Adidas Suddenly Wants To Close The Store. Is This Going To Kill Nike Online?

As young consumers' shopping habits continue to move to the mobile terminal, the campaign brand will burn from the real shop to the online.

In an interview with the financial times, Kasper R rsted, the group's chief executive, recently said that it would gradually reduce its stores in the next few years, but would continue to optimize the offline retail experience. It is expected that the number of stores will decline slightly in the coming year.

He added that Adidas's website is its most important store.

In fact, at the annual conference meeting a week ago, Kasper R rsted explained that the growth momentum of Adidas will come from sustained online sales growth and China in explaining the increase in mid 2020 operating profit to 11.5%.

Great potential.

According to the fashion headline data, adidas Group's sales in 2017 increased 15% to 212.18 billion euros, and for the first time entered the 20 billion euro club. The sales of e-commerce business soared 57% to 1 billion 500 million euros, accounting for 7% of the total revenue. The official website of Adidas official website and Reebok brand has become the largest source of income for the group business channel business.

But this did not satisfy the ambition of Adidas layout online retailing.

Kasper R? Rsted hopes that e-commerce sales of its brand will grow to 4 billion euros, or 4 billion 900 million US dollars, from last year's $1 billion 600 million to 2020.

Its rival Nike launched the electricity supplier plan in 2015 with the goal of increasing sales to $7 billion over the next 5 years.

To achieve this goal, Harm Ohlmeyer, chief financial officer of Adidas, announced that the group is improving its delivery speed through improving logistics, and is expected to deliver service in major cities in the future.

In November 7th last year, Adidas launched a new mobile terminal App, providing customized sports solutions for consumers through Salesforce technology, and providing personalized articles, videos and sports tutorials and related products.

The application is now on the shelves in the United States, Germany and the United Kingdom, and is expected to expand to France, Spain and Canada this year.

In addition to self operated electricity providers, Adidas is also working with e-commerce giant Amazon to become the first batch of Prime Wardrobe member services to be included in Amazon's "first try and buy again" brand.

As one of the members of Amazon Prime, the service not only sends two-way freight free, nor does it charge extra service charges.

According to the industry analysis, the development of online business will obviously challenge Nike's market position for Adidas, who has jumped to the second largest sports brand in the United States in May last year.

According to Nike's latest third quarter report, the group's losses were recorded at $921 million, and revenue grew by 7% to 8 billion 980 million US dollars, of which the retail sales of e-commerce channels registered a 18% strong growth in the third quarter. The opposite of Adidas is that its North American region has dropped for three consecutive quarters.

In the general downturn of the retail industry in North America, this means that it is imperative to open up new markets and cut costs.

Nike CEO Mark Parker once said at the investor conference that he expects the electricity business revenue to increase by 15% to 30% in the next five years.

In terms of digitalization, the SNKRS application launched by Nike in China last December was downloaded 2 million times in the first month.

Mark Parker said that although the Nike Nike + membership program is still in its early stage, the consumer response has been strong in the third quarter, and the number of new members has increased by more than 50% over the same period. The plan will be extended to the world's 12 major cities in the next fiscal year.

However, Mark Parker stressed that although digitalization has become the mainstream of global retail, it does not mean that digital and physical retail channels are antagonistic. The effective combination of the two channels will enhance the channel advantage of Nike.

In fact, the two big sports giants in the recent frequent electric business action behind the traditional retailers face a common dilemma.

According to Euromonitor International Europe International report released by Market Research Institute, clothing and sales of global online channels in 2017

16%, which represents total sales, rose 10% compared with 2012.

The Agency predicted that the channel was sold in 2021.

And shoes will account for 20% of total revenue.

Take the fast fashion giant Zara as an example. After a long run, its parent company Inditex group's huge entity shop became a burden, which also meant that the entity retail channel began to lose its growth momentum.

In the 2017 fiscal year ending January 31st, sales of Inditex (ITX.BME) group increased by 9% to 253.4 billion euros, leaving two digit growth, a further slowdown compared with the previous fiscal year 12%, and the profit before depreciation and amortization rose 12% to 4 billion 300 million euros, and net profit increased 7% to 3 billion 370 million euros.

During the period, the electricity supplier channel has become the most important driving force for group performance. Sales growth from this channel has reached 41%, accounting for 10% of total revenue, or about 2 billion 530 million euros.

Peel Hunt retail analyst Jonathan Stevenson

According to the times report, the electricity supplier is "invisible" against the "visible". To become faster and lighter, it needs to get rid of the efficiency loss caused by the large volume of the physical shop, because the electricity supplier does not need to guarantee the stock reserves of each store.

It is clear that online market will also become the future battleground of sports brand.

Insiders pointed out that under the changing rhythm of e-commerce and the Internet, the sportswear industry is facing pformation and has to face the severe challenge of physical store saturation.

At present, adidas Group has 2500 direct outlets, 1.3 franchises and 15 wholesale stores worldwide.

The picture shows the CEO of adidas Group Kasper R? Rsted.

Vicky Eng, a leading partner in DDT's global retail industry, points out that the retail industry is entering a pition period.

With the development of technology, shoppers can grasp all kinds of information in real time, so they are more capable than ever before.

Retailers should combine both online and offline to better meet the increasingly complex needs of shoppers and create a better customer experience.

Zara set up a "mysterious shop" in the Westfield Stratford store store in London earlier. The products displayed in the shop include men's wear and women's wear, but the site is not for sale, it can only be purchased online, and it also provides services delivered on the same day.

Zara's biggest competitor, H&M group, plans to further promote seamless connection between online and offline businesses after launching the large discount e-commerce platform, such as making the delivery way more convenient and flexible, improving digital applications and introducing new technologies such as artificial intelligence in physical stores, and will open three new highly automated logistics centers this year.

This may mean that online and offline are no longer the basis for dividing traditional retailers. As Aurum Group CEO Brian Duffy says, people will search web sites gradually, and will check websites, but then they will go shopping in physical stores.

An earlier analysis of fashion headlines pointed out that the next battleground of sportswear is not advertising, products, celebrity endorsements, but selling online.

Adidas last year, 30% of the brand content can be created by users.

According to the information provided by Auschel, 60% of the expenditure will be used for the purchase of electronic digital equipment. At present, the group is making great efforts to invest in digital business, including online ordering, shipping directly from the store and what he calls "endless Gallery" which can display the company's entire line of products.

For sports brand retail mode, this significance is very significant.

In an interview with CNBC last year, Kasper R rsted announced a shocking decision. Adidas will abandon advertising campaigns and bet on young consumers and e-commerce channels.

He explained in an interview, "obviously, young consumers are mainly interacting with us through mobile devices. Digital business is very important to us, and you won't see any TV commercials anymore."

Kasper R? Rsted took power from Herbert Hainer in 2016. He will improve the number of retail sales as the center of her reform strategy. It is worth mentioning that Kasper R rsted has been praised as the CEO of Hanko group, a German daily chemical giant during the tenure of office.

Over the years, the market value of Nike is about 4 times that of Adidas.

In the past 2 years, adidas has been developing rapidly, and its market value is about 49 billion US dollars, which is about 50% of Nike.

Some analysts point out that the popularity of sports and leisure sports can make sports apparel applied to more consumption scenarios, thus greatly increasing the market size of sports apparel, and adidas has seized this trend.

According to Citibank's earlier data, Adidas's sales growth now depends mainly on leisure products, star cooperation limited money and other fashion products. It is not brand core sports shoes. There are people in the industry who question whether future entertainment stars will sell more shoes than athletes.

Kasper R? Rsted confidently said in an interview: "it is not common now, but it will definitely be."