Adidas has come out of a sales-strong 2016 ready and rearing to take a real stab at competitor Nike. CEO Kasper Rorsted has announced the companies intent to quadruple online sales by 2020. In 2017 we will see a reinvented Adidas, with Instagram followers proving more valuable than gold medals.
“2016 was an exceptional year for adidas. We have improved the desirability of our brands and products around the globe. As a consequence, we were able to increase revenues strongly and achieve a record net income of more than € 1 billion (1.39 billion AUD) for the first time in the history of our company.” Kasper Rorsted, CEO
And I’ve gotta admit they do have some pre impressive 2016 financial year stats:
• Sales reach 26.9 billion AUD, up 18% on a currency-neutral basis
• Operating margin improves 1.3pp to 7.7%
• Net income from continuing operations climbs 41% to 1.4 billion AUD
• Management to propose a dividend of $2.80 per share
Success Starts From the Feet Up
The secret is all in the shoes. Adidas reported a 54% increase in their shoe sales in the past year. Looking at stats North American Adidas President, Mark King observed that the brand was outperforming Nike and Under Armour in sales of running shoes, mostly due to the success of the Ultra Boost and Kanye West’s collaboration sneakers.
Sports fashion is less about performance and practicability now, it’s about style. Like competitors Nike and Puma, Adidas has realised the revenue potential for gear that was designed not entirely for sport, but for fashion.
In an attempt to quadruple their sales in the next three years the brand has announced its plan to focus on on-trend ‘fast-fashion’ apparel and sacrifice its non-essential sports categories such as golf and hockey.
Influencers over Athletes
In the past, Adidas has used world-ranking sports stars such as olympian Tom Daley and players from the Hawthorn Football Club to endorse their brand. But after observing the success of their Kanye West Collab, and competitor Puma’s use of Rhianna and Kylie Jenner as brand influencers, they have shifted focus.
MORE FOLLOWERS > SPORTS ABILITY
Part of their strategy will include a partnership with 25 female social influencers who may not have any gold medals, but they have tonnes of followers and that’s what counts in the fast-fashion game.
[Tweet “92% of consumers trust an influencer more than an advertisement or traditional celebrity endorsement.”]
For a long time Adidas has focussed on the exposure they get from televised sports games and athlete interviews, expect to see their focus switch to social media this year. You can expect to see a less sporty and more sports luxe Adidas in coming years. Oh and don’t worry you haven’t seen the last of Kanye West X Adidas yet!