adidas strategic business plan

Three Stripes Business Model of Adidas

One brand that dominates the mindshare while consumers think of Hip Hop and sporty brands is Adidas. So much so that Adidas is now one of the most desirable sportswear brands. Adidas produces various sports equipment across different types of sports. But then the question is what is the business model of Adidas that is helping the brand rule the sportswear industry across all the sports (obviously next to Nike).

As of 2020, Adidas had a turnover of  €19.844 billion  and has approximately  62,285 employees  worldwide. From establishing itself as one of the best sportswear, it has also been working towards establishing itself as one of the best CSR companies globally (as of 2020).

How it all Began?

The foundation for Adidas was laid in  1920 by Adolf Adi Dassler , a 20-year old German who was an extremely passionate athlete. He started producing shoes outside his mother’s laundry room using limited materials available post WW1. Initially, he did not intend to sell sneakers and had completed his apprenticeship in a bakery before he started selling his sneakers to produce the best shoes for passionate athletes.

He understood the need for high-quality sports equipment and regularly visited the athletes to seek feedback on what these athletes truly desired. Such observations and a genuine desire to help athletes further encouraged Adolf to develop products that would better the consumers’ lives.

Currently, Adidas has products in the  following category  

• Accessories and Gear

In July 1924, the business was established as “Dassler Brothers Shoe Factory” (Gebrüder Dassler Schuhfabrik), which was later joined by his elder brother. It was only in 1936 that the brand found true success when Adi gifted shoes to the gold medallist Jesse Owen an American track-and-field star, who also made a world record in the 1936 Berlin Olympics. The business became quite successful and was selling 200,000 shoes each year until WWII hit.

After WWII in 1947, the brothers had a clash and they split. Rudolf formed another shoe company known as Puma, which is now considered one of the strongest rivals of Adidas.

Fun Fact: The complete form of Adidas is  ‘All Day I Dream About Sports.’ Initially, in 1949  the logo was a spiked shoe hanging in between the letter ‘d’

Adidas logo developed its famous three strips from the original founder Karhu Sports, who was short on capital post-WWII. The owners decided to sell the trademark of their logo for €1,600 and two bottles of whiskey. As per Economic Times , The three-stripes of the Adidas logo represent a mountain, pointing out challenges and goals people need to overcome.

It was only in 1971  that the brand unveiled the three-stripe Adidas logo in the form of a leaf called the “trefoil.” This version was later replaced in 1990 by the current logo, shaped like a triangle for the Equipment Line but later became the corporate logo, though the trefoil logo can still be found on some Adidas original products.

Adidas Business Model is based on integrating hip hop culture and sports

In 1970  the brand delivered its football for the 1970 World Fifa Cup and designed the ball in such a way that it would increase the visibility on the black and white screen, and this soon led to one of the most successful and famous partnerships of Adidas providing footballs to Fifa World Cup after that.

In 1986, the brand expanded and entered the hip-hop culture and soon became a household name and a lifestyle. Unknown to Adidas, the hip hop group Run DMC wrote a song about their shoes, “My Adidas,” and held up the 3-Stripes shoes during the concert in front of 40,000 fans – amongst which was an Adidas employee, and it led to an unexpected partnership.

It was the first time that sport and art were merging, which led to the brand’s growth over a much larger audience and customer base. This led Adidas to develop new ways of marketing, which was considered as of the critical areas of the company, which led to its success and allowed it to achieve a competitive advantage.

Adidas Marketing Strategy

One of the most famous taglines of Adidas is ‘ Impossible is Nothing,’  which focuses on the importance of fitness and the importance of striving for something that a person truly desires and is also one of the primary marketing strategies for the company.

Furthermore, it has also sponsored many world sports events such as FIFA, UEFA, NBA, Cricket & Olympics. At the same time, it is also known to provide the best products which are comfortable, long-lasting, and beyond the ordinary.

Moreover, it also takes advantage of 6 major cities, which helps shape the trend and the buying decisions of the targeted customers.  These cities are Los Angeles, London, Shanghai, New York, Tokyo, and Paris. In the UK, it primarily focuses on selling soccer products, whereas it focuses on basketball and baseball in the US. Adidas ensures that the marketing strategy meets the needs of consumers globally.

The collaboration of Adidas with various athletes and significant-tech companies has allowed it to enhance innovation with branding and marketing. This has led to the development of a more vital relationship with the customers ensuring customer loyalty. It also collaborates with celebrities which includes music and fashion icons. Thus, the strategy is to build must-have designs that reach out to more than just sports fanatics.

This can be seen when Adidas created Yeezy with Kanya West. It turned out to be one of the fastest-growing footwear lines and, in 2021, was valued between $3.2-$4.7 bn. This has allowed it to expand the customer base and reach out to those customers who are not sports fans.

Yeezy is worth as much as $3 billion, according to a Bank of America valuation. Kanye West made about $147 million from Yeezy shoe royalties last year. That's more than his entire music catalog is worth – valued at $110.5 million by the Valentiam Group. https://t.co/YJ90ZOvIbA — Kim Bhasin (@KimBhasin) April 27, 2020

Nike also has a powerful marketing strategy. Do check out!

Adidas’ powerful distribution network

Another competitive advantage that Adidas has is its distribution channel. Globally it has around 2500 stores. The global supply chain of Adidas extends to various tiers from manufacturing partners to raw materials such as cotton, leather, and natural rubber and the use of technology.

The majority of the products are produced by 132 manufacturing partners worldwide. At the end of 2020, 61% of the strategic suppliers had worked for more than ten years, and 30% worked for more than 20 years.

As of 2020, it outsources most production and has 500 independent factories globally that manufacture products in more than 49 countries. Its supply chain has different types of business partners and also has multiple layers. As of 2020, the top 4 countries in terms of sourcing volumes were:

How Adidas is adding sustainability to its business model

Back in 2015, Adidas collaborated with Parley for the Oceans, an environmental organization. One of the primary goals of Adidas is to double the number of recycled sneakers. In 2021, Adidas aims to produce 17 million pairs of shoes with recycled plastic waste collected from beaches and coastal regions, after more than 15 million in 2020.

Sustainability is an integral part of the Adidas business philosophy. We have continued to invest in sustainability initiatives during the coronavirus pandemic, and we will significantly expand our range of sustainable products in 2021. Adidas chief executive officer Kasper Rorsted in a press release.

Furthermore, it is also currently focusing on eliminating the use of fur and focusing more on using plant-based leather, recycled cotton, and eco-friendly shoes to achieve by 2050 complete global neutrality.

As per the company’s press release , six out of ten Adidas articles are made from sustainable materials. By 2025, nine out of ten will be sustainable as the company expands and further innovates its 3-loop system: recycled loop (made from recycled materials), circular loop (made to be remade), or regenerative loop (made with natural and renewable materials). adidas has been researching fully recyclable or biodegradable materials for some time already and aims to only use recycled polyester in every product from 2024 onward.

Moreover, the sustainability bond amounting to €500 million was issued in September 2020, which was five times oversubscribed. The proceeds from the offering are planned to be used in targets like achieving recycled materials, investing in renewable energy production, and supporting underrepresented communities.

Adidas 2021 Business Strategy- Own The Game

In 2021 Adidas released its next five-year strategic cycle where ‘ Own the Game ‘ puts higher preferences to the consumer than everything else by acknowledging the role they have in shaping the trends in the industry. The “Own The Game” strategy of Adidas centers around a shift towards a DTC-led business model.

As part of the new strategy, Adidas aims for its direct-to-consumer business to account for half of its total sales by 2025 and contribute more than 80 percent to the company’s targeted revenue growth until then. By 2025, Adidas aims to triple its members to around 500 million, all while doubling its e-commerce sales to around $10 billion. In addition, Adidas’ own retail stores will be digitized with fully-fledged omnichannel capabilities.

Furthermore, the successful delivery will also ensure brand credibility, improve the consumers’ experiences, and push the boundaries of sustainability. Another aim of this strategy was to begin the formal process of divesting Reebok, which was needed to ensure the independent growth of each other and exploit its capabilities.

In conclusion, Adidas surely has blended the culture of hip-hop and sports and has successfully captured the interests of the consumers, giving comfort its highest priority. Adidas has built a business model that observes consumer trends and maintains high-quality manufacturing and innovative materials. Adidas has already pledged to strengthen its innovation mindset across all areas of the company over the coming years in order to continue to enable ground-breaking innovations.

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Kashish M is an Undergraduate student from the Middle East. Apart from listening songs and learning new languages and exploring different culture over time she developed interests in writing and gained interest in exploring different parts of the accounting/finance world.

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Unlocking Opportunities, Enhancing Business Potential

Unlocking Success: The Adidas Business Strategy

• Business strategy

• 1.1 A Winning Mindset: Adidas’ Focus on Innovation
• 1.2 Building Strong Partnerships: Collaborations that Drive Success
• 1.3 Connecting with Consumers: The Power of Branding
• 1.4 Going Beyond the Game: Adidas’ Diversification Strategy
• 1.5 Embracing Sustainability: Adidas’ Commitment to the Planet
• 1.6 Seizing Digital Opportunities: Adidas’ Digital Transformation
• 1.7 Staying Ahead of the Competition: Adidas’ Competitive Advantage
• 1.8 Looking Ahead: Adidas’ Future Growth Opportunities
• 1.9 In Conclusion

Revolutionizing the Game: Adidas and Its Strategic Approach

Adidas, the iconic sportswear brand, has been dominating the market with its innovative products and strategic business approach. With a clear vision and a relentless pursuit of excellence, Adidas has managed to stay ahead of its competitors and maintain its position as one of the leading brands in the industry.

A Winning Mindset: Adidas’ Focus on Innovation

At the core of Adidas’ business strategy is a strong focus on innovation. The company constantly pushes the boundaries of technology and design to create products that not only meet the needs of athletes but also exceed their expectations. By investing heavily in research and development, Adidas ensures that it stays at the forefront of the industry, offering customers cutting-edge products that enhance performance and comfort.

Building Strong Partnerships: Collaborations that Drive Success

Another key element of Adidas’ business strategy is its ability to form strategic partnerships with influential figures and organizations. By collaborating with top athletes, celebrities, and fashion designers, Adidas not only gains exposure but also taps into new markets and expands its customer base. These partnerships bring a fresh perspective and unique insights, helping Adidas stay relevant and appealing to its target audience.

Connecting with Consumers: The Power of Branding

Adidas understands the importance of building a strong brand identity and connecting with its consumers on a deeper level. The company leverages storytelling and emotional branding to create a sense of loyalty and establish a lasting relationship with its customers. By aligning its brand values with those of its target audience, Adidas creates a sense of authenticity and trust, making consumers more likely to choose Adidas over its competitors.

Going Beyond the Game: Adidas’ Diversification Strategy

While Adidas is primarily known for its sportswear, the company has successfully diversified its product range to cater to a wider audience. From lifestyle sneakers to high-performance apparel, Adidas offers something for everyone. This diversification strategy not only helps Adidas mitigate risks but also allows the brand to tap into new markets and capture new customer segments.

Embracing Sustainability: Adidas’ Commitment to the Planet

Adidas recognizes the importance of sustainability and has made it an integral part of its business strategy. The company is committed to reducing its environmental impact by using recycled materials, minimizing waste, and investing in renewable energy sources. By taking a proactive stance on sustainability, Adidas not only contributes to a greener future but also appeals to environmentally conscious consumers.

Seizing Digital Opportunities: Adidas’ Digital Transformation

In today’s digital age, Adidas understands the significance of embracing technology and leveraging digital platforms to reach its target audience. The company invests in e-commerce, social media marketing, and data analytics to gain valuable insights, engage with consumers, and deliver personalized experiences. This digital transformation has helped Adidas stay relevant in a rapidly evolving market and connect with tech-savvy consumers.

Staying Ahead of the Competition: Adidas’ Competitive Advantage

With its relentless pursuit of innovation, strong brand identity, strategic partnerships, and commitment to sustainability, Adidas has built a formidable competitive advantage. The company’s ability to stay ahead of the competition and adapt to changing market trends has allowed it to maintain its market leadership and continue to grow its global presence.

Looking Ahead: Adidas’ Future Growth Opportunities

As Adidas continues to evolve and adapt to the ever-changing business landscape, the future looks promising. The company is well-positioned to capitalize on emerging trends such as athleisure, customization, and the growing demand for sustainable products. By staying true to its core values and embracing new opportunities, Adidas is set to achieve even greater success in the years to come.

In Conclusion

Adidas’ business strategy is a testament to its commitment to excellence, innovation, and sustainability. Through a combination of strategic partnerships, brand building, diversification, and digital transformation, Adidas has managed to stay ahead of the competition and maintain its position as a global leader in the sportswear industry. With a clear vision and a relentless pursuit of success, Adidas is poised to continue its growth and shape the future of the industry.

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adidas Group provides further details on its three strategic choices ‘Speed, Key Cities and Open Source’

At an investor event today in Herzogenaurach, the adidas Group provided a status update and detailed its ambitions for its three strategic choices Speed, Key Cities and Open Source. The choices build the foundation of the Group’s 2020 strategic business plan, which was introduced in March 2015.  By ‘Creating the New’, the Group aims to achieve sustainable and profitable growth over the next five years by significantly increasing brand desirability. 

Serving the consumer in the best way possible is a key driver of increasing brand desirability. As a result, the adidas Group will ensure that consumers always find fresh and desirable products at any given place and point in time. By re-shaping its entire business model end-to-end, from range planning to product creation, sourcing, supply chain, go-to-market and sales, the adidas Group expects to significantly improve its speed-to-market. As part of these efforts, the adidas Group will significantly enhance its capabilities to reproduce seasonal best-sellers to fulfil higher consumer demand (Planned Responsiveness) and improve its ability to create or capture the latest industry trends (In-Season Creation). In addition, the company will expand its programmes for products that are replenished on a constant basis to ensure the most iconic and desired products are permanently available (Never Out Of Stock). Driven by these ‘Speed’ initiatives the Group expects to significantly reduce the risk of overbuying stock, capture additional revenues and notably increase margins: By 2020, the company forecasts to generate 50% of its net sales with speed-enabled products. In addition, the Group’s share of full-price sales across all speed ranges is forecasted to improve by 20% over the next five years. 

" OUR GOAL IS TO GIVE CONSUMERS WHAT THEY WANT WHEN THEY WANT IT. SPEED IS ONE OF THE MOST POWERFUL LEVERS FOR OUR GROUP TO DO SO. IT WILL CHANGE THE WAY WE CREATE, MANUFACTURE AND DISTRIBUTE OUR PRODUCTS. IT WILL REVOLUTIONISE OUR CURRENT BUSINESS MODEL. SPEED WILL BE A KEY COMPETITIVE ADVANTAGE FOR US AS WE TRANSFORM THE ADIDAS GROUP INTO THE FIRST TRUE FAST SPORTS COMPANY. "

With 50% of the global population living in cities and 80% of global GDP generated in metropolitan areas, these urban centres play a key role in creating trends, shaping global brands and building brand desirability. As a result, based on their global influence, their commercial relevance and their relevance for sports and street culture, the adidas Group defined six global key cities that it will focus its efforts on and that will serve as role models for the rest of the world: Los Angeles, New York, London, Paris, Shanghai and Tokyo. Across these cities, the adidas Group will disproportionately invest in marketing and retail experiences with the goal of maximising brand experiences. By creating an integrated brand and business ecosystem designed to elevate the brand presence across all relevant consumer touch points, the adidas Group aims to outperform its major competitors in these cities both in terms of market share development and brand advocacy. In addition, driven by a strong focus on key categories,  the company expects to double its business in each of these urban centres over the next five years . 

" THE INFLUENCE OF GLOBAL METROPOLITAN AREAS ON TRENDS AND BRANDS CANNOT BE OVERSTATED. THE FATE OF GLOBAL BRANDS IS DECIDED IN GLOBAL CITIES. IF WE WANT TO BE SUCCESSFUL IN THE FUTURE, WE NEED TO WIN IN KEY CITIES. OUR FOCUS ON KEY CITIES ENABLES US TO ACTIVATE OUR CATEGORIES IN THE RIGHT AREAS AND ENGAGE WITH COMMUNITIES IN THE MOST RELEVANT NEIGHBOURHOODS. ALL OF THIS ENSURES THAT OUR BRANDS SHINE WHERE THEY HAVE THE BIGGEST IMPACT TO DRIVE BRAND HEAT. THAT IS BOTH WITHIN AND – THROUGH THE HALO EFFECTS CREATED – ALSO BEYOND CITY BORDERS. "

OPEN SOURCE 

In order to leverage the full potential of its brands and their DNA, the adidas Group aims to build a unique collaborative network and invites athletes, creatives, consumers and other partners to help shape the future of sport and sports culture. To increase its own creative capital and gain new perspectives, the adidas Group is providing these externals with access to internal tools, including the archive, materials, factories and data. The collaboration with Kanye West, which, in 2015, translated into unrivalled reach of the Yeezy Season 1 fashion show and an unprecedented global sell-through rate of all Yeezy Boost sneakers since then, is a prime example of how the Group started to bring this aspect to life. The collaboration was just recently brought to the next level, making it the most significant partnership ever created between an athletic brand and a non-athlete. Another example of a game-changing Open Source initiative will be the opening of the first ‘Creator Farm’ in New York City in the fall of 2016. The design studio and creation centre will invite urban creative talent to fuel creativity and innovation in sports, outside the regular seasonal product creation calendars. In addition, as part of its Open Source efforts, the adidas Group will be collaborating with the best partners in other fields and will exchange core competencies to create unique brand value. The touchpoints reach from the core field of sport, sports health and monitoring to entertainment experience, manufacturing and sustainability. The award-winning partnership with Parley for the Oceans is as a very positive proof point for the early success of these initiatives.

" WE ARE THE FIRST SPORTS COMPANY THAT INVITES ATHLETES, CONSUMERS AND PARTNERS TO BE PART OF OUR BRAND. OUR PORTFOLIO OF CREATIVE INFLUENCERS AND INNOVATIVE PARTNERS SUCH AS KANYE WEST, STELLA MCCARTNEY, DISNEY, PARLEY FOR THE OCEANS, RED BULL MEDIA HOUSE, BASF AND GOOGLE OFFERS INCREDIBLE OPPORTUNITIES FOR US TO LEVERAGE OUR BRANDS, SHOWCASE OUR CREATIVE POTENTIAL AND INSPIRE CONSUMERS MORE THAN ANY OTHER SPORTS COMPANY. TOGETHER, WE WILL CO-CREATE THE FUTURE OF SPORTS. "

SPEEDFACTORY

All three strategic choices are supported by the Group’s industry-changing SPEEDFACTORY initiative, which heralds a new era in footwear creation. This  flexible model challenges the idea of centralised production and makes product close to where the consumer is.  It opens doors to creation of product completely unique to the fit and functional needs of consumers, through a combination of the craft of shoemaking and cutting-edge technology. The new SPEEDFACTORY facility is all set to go commercial in Germany and will begin large-scale production in mid-2017. The addition of a second SPEEDFACTORY facility in the US at the end of next year will bring the total annual capacity up to 1 million pairs, with further acceleration of the rollout possible for the years thereafter.

" WITH SPEEDFACTORY, WE ARE CHALLENGING CONVENTIONS AND DISRUPTING THE STATUS QUO OF OUR INDUSTRY. THE CONSUMERS OF TODAY LIVE IN A CONSTANTLY CHANGING WORLD. THIS SHAPES THEIR BEHAVIOUR AND EXPECTATIONS. THEY DEMAND NEWNESS AND IMMEDIACY WITHOUT COMPROMISE. SPEEDFACTORY WILL ALLOW US TO FULFIL THE CONSUMER’S DEMAND FOR SPEED, AESTHETICS AND PERFORMANCE BETTER THAN EVER BEFORE AND BETTER THAN ANYONE ELSE. "

Press Release

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With sport playing an increasingly important role in more and more peoples’ lives, both on and off the field of play, we operate in a highly attractive industry. Based on our deep understanding of our consumer and the authenticity of the adidas brand, we push the boundaries of products, experiences and services. We do so according to our strategy, which allows us to fully capitalize on the acceleration of favorable long-term structural trends.

Review of strategy: ‘Creating the New’

‘Creating the New’ was our strategy for the period from 2015 to 2020. Our ambition to drive top- and bottom-line growth by significantly increasing brand desirability was at the core of ‘Creating the New’ – a strategy that proved to be very successful.

We were firmly on track to deliver on our 2020 financial ambition, having raised our targets twice during the strategic cycle. This is reflected by the company’s results for the period from 2015 to 2019, prior to the coronavirus pandemic:

• Net sales: Currency-neutral net sales increased at a rate of 12% per annum on average between 2015 and 2019, in line with our ambition from March 2018 of between 10% and 12% between 2015 and 2020 (initial ambition from March 2015 was high-single-digit growth).
• Operating margin: Reached a level of 11.3% in 2019, in line with our ambition from March 2018 of up to 11.5% by 2020 (initial ambition from March 2015 was around 10%).
• Net income from continuing operations: Grew at a rate of 28% per annum on average between 2015 and 2019, ahead of our ambition from March 2018 of between 22% and 24% between 2015 and 2020 (initial ambition from March 2015 was around 15%).

Ultimately, the financial ambitions for 2020 were not met due to the impact of the global coronavirus pandemic. Aside from financials, we executed on the three strategic choices of ‘Creating the New’ as introduced in March 2015 – Speed, Cities, and Open Source – all the way to the finish line of the strategic cycle. As a result, we not only established new iconic product franchises, such as Ultraboost and NMD, but also built and scaled innovative capabilities, many of which did not previously exist in our industry. These include the groundbreaking partnerships with Parley for the Oceans and Carbon, the creative collaborations with Kanye West, Pharrell Williams and Beyoncé, the shortening of lead times through speed-enabled ranges, and the creation of end-to-end consumer ecosystems in global megacities.

The execution of our Creating the New ‘Acceleration Plan’, which was introduced in March 2017, yielded the profitability turnaround of Reebok and the divestiture of CCM Hockey, the significant strengthening of adidas’ positioning in North America, the relentless standardization of processes under ONE adidas, and the successful digital transformation of our company. The latter resulted in overproportionate growth in the company’s e-com business, which generated more than € 4 billion in net sales in 2020 – more than twice the initial ambition from March 2015.

The many achievements resulting from these initiatives form the foundation upon which we have built our new strategy for the period until 2025, grounded in our purpose, mission, and attitude.

Our purpose: Through sport, we have the power to change lives

We will always strive to expand the limits of human possibilities, to include and unite people in sport and to create a more sustainable world.

Our mission: To be the best sports brand in the world

We are the best when we are the credible, inclusive, and sustainable leader with a first or second position regarding market share in each strategic category in the long term.

Our attitude: Impossible is nothing

We are rebellious optimists driven by action, with a desire to shape a better future together. We see the world of sport and culture with possibility where others only see the impossible.

New strategy ‘Own the Game’ for the period until 2025

‘Own the Game’ is our strategy that guides us through to 2025 – a plan rooted in sport. Sport is adidas’ past, present and future. ‘Own the Game’ puts the consumer at the heart of everything we do and is brought to life by our people. Our strategic focus is on increasing brand credibility, elevating the experience for our consumer and pushing the boundaries in sustainability. The execution of our strategy is enabled by a mindset of innovation across all dimensions of our business as well as our digital transformation. We own the game and will drive significant growth.

Our new strategy ‘Own the Game’

Our consumers are at the heart of ‘Own the Game’. Consumers drive structural trends in our industry through their preferences and behaviors. They strive to live active and healthy lives, they wish to blend sport and lifestyle, and they are digital by default as well as sustainable by conviction. ‘Own the Game’ will be ready to capture those consumer-driven opportunities and carve out new ones for their benefit. In 2025, ‘Own the Game’ will not only have delivered overproportionate growth for adidas, but also deepened relationships with our consumer, as we continue to actively live our purpose ‘through sport, we have the power to change lives.’

Credibility

We are a leading brand thanks to our credibility in both sport and culture. To continue to excite our consumers with innovative concepts that support our mission, we will sharpen our brand, refine our product offering and leverage partnerships to further enhance our credibility with consumers.

To grow long-term relationships with our consumer, we excite and empower them by creating personalized experiences in both digital and physical spaces. With this in mind, we will accelerate our transformation into a direct-to-consumer-led (DTC-led) business built around membership.

Our commitment to sustainability is truly holistic and deeply embedded into how we have done business for over two decades. Its rooted in our purpose that, through sport, we have the power to change lives. As we continue to pioneer in sustainability, we will move from strong stand-alone initiatives to a scaled and comprehensive sustainability program.

To successfully deliver on our five-year strategy, we will support our people to truly own the game. We will make sure we have the relevant capabilities to tackle our business needs and seize opportunities as we attract, grow and retain talent. We will ensure there is a level playing field for all as we continue our diversity and inclusion journey. Furthermore, we will leverage our unique workplace that has the consumer at the heart of everything we do.

• Sport: We will focus on the most important sport categories: Football, Training, Running, and Outdoor. Football is the biggest sport in terms of viewership, while Running, Training, and Outdoor are the biggest participation sports. Our products in these categories are built for sport and worn for sport.
• Lifestyle: To tap into the biggest commercial opportunity for our brand, we will sharpen our brand architecture by introducing a new consumer proposition called Sportswear. These products are born from sport and worn for style. At the same time, we will extend Originals, which is inspired by sport and worn on the street, into the premium segment through top-quality manufacturing processes and materials.
• Women: We will execute on a cross-category plan to achieve product excellence and elevate the women’s experience through our membership program to become her indispensable sports brand. Our goal is to grow currency-neutral net sales for our Women’s business at a mid-teens rate per annum on average until 2025, thereby significantly increasing the Women’s share of our overall business.
• Partnerships: We will amplify our credibility through our partnerships by leveraging their power, authenticity, and reach. We will expand our portfolio of partners, which already includes Beyoncé, Kanye West, Stella McCartney and Pharrell Williams, all of whom will continue to play a significant role in wowing our consumer on the lifestyle side. Likewise, we will continue to leverage our partnerships with the biggest symbols in sport, be it with teams like Bayern Munich or Real Madrid, athletes like Lionel Messi or Mikaela Shiffrin, or events like the Boston and Berlin Marathons.
• Membership: With the launch of our membership program in 2018, we laid the foundation for offering personalized experiences to our most valuable consumers. We are now ready to take this to the next level with the goal of increasing our member base to around 500 million by 2025. Through membership, we reward engagement and purchasing activity by offering exclusive hype products, access to launches and special events, and more.
• DTC-led: E-com continues to be our most important store. Both adidas.com and the adidas app will see enhancements across the entire consumer journey. By 2025, our e-com business is expected to account for between € 8 billion and € 9 billion of our company’s net sales. While e-com is the pinnacle of our retail strategy, our physical stores will continue to play a crucial role in creating a physical and emotional connection with our brand. Retail formats will be digitized with fully-fledged omnichannel capabilities. The DTC business, comprising our e-com as well as our physical stores, is projected to account for around half of the company’s net sales by 2025. We will also continue to leverage our strong relationships with strictly selected wholesale partners and ‘win-with-the-winners’ to ensure a holistic experience for the consumer no matter the point of sale.
• Key Cities: We are building on our Key Cities portfolio of London, Los Angeles, New York, Paris, Shanghai and Tokyo, by adding Mexico City, Berlin, Moscow, Dubai, Beijing and Seoul. These cities represent the beating heart of our global consumer experience and exert influence on the rest of the world, while at the same time offering commercial opportunities as urbanization continues.
• Strategic markets: We will double down on Greater China, North America and EMEA to bring exciting consumer experiences to life, pursuing a tailored approach that appeals to local trends. Our ambition is to gain market share in all three strategic markets.
• What we offer: We keep pushing the boundaries of our sustainable offering, so that our consumer will be able to choose from a uniquely comprehensive range. By 2025, nine out of ten of our articles will be sustainable. How we will do this revolves around how we expand and innovate our 3-loops: made from recycled materials, made to be remade, or made with natural and renewable materials. We define products as sustainable when they show environmental benefits versus conventional products due to the materials used or their respective production technologies.
• What we do: We are committed to reducing the CO 2 footprint of our product offerings as we work to reach climate neutrality by 2050. We will achieve this through initiatives such as driving zero-carbon within our own operations and promoting environmental programs along our entire value chain in close cooperation with our suppliers.
• What we say: We will be vocal about our efforts that focus on creating low-impact products that are made to be remade. To guide our consumer to make more sustainable choices, we will also simplify our labelling strategy and scale up our product takeback program.

Innovation and Digital

Two enablers will set us up for success. The first is applying a mindset of deep and broad innovation across all dimensions of our business. The second is using the speed and agility of Digital throughout our entire value chain. These enablers will be particularly powerful when it comes to executing on the three strategic focus areas – Credibility, Experience, and Sustainability – that support us in intensifying our focus on the consumer and driving growth.

Financial ambition for 2025

‘Own the Game’ is designed to yield growth in terms of revenue, profitability and cash generation, which in turn creates long-term value for our shareholders. Therefore, we are focused on rigorously driving execution and managing all of the factors under our control, which will enable us to:

• Achieve top-line growth above industry average: We aim to increase currency-neutral revenue at a rate of between 8% and 10% per annum on average in the four-year period between 2021 and 2025.
• Further expand both gross and operating margin: We expect to expand our gross margin to a level of between 53% and 55% and our operating margin to a level of between 12% and 14% by 2025.
• Grow our bottom-line sustainably: We plan to grow our net income from continuing operations by an average of between 16% and 18% per annum in the four-year period between 2021 and 2025.
• Invest into future organic growth: We are committed to reinvesting between 3% and 4% of net sales into our business by means of annual capital expenditure.
• Deliver attractive cash return to shareholders: Based on the material growth in terms of revenue and profitability, we will generate substantial cumulative free cash flow until 2025. The majority of it – between € 8 billion and € 9 billion – will be made available and distributed to shareholders through a consistent dividend pay-out in a range between 30% and 50% of net income from continuing operations, complemented by share buybacks.

Given the prevailing uncertainties related to the further development of the coronavirus pandemic, our financial ambition for 2025 has 2021 – rather than 2020 – as a baseline. However, this does not apply to the strategy as such, which will be executed throughout the entire five-year strategic cycle.

As a global leader in our industry with a strong strategy in place, we are very well positioned for the years ahead.

Parley for the Oceans

Parley for the Oceans is an environmental organization and global collaboration network. Founded in 2012, Parley aims to raise awareness for the beauty and fragility of the oceans, and to inspire and empower diverse groups such as pacesetting companies, brands, organizations, governments, artists, designers, scientists, innovators and environmentalists in the exploration of new ways of creating, thinking and living on our finite, blue planet.

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