adidas by Joshua Eferighe June 19, 2017
For the majority of my life, all I knew was Nike. All gym shoes were Nikes, and as a son of an immigrant, receiving Nike’s, regardless of the price or style, was a moment of joy for me.
As I got older, I remembered stints where K-Swiss, Reebok classics, and even New Balance made their appearances as moments of acceptable shoes to wear, but, again, it always came back to the swoosh.
Present day 2017 and all I’m seeing is Adidas. Cold ones, too.
As opposed to Air Force 1’s, Nike SB’s, Air Max and Presto’s. I’m turning my head to Adidas Boost Adidas Ultras, Adidas Stans Smith, the Superstars and, of course, Yeezy’s.
And it’s more than just a trend, these shoes are really comfortable and stylish.
That’s when I got to thinking to myself… is Adidas gaining on Nike?
Adidas was underperforming Nike in the key U.S. sportswear market as recent as 2015. And in 2016, Nike controlled just over half of that market.
Yet, despite Nike’s clear dominance in 2016, Adidas sales in the North American market jumped 23%, following double-digit gains in the first quarter and for the full fiscal 2015 year.
Classics like the Superstars and Stan Smiths helped the boom and those like it have helped Adidas regain ground against Nike in the US market. Adidas more than doubled its share of the US athletic footwear market to 10% in January last year. A jump that it too substantial to ignore.
Just as my eyes were noticing, Adidas was making a splash.
Fast forward to 2017 and Adidas not only has closed the gap but has an extended year-to-date lead over Nike, which is hovering near a 10-year high. Adidas is as popular now than it’s ever been.
A big help has been the partnerships Adidas has paired with as well.
Adidas has landed the NBA’s James Harden, the NFL’s Von Miller and baseball’s Kris Bryant, who all dominant in their sports. Which is a move they had to make to compete with the likes of Nike’s line-up of star-studded athletes which include LeBron James, Serena Williams and Cristiano Ronaldo, and Under Armour who has Steph Curry, Misty Copeland and Bryce Harper.
But you cannot credit the brand’s success without, if even reluctantly, pointing towards one of it’s biggest partners in Kanye West.
When the two announced a partnership in 2013 many hoad no clue what the unpredictable hot head creative in Kanye would bring t the table. But Adidas has benefitted from that roll of the dice.
In a sit down with StockX (the world’s first sneaker stock market), footwear retail expert Neil Schartz attributes the success of the Adidas partnership with Kanye West as part of the strides the brand has made, noting the fact that Kim Kardashian’s 80 million+ Instagram followers and that his ability to market to millennials has caused a resurgence that has worked well for both parties.
In 2012 — the year before the Kanye West announcement — Adidas raked in an impressive $14.883 billion in sales with a 47% gross margin. By the end of 2015, Adidas had hauled in a mind-boggling $16.915 billion projecting a gross margin of 48% (+1%) — that’s 2 billion dollars in added revenue since Kanye’s partnership.
But even more than having Yeezus as an indirect brand ambassador, the old fashioned way of just putting out better product has helped the brand immensely.
New additions, such as the NMD have helped propel sales in ways the company wasn’t even prepared for. The company literally couldn’t make enough of the Boost soles it uses on the NMD and other models to keep up with demand.
What Adidas found in the solution to the NMD delima actually became one of the main strategies that gave the company a competitive advantage in the U.S market and specifically against Nike.
In efforts to keep up with the dwindling resources, Adidas sought out new programs to speed up supply. And in their findings, Adidas said it was able to cut production from a 12-18 months process to a staggering two months production time for 80% of its apparel in the fall/winter 2017 season.
That’s thanks to investments in projects such as factories in Germany and the US that allowed it to get top-selling items on shelves much faster than manufacturing in Asia (where Adidas still makes most of its goods) and shipping them in.
The strategy is exactly the same as the one that has made fast-fashion retailers Zara and H&M so successful: allowing Adidas to make less product up front, and to quickly replenish items that are selling well.
So, is Adidas making a challenge to the throne? Eh, we should hold the horses.
Although the resurgence of the Adidas Superstar was number one on Matt Powell’s top 10 sneaker list for 2016, the rest of the list is dominated by Nike shoes.
Air Jordan Space Jam 11’s, the classic Converse (owned by Nike) Chuck Taylor All-Star Lows and the Air Force 1’s and other various Nike running shoes all made the list, but no other Adidas shoe made an appearance.
Matt Powell is a sports industry analyst at The NPD Group and makes an annual list that tracks units sold. While ot does not show how profitable the shoes were for Nike and Adidas, it nonetheless serves as an example of what’s happening in the increasingly competitive battle for sneaker and sportswear dominance.
It also shows that Nike is reigning supreme, despite its competitor’s gains.
Nike reported $14.8 billion in total North American sales last year, compared with $3.7 billion for Adidas.
So as the king continues to reign — for now.
Nike’s signing of Lebron to a lifetime deal was more than a showing of good faith to its partner, it revealed the company’s uncertainty of landing similar talent in the future. Who knows what the value of the brand will be after he retires and is out of the public spotlight, which may give room for another superstar to take his place and to sign with… Adidas perhaps.
Who knows what the value of the brand will be after he retires and is out of the public spotlight, which may give room for another superstar to take his place and to sign with… Adidas perhaps.
Regardless of who’s atop, the new Adidas campaign is refreshing and the shoes are comfortable as hell. Only time will tell if that gap narrows.