- Adidas is making a strategic shift to a more focused online presence to cope with falling sales as the coronavirus pandemic stops customers from being able to visit stores.
- The sportswear brand aims to digitize its entire value chain and revamp its 'Creating the New' business plan first introduced in 2015.
- From using AI in its supply chain to 3D printing sneakers, here's what we know about Adidas' digital acceleration plan.
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German sportswear giant Adidas plans to bolster its lagging performance by shifting strategy to focus on its digital platform.
The fitness brand reported a 19% sales decline this week as more than 70% of its global stores remained closed during the coronavirus pandemic.
Over an earnings call with company executives, Adidas zeroed in on plans for "digital acceleration" and said it would pivot to a greater focus on its digital presence now that it has limited capacity to operate out of physical stores.
Business Insider got some insights from Adidas into what its revamped digital focus involves:
- Introduced in 2015, Adidas' five-year-strategy 'Creating the New' is being remodelled by digitizing processes along its entire value chain, the company said.
- It plans to use artificial intelligence to help in its supply chain management. Previously, the brand found it tedious to estimate demand for various shoe sizes before orders were received since numbers vary from market to market. AI helps the brand carry out size distribution within a matter of minutes based on reliable data.
- Use of additive manufacturing — using 3D design-printing to add layers of material — to produce the midsoles of the Adidas 4D running shoes.
Adidas also says it is investing in its digital retail infrastructure, and is reaping the benefits during the coronavirus as its online stores, as well of those of partner retailers, are open all the time. Its physical stores and other sporting-goods retailers remain closed in most parts of the world.
The brand's ecommerce sales saw the highest growth rate on record last year, a jump of 34%. That spurt accelerated even further as sales for ecommerce grew by 35% in currency-neutral terms with 55% growth in March this year.
The firm aims to support this trend by connecting experts from its retail teams, mobile-fitness app Runtastic, and the IT team, all working towards building up ecommerce. Adidas is also extending partnership programs with digital pure players — companies that only run virtually — such as Zalando, Asos, Zappos, and Tmall.
As well as focusing more heavily on ecommerce, Adidas is also promoting heavily products that are selling well while people are stuck at home. The brand is increasingly promoting products like the Adilette Slides— a favorite among consumers working from home — as they have enjoyed high demand on the brand's channels. Adilette sales went up by a 'triple-digit percentage' rate in April, the company said.
For its sports apps "adidas Running" and "adidas Training", the brand has been offering free premium access since the start of the coronavirus pandemic. Since then, hundreds of thousands of athletes have used more than 250 training videos, workouts and training plans to continue keeping fit from home.
Adidas has also focused its marketing investments and efforts towards digital and social media channels and an increase in digital storytelling under the hashtag "#hometeam."
Over the past few weeks, the brand has shared inspiring home stories from the daily lives of numerous brand ambassadors around the world who demonstrate creative ways to "make the most of time at home and, of course, to continue to exercise."