Adidas wants to establish its brand in minor sports like breaking, climbing, skateboarding, and BMX as competing sportswear brands compete for position ahead of the Paris Olympics in 2020.

Adidas CEO Bjorn Gulden is trying to restore the company’s reputation after a public altercation with Ye, the artist formerly known as Kanye West, led to the discontinuation of its wildly successful Yeezy shoe line.

Additionally, the Olympics serve as a major platform for the multinational athletic apparel companies, who invest millions in event marketing and player, national team, and sports federation sponsorship.

One of the main components of Gulden’s strategy, which he implemented when he became Adidas CEO at the beginning of 2023, is a return to sports rather than celebrities. This approach will be put to the test in Paris in 2024.

“For whatever reason the old strategy here was to focus more deeply on fewer sports, and I’m the opposite, I want Adidas again to be in the smaller sports and to be visible,” he said.

“Focusing only on the four or five biggest sports is, first of all too easy, and it’s stupid to be honest,” he added in an interview at Adidas’ headquarters in Herzogenaurach, Germany.

Adidas needs to win back the market share that it has lost to competitors over the last four years in order to appease investors who are placing a lot of faith in Gulden.

After two years of losses, Adidas’s shares, which rank second in the world’s sportswear group by market share, have increased by more than 50% so far this year, surpassing those of Nike and Puma.

Adidas continues to prioritise the major Olympic sports, such as athletics, but Gulden noted that the company also finds inspiration for more mainstream items, such as running shoes, by working on more specialised disciplines.

Hip-hop-inspired breaking also appeals to streetwear and lifestyle consumers, according to Gulden. It also presents a chance to expand into other countries, including China, where the newest Olympic sport is well-liked.

The world’s top female breakers, Liu Qingyi of China, sometimes known as “B-Girl671,” was signed by Adidas in June, but the competition is fierce.

Nike announced to Reuters that it has signed 20 athletes and is the official sponsor of the Korean, Japanese, and American breaking federations. Recently, Qi Xiangyu, a Chinese athlete, was signed by Puma.

Climbing, skateboarding, and BMX freestyle—which made their Olympic debuts in Tokyo in 2021—will also be featured in Paris as part of an effort to draw younger spectators to the Games.

It is hard to estimate how much the Olympics influence sales of sportswear, but they do assist companies establish a reputation for producing “performance” goods that are utilised by top athletes.

Kieran Reilly, a BMX racer, the Brazilian Skateboarding Federation, and the Polish Olympic Committee are among the new hires from Adidas this year. Gulden acknowledged that the company’s participation in Paris may not be as extensive as he would have preferred because sponsorship deals for the Olympics are multi-year agreements.

“The Olympics are important for these brands in terms of showing their technology in every sport,” said Boris Radondy, who invests in sports firms at French asset manager DNCA.

“When these brands forget that they are a sports brand, the customer goes away. You can’t be only lifestyle,” he added.

Puma’s primary focus is athletics, an area in which it has previously made substantial investments as the official sponsor of the Jamaica Olympic Association, having signed Usain Bolt at the age of sixteen.

“We still need to focus on gaining market share in these areas,” Richard Teyssier, Puma’s global brand and marketing director told Reuters.

This year, Puma signed 35 new athletes competing in track and field events ranging from 10,000 metres to the long jump and javelin.

“They have selected the best athletes in the past, so it’s very important for them to be exposed to track and field,” said Radondy, whose fund owns Puma shares.

Adidas’s sales are about three times that of Puma, thus the company can afford to invest in more athletes and more Olympic sports. Conversely, Nike can significantly outspend Adidas.

Adidas’ president of specialised sports, Kerryn Foster, countered, saying, “As a company, we continue to invest more and more in the Olympics, not just in the event but in the lead-up.”

The expectation among Gulden’s supporters will be that his new Adidas strategy will bring in gold.

(Adapted from Reuters.com)

Categories: Economy & Finance, Strategy, Uncategorized