(Image Source: Retail Dive)
Adidas will be dedicating its efforts to growing a direct-to-consumer (DTC) led model; to account for 50% of its total retail sales by the end of 2025. The retail company saw a double in e-commerce sales in 2020 and is confident in growing the company’s net sales by 8% to 10% each year.
The CFO of Adidas – Harm Ohlmeyer said that the change will help Adidas gain significant market shares as well as revenue and margins. Similar to Nike, Adidas will also focus on its membership and apps to help deepen its ecosystem.
In order for the new model to succeed, huge investments in digital efforts and marketing is essential. The company plans to invest 1 billion more euros into marketing by 2025 than in 2021, and another 1 billion euros for digital transformation.
The shift to DTC channels will not be easy to operate. Adidas will have a lot to do in the next four years for this strategy to be effective, according to Ohlmeyer:
“Moving from a largely wholesale-driven to a DTC-led business model is a tremendous opportunity from a strategic and from a financial perspective. But it also means that an increasing share of sales is realized by shipping individual parcels to consumers instead of large bulks of products to wholesale partners. Individual product returns need to be handled, omnichannel offerings are becoming more important. All of this increases the complexity in our supply chain and we hold onto inventory longer. That said, we have a clear understanding of all of those moving parts and have a proven ability to mitigate them.”