Last week’s profit warning of sporting giant Adidas sent shockwaves through the apparel and active industries. As a result, adidas share value tumbled 20%. A few factors are being earmarked for the blame.
Firstly, the trouble in the Ukraine is being pinpointed as hugely problematic for the retailer, who count Russia as a key market, having over 1000 stores there. Dwindling participation in golf too has affected the brand’s golf line and Taylor Made subsidiary – some 400,000 Americans left the sport in 2013. And lastly, Adidas’s sponsoring of the World Cup – initially touted as a great coup – appears to have backfired, with a possible overspend on marketing not being met with sales to match.
While global affairs will always have an unavoidable and unplanned impact on the economy, there are fundamentals that Adidas can address to shore up in uncertain times.
In order to sail through these turbulent waters, Adidas must ensure they have the right products, at the right prices. We’ve dug into commercial data to highlight weaknesses in Adidas’s product offering, which includes under-stocking of some popular colorways and price disparity between the brand’s own price points at adidas.com, and the pricing at global retailers of the brand.
1. Are Adidas missing some key retailers?
Yes, mainly in the US. But let’s start from the beginning. Undoubtedly, European Adidas’s biggest rival is the US-based Nike. The geographical positioning of Nike has a great effect on who their biggest stockists are, and for Adidas, this could mean they’re missing out on some key accounts. Zalando, also hailing from Germany, are the brand’s largest online stockist, with only one US retailer sneaking into the top five: Kohl’s. Rivals Nike understandably dominate the US market, with Kohl’s their largest stockist and Macy’s in their top five.
Kohl’s stock over 2.5 times more Nike products than Adidas products, and Macy’s, who do carry Adidas, stock 3 times as many Nike products. Also in the US, Nordstrom carry more than twice as many Nike products – these are all key accounts for positioning to the active and affluent market which Adidas are missing out on. Most notably however is the brands’ offerings with ASOS. The fellow Europeans only stock 9 Adidas products, to 529 Nike products.
2. Color data ignored
Adidas have an incredibly broad offering, which covers men’s, women’s and childrenswear and a multitude of sporting activities across their many diffusion lines. They also have fashion-forward collaborations; with Stella McCartney, with the eccentric Jeremy Scott, and recently with Topshop. Their womenswear goes head to head not only with Nike, but with fashionable brands like Luluelemon and Lorna Jane.
To compete with this busy segment, Adidas need to pay closer attention to their color data: we’ve analyzed each and every product currently online at adidas.com and compared it with the colors of garments which have had full price sell outs on the retailer’s site. It appears the retailer is trying too hard to compete with the ult-feminine offerings of the hip yoga market, with the high levels of pink and lavender currently in stock. However, EDITED data shows that blues sell better, as do the robust reds and hotter pinks. Adidas are understocked on blues currently, as well as very understocked on the fluro yellow that sells very well in their womenswear: neons may no longer be a hot trend, but joggers still need to wear this hi-vis shade! Adidas, trust the data and your customer.
3. Pricing woes
Nike have a 14.5% replenishment rate on their current stock, compared to just 10.7% at adidas.com, and a fractionally lower discounting rate – 20.7% of Nike’s offering is discounted by more than 20%, compared to 21.5% of Adidas’s offering on their own site. Nike also have a higher price point: their average price is $62.33, with the core of their offering sitting between $28 and $84.34. Adidas have an average price of $56.60, with the core of their offering sitting between $28 and $70. Looking at full-priced sell outs (which could be deemed as ‘successful’ products) it’s possible Adidas could afford to raise their price point, if they avoid some poorly selected stock: the average price of full-priced sell outs is $60.14.
More insightful still is analysis of the way Adidas stock their own offering, compared to the way global retailers stock the Adidas brand. We’ve analyzed options counts to reveal the price points with the highest number of products, both at adidas.com and at 60 of their global stockists.
Either Adidas are under-valuing their offering, dramatically in some places, or their control on stockists’ pricing means it does not reflect their own positioning. Across the four key categories (tops, footwear, bottoms and outerwear) in women’s, men’s and childrenswear, nearly every category sees a lower mean representation at adidas.com than it does at global retailers. Take the women’s footwear category, where $70-80 is the most-stocked price point at adidas.com. For the brand’s stockists that price point is $100-110. This needs addressing before it skews the Adidas messaging worldwide. Last week Adidas announced their objective is to strengthen the brand: this could be a good place to start.
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Katie Smith
