Adidas’ North American Strategy

Mark King’s mantra is simple: Change is good — and much-needed at Adidas in the U.S.

Since taking the reins last summer, the president of Adidas North America has overhauled Adidas’ strategy at a time when the company has lost share to popular lifestyle players like Skechers and fast-growing competitors such as Under Armour. “We haven’t been focused on the U.S. consumer the way we needed to be — it’s what we’ve been talking about for a year,” King told FN in an exclusive interview. “The biggest challenge is being relevant in the U.S. the same way we’re relevant in almost every country in the world, breaking through and being that cool brand for U.S. consumers.”

Adidas is also making major moves globally: Last week, during its investor meeting in Germany, the brand unveiled a five-year plan to boost its presence in the soccer, running and originals categories, with a goal of leading the market in each by 2020.

John Wall Adidas
John Wall.
CREDIT: Courtesy of Adidas.

Originals has been a priority for King in the U.S. market. He has stepped up Adidas’ partnerships with pop stars, including Kanye West, Rita Ora and Pharrell Williams — all of whom have powerful social media presences — and added more designers at the company’s Portland, Ore., headquarters and in New York.

“All of our advertising and brand communication is now created here [in the U.S.]. We’re launching products out of rhythm [with the rest of the group] to make more sense for the U.S.,” King said.

In a bid to boost its share of the Nike-dominated basketball market, Adidas is targeting the next crop of NBA superstars, including Rookie of the Year Andrew Wiggins. (Adidas decided to end its sponsorship deal with the NBA earlier this year because the tie-up wasn’t driving basketball sales.) Since he took over the top spot, King also has inked partnerships with MLB and the NFL to allow its sponsored athletes to wear the brand’s products on the field.

“Adidas recognized that they needed to make some changes, and they’ve done that,” said Matt Powell, a sports-industry analyst at NPD Group. “They’ve had one of the most challenged businesses in the U.S.”

Powell said the brand’s main focus should be on delivering must-have product, consistent silhouettes and the technology that the U.S. customer demands.

In February, Adidas launched Ultra Boost, a running style utilizing the label’s Boost cushioning technology. While the sneaker was well-received from the start, its visibility and desirability were instantly heightened in May, when brand collaborator Kanye West wore them during his performance at the Billboard Music Awards. “It went from a shoe on the wall to ‘I have to have that shoe,’” said Lester Wasserman, owner of sneaker boutique West NYC.

The rapper partnered with Adidas in 2013 and made serious waves when he unveiled the Yeezy Boost 750 under the Adidas Originals umbrella in February.

The high-top sneaker quickly sold out in stores and online, and its popularity led to the creation of a low version, the Yeezy Boost 350, which was generating huge buzz ahead of its June 27 launch.

Adidas & Kanye West Yeezy Boost 350
Adidas x Kanye West Yeezy Boost 350.
CREDIT: Courtesy of Adidas.

According to financial insiders, the exposure generated by the partnership is giving Adidas a lift even though the company won’t see a big financial gain from the Yeezy line. “I don’t think it matters commercially — they’re never going to make those shoes in enough quantity to change the market, but [West] certainly gives them an aura of cool,” Powell said of the hip-hop star.

When Adidas chose not renew its apparel contract with the NBA, rival Nike signed a deal with the league starting in the 2017-18 season. Meanwhile, Adidas will focus on its own crop of marquee players wearing its sneakers on the court.

But the brand isn’t looking to sign established superstars like LeBron James and Kobe Bryant. Instead, it’s seeking stars at the beginning of their careers — players like Damian Lillard and Andrew Wiggins.

“We thought finding young [stars] would give us a better chance to drive market share, to have more NBA basketball players in our footwear,” King said. “Each year, we’re trying to sign the top draft picks. We feel in the next four or five years, there will be a significant changing of the guard as the icons get later in their careers.”

Adidas D Lillard 1
Adidas D Lillard 1.
CREDIT: Courtesy of Adidas.

Top-tier retail partners are upbeat on the initiatives, but they recognize that the brand has considerable work ahead. “They’re putting emphasis on the real athlete, which helps authenticate the brand to the American consumer, and marrying that with creating a buzz in commercial opportunities with pop-culture icons like Kanye and Pharrell,” said Dick Johnson, CEO of Foot Locker. “Sometimes, it’s a slower grind than we’d like to see, but I think they are definitely doing the right things, and the consumer is starting to notice.”

Pharrell Williams and Kanye West.
Pharrell Williams and Kanye West.
CREDIT: Courtesy of Adidas.

King said Foot Locker is key to his strategy in the mall, and he is also partnering with Dick’s Sporting Goods on a 600-store soccer program. “We’ll be making massive improvements in the way we look at those stores,” the exec said.

Moving forward, some retailers, particularly influential independents, encouraged the brand to tap into its retro archive in a bigger way.

Wasserman said the best-selling Adidas shoes at West NYC are the classic silhouettes, from the Stan Smith to the Campus. “They have a tremendous archive, with so many shoes. I don’t know if they’re really using it to their advantage,” Wasserman said. “They’ve had so many Olympic teams and countries in these shoes — they’ve been all over the globe. There is amazing product, and I think they need to go into those archives more.”

 

[Editor’s Note: This story first appeared in print 06/29/2015]

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