Its been roughly two years since the Germany-based brand kicked off a megaresurgence in the U.S. market, and at each turn, the company is reaffirming its sticking power.
Adidas today posted another quarter of sales and profit growth in the double-digits — this time 31 percent — in North America.
While competitors Nike and Under Armour have recently faltered amid pressures from increasingly fickle U.S. consumers, Adidas seems to have concocted a secret sauce in the region — disproving claims that it couldn’t sustain double-digit gains for more than a quarter.
While the results continue to surprise naysayers, Mark King, Adidas North America’s president, said the brand is reaping the fruit of a well-thought-out strategy.
“A few years ago, we decided to put a lot of energy, resources and investments in the North American marketplace — at a level that we had not done in the past,” King said.
In 2016, he further noted, Adidas’ growth was based primarily on the strength of its Originals franchise. Now the brand is enjoying wider success across more categories — which should keep the momentum afloat.
“Originals is still doing really well; the other categories are starting to grow at a significant rate — running being the biggest one, training apparel being the second-biggest one,” King said. “So the belief that the growth is sustainable because it’s more balanced is a better position to be in.”
Here, King opens up about five factors driving the brand’s U.S. success.
Product Is King
“It all starts with product. You’ve got to have great product. We have moved designers and people from Germany to the U.S., and we also have the people in Germany [who are] focused on the U.S. We also have a more intense focus on having key franchises — such as Superstar, Stan Smith, Ultraboost and NMD — and knowing that they’re not going to last forever, so continuing to launch new franchises on a consistent rhythm every year.”
“E-commerce is a big investment because that’s the biggest trend in purchasing — all ages are going online to investigate and buy. The easier the experience gets to buy online, the more people will shop online. I don’t know that we’re leading it, but we’ve identified that online will have a significant impact on retail going forward, and we have to do a good job there. When it comes to social media, we recognized a couple years ago that traditional advertising wasn’t going to reach young people. The youngest group of consumers — Gen Z —find their information through these different social media platforms. We have two different newsrooms in the U.S. — one in Portland [Ore.] and one in New York — and we’re constantly communicating what’s cool to the young consumer through these different platforms.”
“We’ve put a big emphasis on telling our story that we’re a sports company — we’ve done that in many different ways by signing athletes, signing leagues like Major League Soccer, the NHL, the U.S. Volleyball team, the U.S. rugby team. Then we’ve had a big advertising campaign that tells the story about us as a creator sports brand — with unique positioning — and it’s resonating with the young consumers and young athletes.”
“We’ve invested with our retail customers on [our] spaces in their stores. So if you go into many stores today — whether it’s Foot Locker, Dick’s Sporting Goods or Finish Line — the presentation of our brand, products and stories is much better today than it’s ever been. We just added 1,500 branded spaces this year on top of 1,500 last year. So you can find our products in more stores and in better selections and with better storytelling. [In addition,] we segment products by channel — so performance running goes to run specialty stores like Road Runner Sports, Originals primarily goes to mall customers and high-street accounts like Kith.”
“What we’re doing is focusing on key cities and in America — those are New York and Los Angeles — which set the trends for young consumers. We’ve [done this so far] with all kinds of activations that make those cities come alive with our brand. We take advantage of sporting events, local athletes and leagues, and we launch a lot of our products in these key cities — [which] keeps our brand cool.” (Adidas announced today that it will open a “world class” office in Los Angeles to get even closer to consumers there.)