The FINANCIAL — At an investor event today in Herzogenaurach, the adidas Group shared details on its strategic aspirations for the three adidas categories Football, Running and Originals.
All three categories are key components of the Group’s 2020 strategic business plan, which was introduced earlier this year. By ‘creating the new’, the Group aims at further accelerating growth over the next five years by significantly increasing brand desirability. Within this framework, each of the categories has been assigned a clear role and specific goals in order to achieve the significant improvement targeted in the Group’s top and bottom line. While adidas Football and adidas Originals aim to lead in every market by 2020, adidas Running is targeting significant market share gains in the coming year, according to the adidas Group.
Between 2015 and 2020, adidas intends to expand its football business at a mid-single-digit rate on average per year on a currency-neutral basis, outgrowing the market and further strengthening its position as the number one football brand in the world. In order to drive brand loyalty among football consumers, the focus will be on bolstering the footwear part of the business. This will be supported by a completely new product line-up as reflected in the recently introduced key footwear franchises ‘X’ and ‘ACE’. In order to connect with both registered and unregistered players, adidas will create football destinations in key cities with premium presentation at the point of sale. Furthermore, engagement will be driven by setting up permanent, seasonal or event-driven grassroots programmes. The establishment of an influencer network will allow closer interaction with the consumer, who will be an integral part of the product and content creation going forward.
“Since the beginning of this year, we have reinvented our football business by discontinuing our former football boot silos, and brought two completely new footwear models to market to better serve the needs of today’s players: X and ACE. We are convinced that this new approach will strengthen our position in football footwear.” Markus Baumann, General Manager adidas Football.
adidas Running expects currency-neutral sales to double by 2020 in strengthening it’s positioning in the area of ‘energy running’. adidas Running will significantly increase its presence in global key cities with the objective to bring ‘energy’ to consumers in a holistic approach from the product range to runners forming part of their local running communities and activations. A particular focus will be put on the North American market where adidas targets significant market share gains over the next five years. A major driver fuelling this growth will be the establishment of two creation hubs for the category in the market. In addition to Boston, runbases will be established in both Los Angeles and New York City for runners and their communities to experience the best adidas Running has to offer. Crafted and designed for the needs of the local urban runners, the runbase inhabits the space where running and culture connect. With runbases at the heart of each key city, runners will have easy access to the best products and services to elevate their running experience.
“We will focus our activities on key running cities representing the largest running communities globally. We will also continue to open source our running business with partners such as BASF, key athletes and running communities around the globe to ensure we continue to create consumer-focused product. Additionally, we have an exciting consumer proposition in the pipeline looking into speeding up and redefining the manufacturing of footwear.” Adrian Leek, General Manager adidas Running.
For adidas Originals currency-neutral sales are expected to increase by 50% by 2020. adidas Originals aims to be the most influential and connected sportswear brand in street culture in every market by 2020. The sub-brand will drive its business by focusing on a thorough lifecycle management of a limited number of global footwear franchises including the Stan Smith, Superstar, ZX FLUX and Tubular. By 2018, the major product families are expected to generate the majority of the overall adidas Originals footwear revenues, allowing adidas to be more impactful and efficient at the same time. In addition, adidas Originals will significantly expand its business with key sneaker accounts as well as its own Direct-To-Consumer channel. The opening of new flagship stores in more than 30 cities around the globe aims at strengthening adidas Originals’ bond with its target consumers. By focusing on these key influential cities, presenting the best of the best of Originals products – including exciting collaborations and limited editions – as well as engaging with the consumer in the store with new tools, the company expects those new flagship stores to create halo effects and elevate the adidas Originals business globally. Going forward, increased speed to market will allow in-season creation and fast replenishment of strong-selling items and, as a result, enable adidas Originals to capture current market trends even better.
“We are more than excited about the strong momentum of adidas Originals. The hype we have recently created around our iconic Stan Smith and Superstar silhouettes is just the beginning. With our well-filled product pipeline as well as some of the world’s most influential artists such as Kanye West, Pharrell Williams and Rita Ora collaborating with us, telling our stories and promoting our products, we will be closer to our sports lifestyle consumers than ever before and set for strong growth in the years to come.” Arthur Hoeld, General Manager adidas Originals.
The adidas Group expects to spur top- and bottom-line growth over the next five years, with revenues projected to increase at a high-single-digit rate on average per year on a currency-neutral basis until 2020 compared to the expected 2015 results. The Group’s net income is expected to grow at a considerably higher rate than the top line and is projected to expand by around 15% on average in each of the next five years.