Sports brand adidas has unveiled a new strategy that focuses on its direct-to-consumer (DTC) business. According to a press statement, adidias' investments into product development, marketing, sponsoring and the company's digitalisation are set to increase significantly over the next five years. Adidas plans to invest around US$1.1 billion more into the brand in 2025 compared to 2021. It is added that by 2025, the company's digital transformation efforts would be driven by investments of more than US$1.1 billion as well.
The sports company said its DTC business is projected to account for around half of the company's total net sales by 2025 and to generate more than 80% of the targeted top-line growth. Its eCommerce business is also forecasted to double from US$4.7 billion currently to between US$9.5 billion and US$10 billion. Additionally, adidas said it will be focusing on Greater China, EMEA (Europe, Middle East, and Africa) and North America markets moving forward, which are expected to account for around 90% of sales growth until 2025.
According to adidas, it will continue to invest into eCommerce and into expanding its membership programme as part of its transformation into a DTC-led business. This comes as the company sees consumers expecting to receive a brand and shopping experience tailored to their preferences, with personalised offerings in both digital and physical spaces. In 2025, adidas aims to have tripled the number of members in its membership program from the current level of more than 150 million to around 500 million. In addition, adidas’ own-retail stores will be digitised with fully-fledged omnichannel capabilities. The focus on increasing digitalisation will also be expanded to the company’s wholesale partners to ensure a seamless experience for the consumer across all touchpoints, adidas said.
On the digital front, adidas said its core processes across the entire value chain will be digitalised. This ranges from the creation process with 3D design capabilities, via the sourcing of its products to selling it to customers and consumers. In 2025, adidas said its vast majority of sales will be generated with products that were created and sold digitally. To achieve this, the company will expand its data and technology expertise internally and increase the size of its tech team. In 2021 alone, adidas will hire more than 1,000 tech and digital talents. The company is also investing into the new ERP system, SAP Business Suite 4 SAP HANA (S/4HANA).
Adidas' new digital-focused strategy comes just months after it appointed Sanchita Johri, Johnson & Johnson's Asia Pacific lead for connected commerce and marketing and content excellence, as its director of digital activation for emerging markets. According to Johri's LinkedIn, the markets include India, South Africa, Turkey, Israel and the Gulf Cooperation Council.
Besides going digital, adidas has also planned to work on its sustainability goals. The sports brand said that by 2025, nine out of 10 of its articles will be sustainable as the company expands and further innovates its three-loop system: recycled loop (made from recycled materials), circular loop (made to be remade), or regenerative loop (made with natural and renewable materials). Currently, six out of 10 adidas articles are made from sustainable materials. Adidas added that it has been researching fully recyclable or biodegradable materials for some time already and aims to only use recycled polyester in every product from 2024 onward.
In addition, the communication and marketing for products made from sustainable materials will be intensified, while product takeback programs will be rolled out at a large scale. adidas is committed to reducing its CO2 footprint per product by 15% by 2025. To this effect, the company is working closely with its partners in the global supply chain to reduce energy and material consumption and make greater use of green energy sources. adidas said it aims to achieve climate neutrality in its own operations by 2025 and overall climate neutrality by 2050.
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