Adidas redefines itself

Is the sports apparel manufacturer on a way to become a professional retailer?

“Adidas will no longer be only the sports apparel manufacturer you already know. With an aggressive expansion into retail we will come out as one of the leading fashion and sports retailers in the world.”

This significant change of mind was announced by Glenn Bennett, executive board member of the adidas Group, two weeks ago in Germany.

But, where is Adidas really heading for? Flagship stores, as we have seen them in the “mi adidas” case, are already in existence? So, what are the reasons for pushing into retailing that hard?

22, Avenue de Champs- Elysées, Paris, France- this is the euphonious address of the Adidas performance store in the French capital. Opened in October 2006, the 18,800 square foot location at Europe’s most expensive shopping boulevard represents Adidas new way of thinking[1]: On two floors, the whole brand does not only represent itself and create an even better brand image and recognition. Making it the most profitable of all Adidas stores in the world, this location really sells Adidas products. From customized high-end sport shoes to standard soccer jerseys of Beckham, Ballack & Co. The store reflects Adidas' full retailing capability.

But… that’s not all. Different to other brands, Adidas makes money in Paris. A lot of money. It is their most profitable store in the world!

Adidas seems to fear to leave money on the table if they do not enter the retailing sector. By defining itself more and more as a premium sports brand, margins increase consecutively. And if margins increase, nobody is willing to leave them to the WalMarts and Sportcheks.

Additionally, in a wholesale retail store environment Adidas would never manage to focus on their products. Limited space available and a presentation besides Nike, Puma and other brands is not any more what Adidas wants to be faced with. A presentation which carries the image, brand values and especially emotions is a “must have” under the new strategy.

Another reason for the interest in retailing is given by the emerging use of technology in their products, for example jogging shoes[2]. Those require increasingly knowledge in the selling process which might (only) be provided by their own sales representatives.

If we then add the firm’s perfect branding in Asia to the discussion, it is easy to see a strategy behind it: The company sets up a worldwide distribution and supply chain in order to sell the products they have manufactured. Fashion stores in Paris, megastores in Hong Kong and Shanghai. In 2008, adidas India opened 160 all-new retail stores[3]. That’s an average of one new store almost every second day. Get that!

Not yet convinced? Well, take another look to India. Nothing but silent, Adidas opened the “adidas Retail University” in order to educate (and recruit) highly-talented retail managers for their global expansion plans[4]. If this is not a serious indicator of a long-lasting approach to retailing, I don’t know whatelse. I just know that not only the ‘four letter sports brand’ (Glenn Bennett) should take it serious...

Sources:
[1] http://hugin.info/136610/R/1083206/188076.pdf
[2] http://www.btexpedite.com/files/2982007152030Adidas_Case_Study.pdf

[3] http://retailnu.wordpress.com/2008/06/09/adidas-on-expansion-spree-to-add-160-new-stores-in-2008/

[4] http://www.indianrealtynews.com/retail-market/adidas-with-its-new-retail-endeavor-in-india.html