Adidas' Impossible Task

After surpassing rival Nike for the first time in the Chinese market, the pioneer of sports marketing is now struggling under the curse of the Olympic Games.

At the three floors of a model factory in Adidas, Suzhou Industrial Park, the production of about 200 employees was as usual, but the strength was not as great as before. Compared with 10 o'clock in the evening during the Olympics and Paralympics, they are now leaving work at 5:30 pm every day. This can only mean that the sales season due to the Olympics has expired on time.

Recruitment of new employees has stopped. The employees are eager to live a busy life, but there is no complaint about the leisure. Because "this is good, several nearby Adidas foundry companies have begun layoffs." An employee of the factory told "Global Entrepreneur."

What makes them a little relieved is that the sales season has been recorded in history by Adidas. In the first half of fiscal year on August 5th, net sales rose by 14%, and gross profit margin historically reached 50.1%. In particular, its market share in China accounted for 22%, surpassing rival Nike for the first time for the first time. . According to the company’s latest global financial report released in November, sales in North America fell by 7% during the first nine months of this year, sales in Europe rose by 13% due to European Championships in June, and Asia’s sales were mainly driven by the Chinese market. Sales revenue increased by 23%.

However, the new financial report did not lose meaningful words. For example, because management cannot predict the year ahead, the guidance forecast for 2009 will be withdrawn. Its implication is that such a good performance is the first time, and it is very likely that it is the last time. The worst global economic crisis in 70 years has cooled people’s desire to consume. Adidas’ sales have slowed in the world. The future is uncertain and it cannot be expected that the Chinese market will have such a huge effect on global performance.

This is a difficult year. Adidas is worrying about billions of dollars of Olympic-marked inventory. Although the Olympic sponsorship model was first created in 1928, Adidas did not choose to become a global sponsor in 2008. Become a sponsor of the Beijing Olympic Games. The direct consequence of this approach is that by March 31 next year, all goods bearing the logo of the Beijing 2008 Olympics will be declared expired.

An Adidas employee, who did not want to be named, told the journal that it was no longer possible to sell a few hundred million worth of goods within the specified time. Adidas is considering applying for an extension to the International Olympic Organizing Committee. This year, Adidas has many challenges to face: a large backlog of stocks, weak sales, and anxious dealers—ask for urgent needs and rely on unusual lobbying skills.

Anxious

In fact, starting in September, Adidas began to receive bad news from distributors: The situation of pressing goods was very serious, resulting in insufficient liquidity and unable to import more goods. A dealer from Linyi, Shandong, told Global Entrepreneur: “Originally, the atmosphere of the Olympics here is not so heavy. Basically, it is better to win the award service. After the Olympics, it is even more difficult.”

In the following October, the financial crisis blocked the financing channels for venture capital companies. The leading sports company, one of the three major channels for domestic sports brands, announced the dissolution. The original Shenzhen Longhao, Sichuan Jinlang, Zhejiang Ruili and Shenyang Pengda returned to their own way. This incident directly affected the shipping status of sports brands. "Originally merged leaders can enter more than 4 billion yuan at a time, but now each family can only enter into several hundred million yuan," a person from Adidas's retail department told the journal. In fact, this not only means a reduction in shipments, but also strongly corrodes Adidas and distributors' interests.

As far as dealers are concerned, the ability to ship cash faster is a top priority. The effective solution is of course to clear the goods at a very low discount. However, this practice is contrary to Adidas's brand maintenance strategy. A wide range of low discounts will hurt Adidas's brand image: "In the future, consumers will not buy regular prices anymore."

With the escalation of conflicts with distributors, Adidas made an important decision at the 60th anniversary of the establishment of its brand, Clover: By the end of 2008, 90% of the original clover shops operated by dealers were all recovered as self-operated stores and sales staff. Recruitment work has also been reintroduced by Adidas from the hands of dealers. The company's training department has specifically trained sales personnel on corporate culture and products, and launched a clearer promotion system to motivate sales personnel.

In the improvement of the store, it began to improve and make up for the leakage. Original dealers in the store did not arrange full posters and activities as required. At the same time, the marketing department also manages its member database more efficiently and conducts more targeted product recommendations for different groups of people. In short, everything has changed from communicating with agents and distributors to the most end-user consumption segments.

However, Adidas understands that whether all these efforts can work is still unknown. “In 2009, 2010, Adidas had a difficult time.” An Adidas executive told the journal.

Traceability

Perhaps, for Adidas, this was the most difficult time since rival Nike had overtaken the market in the 1980s. With the continuous decline in sales volume in the North American market, it is high hopes for sponsoring a popular sports event in emerging markets. To this end, in December 2007, Adi launched a series of sponsorship activities planned for a full two years and up to 10 months. "Even if it was the 2006 German Football World Cup, we didn't spend that much effort." Adidas Beijing Olympic Games Project Director Ke Ruijia said earlier during an exclusive interview with Global Entrepreneur. In Adidas China, despite the fact that it has demonstrated sufficient "magnanimity", there is no lack of frustration within the company that it is not as desired: "It took more than 1.2 billion yuan for the Olympic Games and Li Ning was torched."

However, it is not unreasonable to adidas to generously sponsor the Beijing Olympic Games. Although the curse of the "Olympic Games" is difficult to resist, the market is generally optimistic about the growing interest of Chinese people who are detonated by the Olympics. Liu Li, a partner of the Beijing Yabang Sports and Cultural Exchange Company sponsored by the Cheerleading Team, said: “After the Olympic Games, this cake is really getting bigger and bigger. Our customers basically have increased their sponsorship in 2009.” The daily life of Chinese people is recognized as an opportunity for the sports industry.

Frankly, Adidas does not care about ordinary consumers. According to Herbert Hainer, Adidas' global chief executive and chairman, the Shanghai Research and Development Center specializes in the preference of Chinese young consumers for color and tailoring and quickly shifts to product design. "We have worked hard and you will see it in Adidas's specialty store," he said. At the same time, he also pointed out with pride: "The real difference is that Adidas is a professional sports brand that represents the top technology and design, such as running shoes, football shoes, etc. No matter what the product, we are the most professional Sexual, this is our core competitiveness.” Even if you know how to focus on folklore, Adidas will habitually focus on avant-garde skateboarding.

Right now, how long can this competitiveness continue? The key to the climax of sports brands is to have a rich product line that is closer to the daily life habits of the general public. But this is where Adidas's pain lies. In this respect, it has not been as good as Nike. "The specialization and daily life of sports must be taken into account. Sports is not only for athletes, but also for everyone." Wang Naiyun, senior business director of Lowe, who is responsible for Reebok brand marketing, told Global Entrepreneurs. This means that Adi can only rely on the momentum of sports events to conduct large-scale marketing to compensate for its relatively weak performance in daily sales.

In addition, the creation of a brand image for the Olympic Games will help Adidas to better penetrate into third and fourth-tier cities in China. In September, Adidas still adhered to a strategy of large-scale expansion: the largest flagship store in China, and announced that by the end of 2008, it had increased the number of Chinese stores to 5,000. In fact, both Adidas internal employees and people in the industry believe that Adidas has faced bottlenecks in its development in China.

When the number and sales of stores in first-tier cities are nearly saturated, the third- and fourth-tier cities are the next target for international sports brands including Nike and Ardi. However, in China's third-tier cities where consumer prices are generally low, consumers are more willing to purchase local brands such as Li Ning and Anta. In their opinion, these brands have the same reputation, but the prices are much lower than those of Nike and Adi.

The full blossom of emerging markets may be another idea, such as Russia, Brazil and India. Adidas now looks to Brazil in particular. Due to the serious anti-American sentiment in the region, adidas of German origin has an advantage over Nike.