The study attempts to find out the relevance of the strategies adopted by these companies, which are globally successful athletic apparel companies in the context of Bahrain. The findings of the study highlight Nike's strategies which focus on innovation and emphasis on its research and development department, provision of premium pricing for its customers, broad differentiation strategy, market Segmentation Strategy and Closed-Loop strategy. The Adidas strategies focus on the broad differentiation, innovation, trying to produce new products, services and processes in order to cope up with the competition. It embraces a multi-brand strategy, emphasis on expanding activities in the emerging markets, continuously improving infrastructure, processes and systems, foster a culture of challenging convention and embracing change, foster a corporate culture of performance, passion, integrity and diversity. These strategies coupled with its resources and unique capabilities form the basis of sustainable competitive advantage for both the companies. INTRODUCTION: The strategy is a path towards achieving the optimum goals of individuals, groups and organizations. In addition, it leads to a best use of companies' available resources and it also guides the company to stay in a business successfully and continuous improvements for its processes. The definition of strategy could be differ from one author to another, but the most common definition is that the strategy is long term plans and approaches towards the intended visions and objectives. It is a general framework that specified the organizations' plans, policies and approaches to meets its objectives, goals and end results. The way an organization used to shape its strategies could be differentiate from other organizations in order to make its products unique and remarkable. Globally, companies formulate their strategies based on their visions and reaching the satisfaction of customer's needs, requirements and expectations. Subsequently, they use those strategies as a baseline to compare their actual performance with planned ones, to evaluate the end results and ensuring the continuing organizational excellence. There are many kinds of strategies that are pursued by the companies; Such as cost leadership, differentiation and the focus strategies (Porter, 1985), services strategies, growth strategies. Based on the goals, the companies form those strategies and they rank them upon the priorities. It is more than important for any organization to put strategies and not any strategies; the correct strategies which are formulated after a long time of studying and after numerous number of brainstorming among the top management members. Therefore, those strategies then to be implemented by converting the organization's plans and policies into real actions through the best use of available resources such as: human resources, budgets and technological advance; in order to enhance the organization's performance, productivity and sustainability.
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Adidas Case Study | Handling Inventory Demands More Efficiently
With retailers demanding faster inventory replenishment turns, adidas set out to ensure that its 258-acre campus in Spartanburg, SC, could meet this demand. Honeywell Intelligrated designed and installed automated conveyor and sortation systems in the campus's two unique DCs, on-time and on-budget.
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Adidas: How to keep running fast in a post-Covid-19 world?
By the end of 2019 the adidas Group was solidly the world’s second largest multinational in the sportswear manufacturing industry. Following the successful implementation of a digital transformation initiated in 2015, the company enjoyed years of sustained growth and high profitability in the 2016-2019 period, strengthening its brand desirability and increasing sales volumes, especially in the online space. It ended fiscal year 2019 stronger than ever and its chief executive officer (CEO), Kasper Rørsted, was very optimistic about what the future would hold. The outbreak of the COVID-19 pandemic at the beginning of 2020 radically changed the business landscape. adidas was severely hit by the lockdowns imposed by governments. The new measures of social distancing were expected to have a lasting impact on consumer habits and consequently on the operations of companies such as adidas. Thus, unimaginable only few months before, the company’s first earnings call of 2020 led by Rørsted focused on the negative results obtained in the preceding few months and the high degree of uncertainty looking forward. Aware of the many challenges facing the company, Rørsted had to decide which strategic initiatives he should prioritize to future-proof the company and keep it on a steady growth trajectory in a post-COVID-19 world.
• Analyze the extent to which digitalization has changed the retail sector. • Analyze the extent to which the COVID-19 pandemic has revolutionized the business operations of companies such as adidas. • Explore the need for a retailer’s strategy to be adjusted in view of the pandemic and the ongoing digital disruption of the retail world. • Explore strategy in an environment characterized by a high degree of uncertainty associated with the COVID-19 pandemic.
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It's critical to comprehend the process of creating a case study. Starting a case study and making sure it covers all the necessary aspects is not a simple undertaking. Students must give it their all by carefully examining the facts before expressing their opinions. Adidas is a well-known brand in the sports market, so talking about doing a case study on it is a major deal.
It is a case study that relates to business. You must thoroughly examine the brand's development, history, revenue, marketing, current situation, ups, and downs, etc. Therefore, it becomes essential for students to deliver a top-notch case study in order to guarantee their final scores.
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History of Adidas
One of the most well-known sports brands, Adidas develops, manufactures, and produces a range of sportswear and accessories. This business was established in 1924 by Adi and Rudolf Dassler, two German brothers. Dassler Shoes was the original name of the business.
But later, in 1948, Rudolf quit his job and departed to create his own business, which he called Puma. One of Adidas' competitors is now Puma. After that, Adi changed the company's name from Dassler Shoes to Adidas.
In 1949, Adidas registered its name. Up until 1972, it began to become one of the most well-known brands of sporting footwear. Nike was introduced in 1972 at the Olympics. Adidas, however, was still doing well. When Run-DMC, one of the most well-known hip-hop dance groups, wore the label and modernized it, it became popular again.
Swot analysis of Adidas
Adidas swot analysis is the type of method that helps to measure the internal factor that is affecting the company. SWOT represents strengths, weaknesses, opportunities, and threats.
- The brand has a good reputation for its products.
- The products are of high quality.
- Possess a wide variety of products such as shoes, shirts, bags, perfumes, etc.
- The company always works by following the environmental laws.
- The policies of Adidas protect the rights of the employees.
- Only the USA and a few European countries have access to online retailers.
- Problems arise because customer service isn't fully functional, especially when it comes to e-marketing.
- Price and good quality are intertwined in the swot analysis of Adidas.
Opportunities
- The company has the chance to outsource the digital marketing works from a third party.
- The sports apparel market is at its growth.
- Joint ventures with worldwide partners will increase the involvement in athletics.
- The economic environment is not stable.
- Lots of competitors at the supply chain management level.
- Nike has a solid base in the sports apparel industry.
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Analyzing supply chain management system of adidas.
Question: Discuss about the Analyzing Supply Chain Management System of Adidas.
Introduction
The report aims to discuss about the supply chain management system of Adidas by analyzing its internal operations. The key flows in supply chain would be discussed to understand the product flow, cash, flow, information flow and return flow of Adidas shoes. The report would evaluate the existing processes of the company to assess their effectiveness of operations. Further, production process would be studies to understand the scheduling process and material requirement planning process of the company. Read More
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Pestle analysis of adidas.
Pestle analysis of Adidas examines the company's commercial strategies. Adidas pestle analysis looks at the numerous external factors—political, economic, social, and technological—as well as the legal and environmental ones—that have an impact on company operations. In addition, the pestle analysis emphasizes the various extrinsic circumstances that have an impact on the brand's business.
Political factors impacting Adidas
- Imposition of tariff taxes by the Trump government on all Chinese products
- Supply chain policies are unlike in different countries
- In different countries, they have various kinds of laws.
Economic factors of Adidas
- The pandemic has led to a recession which caused a shutdown of various businesses.
- Economic recession due to the pandemic made the exchange rate volatility.
- A slight shift in the exchange rates between the US dollar and the euro has a significant impact.
- Due to the pandemic, the people faced scarcity in their finances, which reduced their buying number of people.
- As sportswear is a leisure product, people don't buy it regularly and during the pandemic, the sale of sportswear dropped.
Social factors
- People are doing different kinds of fitness activities like gym, running, etc., and here, Adidas comes into action.
- People are now doing yoga and they need to buy yoga pants. So it's good that Adidas is selling yoga pants.
- Adidas had invested approx. 100 million pounds in 2012 Olympic Games which help in boosting their sales.
Technological factors
- Adidas sells its goods through online channels like websites and social media.
- Due to their innovation with FITBIT, they are well-liked by athletes and health-conscious individuals.
- Due to its ongoing product testing, Adidas enjoys a reputation as a quality-conscious company.
Legal factors
- Like any business, Adidas must abide by the rules and regulations established by the nations in which it conducts business.
- Minimum wage is a prime illustration. In more developed nations, there are mandated minimum wages for workers.
- The minimum wage in less developed nations is much lower or nonexistent. Therefore, it is far less expensive to produce items there.
- Although it lowers Adidas' production costs, this possesses ethical concerns.
Environmental factors
- Businesses like Adidas have been compelled to reconsider their strategies due to the rising public awareness of the state of the environment.
- Adidas has stated that it is attempting to reduce the use of prohibited and restricted materials in its manufacturing, merchandise, and retail operations.
- The corporation also pledges to cut carbon emissions and meet its 2020 green company goals.
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Target market of adidas.
Adidas primarily targets young people between the ages of 13 and 30 who are interested in sports or other activities. Although their products are priced affordably, the quality is top-notch.
At first, it was solely intended for athletes who participated in a variety of sports. Still, as fashions changed, individuals from other fields began buying the products because of their great quality. As a result, Adidas has kept its prices in a range where those in the middle class may also purchase the goods.
Teenagers that participate in various sports are its main target market. One sport where Adidas shoes have seen increasing demand is football, and these shoes are still in use today. However, there is also a different audience subset that is not interested in sports. Instead, they choose shoes based on their design and brand name. Typically, this audience consists of boys and females between the ages of 16 and 25.
Adidas is flexible with its retail partners. The brand's merchandise is available anywhere on the high street, except in the original Adidas stores. In addition, there may be several sections, such as those for swimwear, football, or fashion.
Based on the reputation and market worth of online retailers like Asos, Adidas also permits the sale of its products there. In contrast to its rivals, such as Puma, Nike, etc., Adidas uses a premium price approach for its products. Adidas' pricing suggests that it offers higher quality than other brands and a more upscale lifestyle than its rivals.
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Most Popular FAQs Searched By Students:
Q.1. what is the adidas case study.
Ans. Adidas is one of the leading sports shoe companies with a large market base and a strong sales and distribution channel worldwide. Adidas's case study helps to analyze several important factors related to business operation, marketing, and supply chain. It allows the students to understand the company's strengths, weaknesses, and opportunities and learn about the strategies used by the company to meet the demand at competitive costs.
Q.2. What is the primary purpose of SWOT Analysis?
Ans . SWOT analysis is a tool used to create an effective strategic plan that outlines the strengths, weaknesses, opportunities, and threats of a company or a company's particular work sector. The report helps to identify the booming sectors of business while highlighting the weaknesses and threats that the companies must address at the earliest. It also searches out opportunities that an organization must acknowledge and use to its advantage.
Q.3. What is the difference between a SWOT analysis and a Pestle analysis?
Ans . The primary difference between a SWOT and Pestle analysis is that a SWOT analysis focuses on the internal factors, while a Pestle analysis identifies the external aspects of a business. A SWOT analysis identifies the company's elements, like strengths, weaknesses, opportunities, and threats. A Pestle analysis applies to six external factors impacting the business – political, economic, social, technology, legal, and environment.
Q.4. How can I practice SWOT analysis and Pestle Analysis?
Ans . Follow these guidelines to go about SWOT analysis successfully:
- Talk about the brand's strengths.
- Identify the company's weaknesses.
- Highlight and talk about the opportunities
- Identify and evaluate potential threats.
For PESTLE analysis:
- Firstly identify the political and economic factors of the business.
- Talk about the social and technological aspects of the brand.
- Lastly, highlight the legal and environmental dimensions of the business.
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Adidas Case Study
The business strategy of adidas.
Inspired by the heritage, Adidas know that a profound understanding of the consumer and their journey in sport is essential to achieving this goal. To anticipate and respond to their needs, it continuously strives to create a culture of innovation and creativity. By harnessing this culture together with their insights and knowledge of sport, Adidas push the boundaries of products, services and processes to drive a long-term strategic advantage. This, in turn, will drive value creation for their company and
Sustainability Analysis Of Adidas
It is a fact that nowadays Adidas appears to be one of the most famous multinational company, which designs and produces sports clothing, shoes, and different kind of accessories. The popularity of the brand is hard to describe, but the is no doubt that today it is one of the most successful clothing corporations in the world and it is the largest sportswear producer in Europe as well. The corporation with the well-known motto "Impossible is nothing" presents the perfect example of the efficiency, comfort, and sustainable development, considering its strategy which is focused on integrity, diversity, and performance.
The Similarities Of Nike Vs. Adidas
Adolf Dassler is the founder of Adidas. Adolf started in his mother's wash room. In 1924 him and his brother established a shoe factory and called it Dassler Brothers Shoe Factory, from there he went on with his journey to provide athletes the best shoe. The brothers split and his brother made the shoe company Puma. Adidas is named after Adolf because his nickname is Adi and they used the first three letters of his last name which were das. Adidas stands for "All Day I Dream about Sports". Adidas is the largest manufacturer of sportswear in Europe. They are second in the world after Nike. Adidas also owns Reebok. Their first piece of apparel they sold was a tracksuit. Adidas has been around for sixty eight years. They became popular because in 2014 they were falling in sales but then they came out with new shoes that boosted sales. The new style of shoe had many purposes as they used to be basketball shoes but now are just normal regular
Adidas branding strategies
Adidas is a Germany multinational corporation that design and manufacture sport accessories and clothing. Besides, its core business adidas also have leverage its product types such as bags, shirts, watches, eyewear, and other sports- and clothing-related goods. Adolf Dassler, founded adidas in 1948, after the separated from his brother Rudolf who was founded Puma which is main rivalry of adidas in early years.
Adidas Group
Adidas Group is showing initiative and a desire to grow making it clear that they have every intention to become the world’s market leader and by 2015. Nike, who use to dominate Adidas Group in the business world, has lost ground. Currently Adidas Group is only one percent shy of Nike’s market share. Adidas has closed that gap significantly from five years ago and is showing no sign of slowing down (Marian, 2012).
Adidas International Global Media Manager
Starting out post World War II, Adidas was an important provider of the national German soccer team. Later, Adidas they changed their marketing approach to expand their products to “fringe sports,” such as high jumping and bobsledding. By the 1990s, Adidas secured their global sales on soccer footwear. In 1998, Adidas began to focus on the U.S market. By sponsoring some famous basketball players such as Kobe Bryant and by doing so Adidas was able to gain doubled market share.
Case Analysis: Mobile Marketing at Adidas
1. What is adidas’ position in the athletic shoe market? How does the brand seem to be doing in this market? Position: the position of adidas has transferred from “leading supplier of soccer footwear worldwide” to “leading sport brand”. Adidas was founded in Germany in 1920. In 1995, it became a public company as well as the leading supplier of soccer footwear due to its great performance of footwear sales. In 1998, adidas began to move into the U.S. market. Adidas doubled its U.S. market share within only one year, so it hoped to continue to make big move in following years. In its way to U.S. market, adidas confront with the
Vertical Integration Strategy Of Adidas
First according to "Adidas" shaping the sporting goods industry sustainably is more than a job . Sport industry is not just an industry , Sport industry is so important and help in the economy of any country so we neither can say that sport industry is not important nor ignore it . Adidas overview "At the Adidas Group, our love for sport drives who we are and
Brief Description Of The Business Model Of Adidas
Adidas’ business model is represented in a variety of aspects. Those of which will be discussed include technology, sell channels, customers, ability to innovate and geography. The technological advances in the last ten years means Adidas are more accessible to customers than ever before. Customers are able to shop online as well as on their smartphones causing a surge in demand. This in turn affects their suppliers. Adidas need to invest more in suppliers to keep up with higher demand. This means opening more stores, and Adidas have plans to expand worldwide by 2020, as well as factories to produce their products. Growth in technology has a profound effect on Adidas’ business model.
Marketing Analysis : Adidas Group
Adidas Group, as one of the world’s retail leaders in sportswear, has as primary target the sports participants, including high performance athletes, as well as non-athletes who are inspired by those at the highest level of their sport, and those that really love sports as part of their lives.
Adidas Positioning
Adidas is the second largest sportswear and apparels manufacturer (Dogiamis & Vijayashanker, 2009). By far, Adidas holds a market share of 22% (Dogiamis & Vijayashanker, 2009). Adidas had also registered the infamous ‘3 stripes’ as its trademark (Berntson, Jarnemo & Philipson, 2006). The founders of Adidas, Adolf and Rudolf Dassler had the vision of providing athletes with the best suited pair of shoes for their respective sports (Dogiamis & Vijayashanker, 2009). In efforts of achieving that, Adidas is had used the strategy of collaborating with important athletes to gain their insights on the products offered (Berntson, Jarnemo & Philipson, 2006). This contributes to the fact that Adidas had earned
Adidas : Brand Review : Adidas
Adidas is a sportswear manufacturing company started by Adolf Dassler. Adidas group has incorporated brands including Adidas, Reebok, TaylorMade-Adidas and Rockport. The wings of the company are widespread and have assimiliated other productions including handbags, shirts, spectacles, watches, balls, and sportswear. Adidas is being the largest company that sells footwear in the European market and have achieved a momentous market share at the global platform. Adidas has achieved phenomenal sale and have reached the pinnacle of success on the global scale with other international footwear companies (McDonald & Milne, 1999).
Nike 's Offensive Competitive Advantage
Adidas was founded by Adi Dassler on August 18, 1949 in Herzogenaurach, Germany. Adidas has been in business longer than Nike, they have had their logo since the inception; thus, the three stripes on the side of their shoes. In Spring of 2015, they came out with their new strategic business plan called, “Creating the New”. The focus was on Cities, Speed, and Open Source. According to Herbert Hainer, the CEO at that time stated, “The company is working every day to inspire and enable people to harness the power of sport in their lives (Adidas Group, n.d.). Adidas current competitive strategy is not the same as Nike’s competitive strategy. In October 2016, Kasper Rorsted became Adidas’ current CEO. He believes health and fitness will continue to become a lifestyle not a fad. Furthermore, he wants to expound the three clear strategic choices: Speed, Cities, and Open Source.” They are more focused on the broad target market, a low-cost provider strategy. In March 2017, he updated the focus for Adidas to include “Corporate Culture, Digital, One Adidas, North America and Portfolio.” (Adidas Group, n.d.).
Marketing Segmentation of Adidas Essay
Adidas is a major German sports apparel manufacturer, which was founded in 1948. It is the largest sportswear manufacturer in Europe and the second biggest sportswear manufacturer in the world, after Nike. The company's clothing and shoe designs typically feature three parallel bars. The company revenue for 2009 was listed at €10.38 billion. The market segmentation; targeting and position play an important role in this company. This essay will use the three factors to analyze this company.
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Adidas AG (german pronunciation) is a german multinational corporation that designs & manufactures sports shoes, clothing & accessories based in herzogenaurach, Bavaria, germany, it is the holding company for the addidas group, which consist of reebok sports wear. Besides sports addidas also produces products such as bags, shirts, watches, eye-wear & other sports clothing related clothes. shoe designs typically feature three parallel bars. The companys revenue for 2012 was listedat $14.88 billon . Also known as Adi Dassler was born in Herzogenaurach, Bavaria, Germany on November 3, 1900. The son of Christoph Dassler, a shoe factory worker made his foray into the shoe making business when he was 20 years
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In 2019, brand adidas and Reebok sales were again driven by the latest product offerings. At brand adidas, products launched during the course of the year accounted for 77% of brand sales (2018: 74%), while only 3% of sales were generated with products introduced three or more years ago (2018: 3%).
Adidas, the giant sportswear manufacturer with more than $ 19.0 Billion in revenues, sold 360 million pair footwear in 2016 and produced 97% of total footwear volume in Asia. [1] However, "Speedfactory" project that Adidas initiated under the umbrella of German Government's "Autonomic for Industry 4.0" program seems that it will innovate supply chain operations in sportswear industry ...
Adidas' latest breakthrough innovations include a 100% recyclable performance footwear using Loop Creation Process. This is also aligned with their pledge to preserve the oceans. The brand also intends to add more pages to its celebrity partnerships success story by joining forces with Beyonce.
It has also improved page-load times by 50 percent and was able to scale easily when a popular sneaker generated 1 million sales in just 2 days. adidas is Europe's largest sportswear company and one of the most recognizable brands on the planet. In 2019, it sold 1.1 billion items worldwide.
Instead of compromising on their values and goals, Adidas started out by incorporating Design Thinking elements to optimise on available resource and deliver innovation. The brand started changing their corporate culture to focus more on the collective human experience.
adidas Case Study. The Mechanics of Innovation. What does "innovation" look like? The adidas Future team, which makes up the advanced research, design and development arm of the company, has been the source of countless game-changing inventions and innovations in the world of sports. Leadership wanted a clearer look into the group's inner ...
Case Study. Adidas Athlete Performance with the Right Emotional Fit in Footwear - featuring Jeff Goldblum ... For iMotions client adidas, innovation and performance are at the core of their company values, with sport science and technology-supported products helping them become a top-50 Interbrand global brand.
The paper "Adidas Company Innovation" is a perfect example of a business case study. This report is a critical evaluation of how entrepreneurial innovation serves as an organizational driving force and a sustainable competitive edge in the highly competitive and dynamic market.
Nike has gone 35% digital and is planning to reach 50% by 2025. It has shown immense growth and is expected to close year 2022 with over 50-billion-dollar revenue. Strategically Nike is also ...
LATTICE INNOVATION Digital Light Synthesis™ is a breakthrough additive manufacturing technology pioneered by Carbon that uses digital light projection, oxygen permeable optics, and Carbon's programmable liquid resins. ... CASE STUDY - adidas Enthused by our ability to 3D print innovative lattice structures, adidas partnered with Carbon to ...
By 2025, nine out of ten will be sustainable as the company expands and further innovates its 3-loop system: recycled loop (made from recycled materials), circular loop (made to be remade), or regenerative loop (made with natural and renewable materials). adidas has been researching fully recyclable or biodegradable materials for some time …
INNOVATION AND DIGITAL Two enablers will set us up for success. The first is applying a mindset of deep and broad innovation across all dimensions of our business. The second is using the speed and agility of Digital throughout our entire value chain.
Product innovation by Adidas Group through Sustainability Article Jan 2020 Sheryl George Crasto Daisy Mui Hung Kee Alyssia The Yi Huan Divya Pandey View J.B.D. García Virginia Blanco The field...
"The case shows how even leading companies such as adidas need to rethink their strategic priorities to future-proof themselves in a post-COVID-19 world," said Pisani. "The strategic choices that companies make now will be critical to remain competitive in the aftermath of the pandemic."
Sustainability is on all of us, that's why Run For The Oceans in 2017, 18, 19 and 21 rallied all our communities in our fight to end plastic waste. "adidas' commitment to sustainability started way before the topic gained public attention. For 20 years, we have been a change leader in our industry.
The paper "Organisation Innovation for Adidas Company" is a great example of a marketing case study. Adidas was established in 1924 and has continuously developed to introduced and improve customer products. The company brings together designers, innovators and managers in developing products and engaging the customers…
Corporate Strategy Before Restructure Adidas was founded by a German baker Adolph (Adi) Dassler in 1920, his focus was to make competitive footwear for athletes playing soccer, tennis, and track and field events.His brother Rudolph Dassler in 1924 joined the sole- proprietorship;the company was named Gebruder Dassler Schuhfabrik (Dassler Brothers …
Adidas Case Study | Handling Inventory Demands More Efficiently. June 9, 2021. With retailers demanding faster inventory replenishment turns, adidas set out to ensure that its 258-acre campus in Spartanburg, SC, could meet this demand. Honeywell Intelligrated designed and installed automated conveyor and sortation systems in the campus's two ...
It ended fiscal year 2019 stronger than ever and its chief executive officer (CEO), Kasper Rørsted, was very optimistic about what the future would hold. The outbreak of the COVID-19 pandemic at the beginning of 2020 radically changed the business landscape. adidas was severely hit by the lockdowns imposed by governments.
A case study on Adidas - A case study on Adidas Introduction Background of the company Supply chain - Studocu case study on adidas introduction background of the company supply chain management of adidas logistics reverse logistic and returns processing procurement Skip to document Ask an Expert Sign inRegister Sign inRegister Home Ask an ExpertNew
Adidas's case study helps to analyze several important factors related to business operation, marketing, and supply chain. It allows the students to understand the company's strengths, weaknesses, and opportunities and learn about the strategies used by the company to meet the demand at competitive costs.
Adidas Case Study; Adidas Case Study. Decent Essays. 1113 Words; 5 Pages; ... Under Armour Case Study Analysis MRKT 5000 Online Course Name Case Summary This case study is about Under Armour, a company that deals with the manufacture and sales of all forms of sportswear and accessories. The company has had great sales in most of its products ...