Directly from Adidas: Aiming to have direct-to-consumer (DTC) sales account for half of total sales by the year 2025
In a bold move to renew its focus on the women's market and drive growth, sportswear giant Adidas has unveiled its four-year plan, Own the Game. This strategic pivot aims to shift Adidas' business model to be direct-to-consumer (DTC) led by 2025, with DTC sales making up 50% of total sales.
Key aspects of the Own the Game plan include scaling DTC sales aggressively, digital acceleration, and embedding the brand in culture. Adidas plans to invest an additional €1.1 billion on marketing from 2021 to 2025, on top of more than €2.75 billion spent annually in recent years. This significant marketing investment will drive digital sales channels and build brand momentum and consumer loyalty directly.
The strategy also emphasises sustainability. Adidas aims to make nine out of 10 of its products sustainable by 2025. The company has already partnered with sustainable athletics companies, such as Allbirds, and plans to launch a new consumer proposition, dubbed Sportswear, targeting the athleisure market in 2022.
Adidas is also focusing on its membership and apps to help deepen its ecosystem. The company currently has 150 million members and aims to triple that, to 500 million by 2025. Adidas' e-commerce sales are expected to double to between €8 billion and €9 billion by 2025.
Factory Outlets will continue to grow and be upgraded, while Adidas plans to double its Halo stores by 2025 and revamp its concept store strategy, with a focus on larger stores and fewer locations. DTC is expected to drive more than 80% of the company's net sales growth over the next four years.
Adidas' strategy shift is expected to bring "significant" market share gains, higher revenues, and margins. The company aims to grow net sales by between 8% and 10% each year and net income by between 16% and 18% each year.
However, this ambitious plan comes with challenges. The complexity in the supply chain is expected to increase due to individual product returns and omnichannel offerings. Adidas is building an integrated ecosystem, with stores being a key part of the digital ecosystem.
Adidas has recently launched a running shoe with Allbirds and announced a women's-focused product line, Formotion, which is its "most supportive activewear to-date." The company expects its strategy shift to bring positive results, with currency-neutral sales growing 13% in Q1 2025 and the Adidas brand itself growing 17%, fueled by the DTC-led transformation.
- Adidas' focus on the women's market and growth drive is evident in its four-year plan, Own the Game, which includes a shift towards a direct-to-consumer (DTC) business model.
- The strategic pivot aims to increase DTC sales to 50% of total sales by 2025, with an aggressive scaling strategy and digital acceleration.
- Adidas has planned to invest an additional €1.1 billion on marketing from 2021 to 2025, targeting digital sales channels and building brand momentum.
- Sustainability is a key aspect of the plan, with the company aiming to make nine out of ten products sustainable by 2025 and partnering with sustainable athletics companies like Allbirds.
- Adidas is also focusing on membership and apps to deepen its ecosystem, aiming to triple its current 150 million members to 500 million by 2025.
- The strategy shift is expected to bring significant market share gains, higher revenues, and margins, with net sales growing by 8-10% annually and net income by 16-18% annually.
- However, the plan comes with challenges, such as increased complexity in the supply chain due to individual product returns and omnichannel offerings.
- In addition to launching a running shoe with Allbirds and announcing a women's-focused product line, Adidas expects its strategy shift to bring positive results, with currency-neutral sales growing 13% in Q1 2025.
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