Name: Adidas' image problem
Uploaded: 2015-05-22
Duration: 3 min 54 s
Description: Fortune's Dan Roberts takes a shot on goal at the sports retailer's turnaround.

I think the last few years at Adidas have been marked by a combination of bad luck and bad decisions. Basically the company is struggling in the US. It's still the number one or number two sports apparel player everywhere else, but for the first time it has slipped in America to number Behind Under Armor. I think one big problem is that Adidas is known as a soccer brand, and that's great all across the world. Everywhere but in the U. S ., which is the world's largest sports apparel market. In the U. S. soccer just is an area, every four years people care about the world cup. But no one really cares about MLS And it's growing. But compared to the big three of football, basketball, and baseball, it's nowhere near the same in terms of merchandising or footwear sales. And that's a problem. In 2014 in the US, Nike sales Grew almost 20 %, Under Armor's grew almost 30 %, Adidas's grew 2 %. One unfortunate thing for Adidas, which is really just been some bad luck, is that they've big bets on American athletes that haven't worked out. In fact, with endorsement deals, they really haven't been able to get it right. And in basketball at large, Adidas has been the official apparel provider. It's done nothing for them, Nike has 96 % of the basketball footwear market. So finally and unsurprisingly Adidas announced this year that when the contract is up in the New Year, it won't seek to renew it. One decision they've made in the US that a lot of analysts have praised is the direction in which they've taken Reebok, you know Adidas bought Reebok in 2008, some people thought it was a mistake. And there's been pressure over the last few years for them to sell it off again. But now they've pivoted Reebok into being the fit- gen brand. They associate it with CrossFit, and training, and yoga. All those kind of activities that people are now doing that are individual sporty activities, not team sports. And that has worked for Reebok. In the first quarter of 2015 Reebok really grew a lot. Everywhere but the U. S. and I think eventually people will tell you that this strategy will work for Reebok in the states. [ MUSIC ] Some people will tell you that Adidas's problems are really just in the U. S. And although that is where the crisis is. They're also being hounded by their competitors abroad. I mean, in Germany, which is Adidas's home base, Nike has made huge gains and soon might surpass them as the number one. Their plan to turn around the US involves a lot of disBritt parts. One is, curiously. They wanna sign a huge number of additional athlete endorsement deals. Even though those haven't gone well for them. They also are going to be using robots in some of their stores to help customers. And they're seeking to do more automation and 3d printing. But part of their strategy in the US now is just to try and go bigger In the big three sports and their CEO acknowledges that in the past they never really focused on that as much they kind of thought they could leave America alone and they'd be fine with their power abroad, but the U. S is the world's biggest sports apparel market and they have dropped to number three. Part of their turn around plan is that their focusing and on and stressing Thing these Originals and Originals is part of their fashion line, for example they launched the Kanye West sneaker the Yeezy Boots and that did very well and it built a lot of hype, but you have to wonder is focusing on things like a Kanye West sneaker really the right road for a mega sports brand to go down? And in fact some people will tell you that in the U. S. [ MUSIC ] town. Consumers and teenagers think of Adidas as a street and hip hop, pop, you know fashion brand. And that's a problem because in the sports apparel market, you need to be first associated with sport, sport, sport. And Nike is thought of as sports. Under Armour. Sports. If people see Adidas as a hip- hop and fashion type of company, that might be a problem for them moving forward. [ MUSIC ]

Adidas' image problem

Fortune's Dan Roberts takes a shot on goal at the sports retailer's turnaround.