ADIDAS MAPS THREE-TIER APPAREL PLAN

Byline: Rosemary Feitelberg

NEW YORK — “Passion” is how Adidas now defines its vision for the brand’s global strategy.
During a two-hour presentation Wednesday at Manhattan’s Milk Studios, Adidas’s new senior management team repeatedly pledged their passionate commitment to the brand and sports.
Companies like Adidas, which have built billion-dollar businesses selling sneakers and T-shirts, now find themselves in the precarious position of trying to be fashionable without jeopardizing their athletic heritage. Coupled with that, they’re wrestling with competition from non-sports brands, price-conscious shoppers, private label overload and sameness at retail.
The Adidas game plan, as mapped out by Herbert Hainer, deputy chairman of the executive board and chief operating officer of Adidas-Salomon AG, involves streamlining the organization, improving global sourcing, upgrading its e-commerce site, sharpening product focus and investing in sales and marketing for its secondary brands Salomon, Taylor Made and Mavic.
The aim is to increase the company’s $4.6 billion sales by 3 to 5 percent in the next year, Hainer said. Despite his pledge to try to surpass Nike as the leading sports brand, Hainer did not put a time frame on that goal and noted that Nike is twice the size of Adidas.
Hainer, as well as Erich Stamminger, head of global marketing, and John “Ross” McMullin, the new chief executive officer of Adidas America, highlighted the brand’s need to get up-to-speed with fashion-conscious urban customers who tend to set trends. That might explain the shot of the young woman wearing an Adidas T-shirt and holding a nearly empty pint of beer that was mixed in with Olympic and pro athletes in a video presentation.
“We want to add coolness to the brand image and make it a status symbol,” Stamminger said.
To try to create a distinguished image, Adidas has set up three divisions that will each offer apparel and footwear: Forever Sport for athletes looking for stylish products, Original for consumers interested in athletic-inspired looks for leisure activities, and Equipment for cutting-edge multifunctional sports items.
Forever Sport, which will carry the Adidas performance logo, and Equipment, which will be imprinted with the original trefoil logo, will be shown to key retailers at the company’s corporate headquarters in Herzogenaurach, Germany, on Nov. 3, what would have been the 100th birthday of its founder, Adi Dassler.
Original, a unisex group, should compete with such “lifestyle” labels as Polo, Abercrombie & Fitch, Levi’s, Diesel and Replay, according to Stamminger. Adidas currently has about 1 percent of the estimated $20 billion athletic lifestyle market, said Patrik Nilsson, head of global heritage division, after the event.
Sales of Original merchandise are expected to account for 20 percent of the brand’s worldwide sales within the next three years, he said. The first women’s Original group will bow for fall 2002. Annual gains of more than 10 percent are expected, he said.
The three-tier strategy gives the brand access to a variety of retailers beyond sporting goods stores, but there will be some overlap. Original’s aim, for example, is to be placed in nontraditional accounts like Barneys New York, Colette in Paris and Levi’s Buttonheim store in Berlin, Nilsson said.
“We’re not in the right stores with the right products,” Nillson said. “We want to build slowly and get the right customer before we build demand.”
Imprinted with the brand’s original trefoil label, the 40-piece Original collection will be launched at about 90 “directional” retailers in fall 2001. More street-oriented and designed to play into the popularity of retro sports labels, the line offers updated versions of such old styles as zip-front polyester warmups, three-stripe T-shirts and leather baseball jackets. Knit caps, bowling bag handbags, nonathletic-looking footwear reminiscent of the currently trendy Hogan brand, and knit caps are some of the group’s finishing touches.
Equipment, which will carry a new Equipment logo, will be launched at retail for fall 2002. Peter Moore, who teamed up with the late Rob Strasser to bring back the brand in the U.S., is overseeing the Equipment division.
The brand remains committed to elite athletes as proven by its plans to be the official sponsor, licensee and supplier of the FIFA men’s World Cup in 2002 and 2006, as well as the FIFA women’s World Cup in 2003. In the next two to three years, Adidas plans to reallocate more than 10 percent of its sports marketing budget to reinvest in media and other brand campaigns.
To try to relay a more cohesive brand image, Adidas, which won a CLIO advertising award last year, now has all advertising, marketing and public relations reporting to Stamminger instead of being set up in separate business units.
Asked after the presentation how the new American team will approach the women’s market differently compared to previous ones, Moore said, “They’re much more aware of the value of the female market and that their needs are just as great.”
He expects the trefoil group to appeal to women as it already does to high school girls who favor the brand’s shell-toe shoes and three-stripe jackets. Moore also said Adidas won’t cater to women as “some sort of uniquely different consumer type, which to a certain degree will make communication a bigger challenge.”
Rejuvenating the U.S. business is a priority to Adidas. In recent months, senior executives have devoted 50 percent of their time and energy to the American market, which tends to be the most influential, Hainer said.
After one week on the job, McMillan hit the road to visit key retailers like The Finish Line, Venator and Footaction. Retailers are looking for partners that are willing to help them react to market needs and be more responsive to trends. Given that, Adidas is setting up teams of designers, merchandisers, product developers, and sales and marketing executives to work with key accounts to make products that will sell in their stores.
“That doesn’t mean we will do everything retailers want and demand,” McMillan said. “They often do not know where trends are moving.”
To get a better handle on what consumers are looking for, Adidas will use street teams, focus groups and the Internet to get consumer feedback, McMullin said afterwards.
“Going forward, we’re going to be looking at local consumer trends and needs in this market,” he said. “That’s one thing that hasn’t been done before.”
Adidas America has also scaled back its senior management from 12 to five and is now trying to “tighten” up its shipping process, McMullin said. As for how the company will approach the women’s business differently than previous leaders, McMullin said, “I don’t have an answer for that today.”
Reached at his office at First Security Van Kasper, John Shanley, senior vice president said, “The new U.S. head has its work cut out for him but there has been significant improvement in the line’s styling and content.”
Having recently spent the better part of a day with Hainer, Shanley described him as “very impressive and very smart with a good game plan.”
Retailers want Adidas to succeed, they’re “comfortable” with the brand and would welcome a challenge for Nike, Shanley said.
“A strong Adidas keeps Nike in check,” he added.

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