Adidas has trailed Nike in the sportswear market for years. Now the German company says it's in a position to outgrow its US rival and dominate the market by 2015. Consumers in the United States are central to its plans.
Adidas aims to escape Nike's shadow in the United States
After weathering a difficult year in 2009 and pinning its hopes on the 2010 World Cup in South Africa, German sporting goods company Adidas has surged ahead in profits and now says it wants to outperform leading rival Nike.
Adidas wants to grow faster than Nike through 2015 and increase its turnover by 45-50 percent to 17 billion euros ($23.4 billion).
"We're hoping this faster rate of growth will let us lay a foundation to be the market leader at a later point in time," an Adidas spokeswoman told Deutsche Welle.
Nike, however, is moving forward with goals of its own. It hopes to generate 19.2 billion euros ($27 billion) in revenue by 2015.
In the first nine months of 2010, Adidas primarily grew in the United States, China and Russia, according to the company's spokeswoman. Most of the growth was generated in the sports style, fashion and lifestyle sectors, as well as the Reebok brand, which it bought in 2006.
The FIFA World Cup gave Adidas a major sales boost
Adidas maintains a consistent marketing budget of 13 to 14 percent of its overall turnover.The Bavarian-based company now plans to market new clothing designs for teenagers every two weeks. It also plans to aggressively pursue the young customers on the Internet using social networking.
US market vital
According to Matt Powell, an analyst at SportsOneSource - a research and data firm based in Charlotte, North Carolina - the key market for both Adidas and Nike is the United States.
"The US does about half of the athletic footwear and apparel business in the world," he told Deutsche Welle. "So you've got the US versus the rest of the world, if you will. Now you've got some markets – especially China – which are growing very quickly. But that pales in comparison to the US."
Powell also said that both Adidas and Reebok had been losing market share in footwear "until very recently."
"I really think that part of why Adidas has struggled in the US is because they really don't have a clear understanding of what the US consumer wants," he said. "(But) I think they're doing a much better job today than they were five years ago."
What the US consumer really wants is fashion, Powell said, adding that most athletic footwear "isn't used for sports."
Growth in North America and China
China is also a rapidly growing market for Adidas and Nike
Some of the highlights of Adidas' quarterly exchange-rate-adjusted figures include a 10 percent increase in turnover for the Adidas brand, and a 14 percent increase for the Reebok brand. The company's overall third-quarter turnover increased in all regions, specifically 14 percent in North America and 9 percent in China.
Powell said he believes there is a chance Adidas could grow faster than Nike in the next five years. "Historically the numbers would say it's doable, but it's a pretty steep hill to climb."
Author: Gerhard Schneibel
Editor: Sam Edmonds