High-growth behind Adidas' "fashion" face change

Adidas has ushered in a turning point in the Chinese market.

A few days ago, Adidas announced its first quarter 2011 financial report. The data showed that Adidas' global sales revenue increased by 18% year-on-year, of which, sales in Greater China increased by 36% in the first quarter, which was higher than other regions. In March of this year, Adidas announced its 2010 financial report that Greater China achieved sales of 1 billion euros, a year-on-year increase of 3%, removing the exchange rate factor, a 2% year-on-year decrease, and not reaching a global average growth rate of 15%.

From advancing to increase, Adidas, who had been trapped in the inventory pressure and channel dilemma in the Chinese market, seems to be predicting a turning point in 2011. Adidas Group also announced its first-quarter 2011 financial report, raised its annual sales forecast and expressed confidence in its future development.

In this regard, independent sports industry observer Ma Gang told reporters that in his view, Adidas's high growth in the first quarter is a very important factor is the recovery of growth, which is to restore the level of 2008.

Zhang Qing, the CEO of Keystone Sports Consulting Co., Ltd., believes that growth is due to reforms and adjustments. “In fact, in the fourth quarter of last year, Adidas China's performance has started to rise, and strong growth in the first quarter of this year can be seen as Adidas’ change in 2008. The blind expansion of the year and the adjustment of direction are now the result of pragmatic expansionism."

What is the specific reason for the rejuvenation of Adidas?

Channel remodeling

In 2009, in order to step out of the difficult development of the Chinese market, Adidas began to reform its domestic marketing channels. Related statistics show that throughout 2009, Adidas closed at least 200 stores. As a result of the withdrawal of the shop, Adidas was once in awkward position in the Chinese market. In March 2010, Li Ning’s 2009 annual financial report showed that Li Ning’s market share in China exceeded Adidas.

Zhang Qing said that in order to reshape the channels, Adidas adjusted its policy toward large distributors, strengthened channel support, and provided certain support in advertising strategies, pricing strategies, and activity strategies, thus prompting dealers to get more goods and open stores. According to a set of data provided by Adidas to this reporter in the mail, comparable sales in the first quarter increased by 40%-60% among its retail partners, which is higher than the average level of 36%, which reflects the Adidas’s data. The initial success of the distribution channel reform.

A very important measure of adidas' domestic channel reform is to re-demarcate the five major regions and strengthen the ability to control and control channels. Not long ago, Adidas set up its Western headquarters office in Chengdu, marking Adidas's reorganization of the five major regions of Greater China. Gao Jiali, Managing Director of Adidas Greater China Group, once said: “The western region is a key area that we are sure to win. Our full range of products are already listed in this region, and our unique advantages will help us to better carry out in this region. Brand penetration.” Zhang Qing believes that Adidas Group is now redistributing its regional markets, helping close-knit markets and providing support to distributors, thereby increasing the efficiency of sales channels.

At the end of last year, Adidas announced its strategy for “2015 China”, with double-digit growth every year for five years, increasing its product distribution destination from the current 500 cities to 1,400 cities and opening 2,500 new stores. It can be seen from this plan that Adidas will sink to 900 or so third and fourth-tier cities in the future. Adidas's move confirms that from the second half of last year, its recovery in the Chinese market will set the tone for future expansion. Zhang Qing believes that "adidas pragmatism's expansion strategy, a very good performance is that where there are Adidas's consumers, his shop will be open where. Adidas sinks into the third and fourth tier cities market, in the future may It will be more obvious."

Zhang Qing believes that there is no obvious geographical difference in the brand's spending power. Consumers in small and medium-sized cities are willing to pay high prices for brand names. Therefore, the brand should break the geographical boundaries in the expansion, especially the domestic sports brands, can learn Adidas's practical expansion, seize the potential market development.

Adidas told this reporter: We believe that the "towards 2015" China strategy also provides a clear direction for this growth.

Multi-line brand development

Magang believes that the growth of the Reebok brand has been noticeable and it has contributed greatly to Adidas' growth in the first quarter. The first-quarter sales of Adidas and Reebok brands increased by 18% and 24%, respectively.

In January 2010, Adidas signed a cooperation agreement with Pou Sheng International. Pou Sheng became the exclusive agent of Reebok in China. They jointly design, manufacture and sell Reebok products. Magang believes that the good cooperation between Adidas and Pou Sheng International has played an important role in Reebok’s expansion in China and has helped Reebok to expand its terminal stores in China. Although Reebok did not disclose the number of specific stores, Ma Gang said that since the re-positioning of Reebok's positioning and Adidas' increased investment in publicity, since the beginning of last year, Reebok's performance in China has grown rapidly.

In the adidas multi-line brand expansion strategy, NEO is another important piece.

Since its establishment in 2007, NEO currently has more than 800 to 1,000 stores in China. It is one of the sub-brands underneath Adidas. NEO is targeting young people between the ages of 14 and 19, with a more stylish and casual design. The price is also closer to the people, about half of the adidas sports performance series. According to the official data of Adidas, the sports fashion products represented by NEO grew by 51% in the first quarter and expanded rapidly.

The positioning of the mid-market NEO is a sharp sword for adidas to face the rising domestic brands. According to Zhang Qing, this reflects Adidas' insight into Chinese consumers. Chinese consumers' sports participation is low, and they have a high sense of sporty fashion. They are willing to wear sportswear on various occasions. This determines that the development of fashion sports products in the Chinese market has more potential than professional sports products.

Adidas told this reporter: "We look forward to the annual growth of double-digit annual sales with its excellent brand portfolio in the next five years."

Tighten the "fashion" space

On March 18, 2011, Adidas launched a new advertising strategy "adidasisallin" (full dumping full force).

For the first time, Adidas made its debut in three series: adidasSportPerformance, adidasOriginals, and sports fashion series (NEO, Y-3, SLVR). Among the new group of spokespersons, entertainment stars such as Li Bingbing, Eason Chan and Angelababy were invited.

Ma Gang believes that: "This marketing strategy that integrates and promotes Adidas's brands can influence the current pattern of sporting goods marketing strategies, that is, from a single brand promotion to a multi-brand integration type of communication." Zhang Qing believes that the new advertising Remodeling Adi’s image and tapping the commonality among various brands, namely the spirit of passionate sports, made Adidas’ brand image from conservative to more dynamic, and communicated with consumers more effectively.

In addition, from the point of view of inviting entertainment stars, Adidas will attach importance to the development of sports fashion series.

In this field, the Chinese market has cultivated a large number of domestic competitors such as China Trends and Xtep. They bypassed Adidas's "sports" frontal confrontation through differentiated fashion marketing appeals and gained room for growth.

Nowadays, adidas sports fashion is “tightening” the survival space of these local brands. An Adidas who is more familiar with the Chinese market will be born. For the local sports fashion brands, the future of bypassing the positive competition with Adidas will change. It's impossible.