The newly-opened Adidas flagship NYC 5th Avenue store

The newly-opened Adidas flagship NYC 5th Avenue store

Sportswear giant Adidas is gaining traction in the US – the largest sportswear market in the world. Bernadette Kissane, senior research analyst for apparel and footwear at Euromonitor International, looks at how the company can maintain momentum and further expand its presence in this core country.

It is proving to be a stellar year for Adidas, after it reported 20% growth in revenue on a currency-neutral basis during the nine months to 30 September 2016. Notably, the company is also picking up the pace in the US, where it has struggled to gain significant traction in the face of behemoth Nike's dominating presence and rising stars such as Under Armour.

Given the US boasts the largest sportswear market in the world, valued at US$97bn  in 2015, capturing a significant proportion of this market will solidify Adidas' global position and prove crucial in sustaining future growth. Interestingly, whilst Adidas' influence is growing, Nike has come under fire, with the general belief that the company will not meet market expectations during its FY2017, causing many to wonder if Nike has already reached a peak in terms of market share in the US.

Nevertheless, Adidas is not in a position to rest on its laurels. Until now, a lack of scale has hindered growth and adversely impacted profit margins; so how can the company maintain momentum and further expand its presence in this core market?

Store wars in NYC

New York City has become a battleground for Nike and Adidas, with both armoured with impressive, high-tech flagship stores. As they are aiming to strengthen their direct-to-consumer businesses, generate brand awareness and engage consumers through memorable experiences, store space has been repurposed to enhance service, deliver product demonstrations and create a social environment.

Located on 5th Avenue, Adidas earlier this month opened its largest and by far most impressive store to date. Building upon its 'stadium' retail concept, the store echoes the look and feel of US high school stadiums, with a tunnel entrance and locker rooms as changing rooms, in addition to track and field spaces where consumers can test out products.

Adidas NYC flagship raises the bar on sport stores

Launching a concept store in NYC is logical given the city's influential status as a tourist and innovation hub while illustrating the company's continued focus on the US market. In order to better compete against Nike, Adidas will have to roll out this new concept (or at least parts of it) across its stores in other US cities. Taking a localised approach to what is implemented in store could go a long way in appealing to consumers, for example, incorporating relevant sport facilities based on whether a city or state has a stronger affinity to a particular sport.

Grassroots tactic

Given the vast geographic reach of the US, a one-size-fits-all approach to marketing has limited benefit; instead, adopting a localised strategy, utilising local influencers, combined with a national campaign, would enable Adidas to generate more meaningful brand awareness. Furthermore, targeting Generation Z and becoming the sports brand of choice among high school athletes through sponsorship deals will equip Adidas with a legion of brand loyal consumers and secure future growth.

Developing desirability

With a rich cultural history grounded in hip hop and underground meccas, Adidas has formed a premium, fashion-orientated image in the US. Aided by its multiple sub-brands, such as Originals, Adidas by Stella McCartney and Adidas NEO, the company has the ability to cater to a broad consumer base. Notably, its collaboration with Kanye West has proved extremely successful and can be credited with enhancing Adidas' brand reputation among US consumers. Exploring collaborations further by building upon the Yeezy range while working with other high-profile personalities would enable the company to tap into the current zeitgeist and maintain relevancy among a consumer base that moves on quickly.

Preserving a high level of desirability will become fundamental to the company's strategy going forward, and focusing on limited editions rather than reduced stock levels is likely to prove lucrative; striking a balance between creating a sense of urgency and demand, rather than irritating consumers can be a tricky route to navigate, but one that is required to build hype and excitement.

While Nike is struggling to hold onto its leading 21% value share in the US (2015), Adidas is in a prime position to push further ahead, capturing growth opportunities by focusing on consumer engagement, technology and savvy marketing. Needless to say, every business development will need to be grounded in digital, from social media to omnichannel, if it is to make any real impact. 

Adidas pulls ahead on speed and innovation

About the author: Bernadette Kissane is senior research analyst for apparel and footwear at Euromonitor International, where she is responsible for publishing research studies related to corporate strategies, market entries, competitive intelligence and opportunity analysis in the global apparel and footwear industry.