Can Adidas win Back North America?

Adidas knows that digital is where it needs to be, despite making a physical good.

I think it can. Even for a company that predominantly creates apparel, “digital is its ‘most relevant channel.'”

Adidas compares TV to the fax machine, claiming digital is its ‘most relevant channel’

Adidas is a brand that has taken the time to understand its consumer and has built deep rooted, authentic trust with him/her. In the long run, this value creation will lead to a loyal following that rewards innovation. Adidas can now take a riskier stance on innovative products, and not have to continue to pump out only what is currently mainstream. They have earned that trust with the consumer, and I have the feeling some competitors are trying to shortcut that process. It is a bit like someone trying a bit too hard to be cool – before they’ve shown their colleagues who they really are.

In the apparel space you clearly must have a product people love, but also need the marketing dollars to tell people about it. Of course the more marketing dollars you have, the better, but I’d argue that Adidas has done an amazing job recently with how they’ve spent their marketing dollars. Other brands go after traditional sponsors such as Tom Brady and Steph Curry, and while Adidas has some high-end entertainers (Kanye and Pharrell), let’s examine the basketball sponsors they have recently attracted. James Harden, Derek Rose, Joel Embiid, Damian Lillard, John Wall, Andrew Wiggins, and Jalen Brown. I would classify these athletes as independent, unique, fashionable, hard working, and under spoken. This is putting marketing dollars to work wisely. Of course, Kanye’s shoes (Yeezys) retail for thousands of dollars and are certainly large money makers in their own right.

Smaller, up and coming, brands that are off the beaten path – such as Zanerobe – often feature models wearing Adidas sneakers. FfGAL6e_LC4WDona2FfMsI9A-AW9a4sa24aAllX8P8HAQ

This is a great example of an extremely large, mainstream company that is operating at huge scale, reaching the non-mainstream crowd with ease. One article quotes Adidas as speaking about their newest sneaker release as: “Driven by a desire to experience. Inspired by the past but always looking to the future.” It is in this way that Adidas has created value for the consumer, and can continue to do so.

The value capture remains the same for Adidas despite the further emphasis on the digital channel: Price > Cost. However, the Company has figured out another interesting means of value capture. Sneaker resales have become a huge market, with entire businesses profiting by purchasing limited release shoes and reselling them. Adidas has supplied the market with these limited release shoes and charged up for them.

Q4’16 results were extremely positive for Adidas – and I believe this is only the beginning of a great run for a brand that saw the shift to digital, despite making a physical product, early on. Perhaps they must start shifting their focus even further down the line to IOT.

 

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1 thought on “Can Adidas win Back North America?

  1. I agree that Adidas marketing has been on point lately. It almost feels like they’ve decided to abandon Nike’s marketing approach of getting superstar athletes and instead focus on superstar entertainers and influencers. In a world where social media is so important, it wouldn’t surprise me if a Kardashian would add more marketing value for them than a top tier athlete – despite them being a big shoe company! Kanye is a perfect case of an entertainer and social influencer being the perfect marketing tool. Kanye got to design his shoes and Adidas got lots of earned media along with it – the deal seems win-win. Do you think Adidas should still compete head on with Nike or go further down this fashion driven approach they seem to be following?

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