About a few days ago, I discussed about the Zara SWOT analysis. In today’s article, I will be discussing a in-depth SWOT analysis of Adidas, the most well-known footwear brand across the globe.
Key summary
| Topic | Key Points |
|---|---|
| Adidas’ Strengths |
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| Adidas’ Weaknesses |
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| Adidas’ Opportunities |
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| Adidas’ Threats |
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Overview of Adidas
Adidas is a big brand in the sporting goods market. It records billions of dollars in revenue every year. The athletic goods behemoth has strong competition with Nike, resulting in some extreme and unusual economic implications.
Adidas is actually a German company that offers different athletic apparel, ranging from footwear, sportswear, equipment, and many more. The corporation was created by Adolf “Adi” Dassler. It is the largest maker of sportswear in Europe and the second largest in the world.
Traditionally, Adidas items are identified with a three-stripe emblem that maintains a component of the present “trefoil” and “mountain” logos of the company. The term Adidas is derived from the name of the business owner, ‘Adolf Dassler’ (“Adi”).
For the purpose of this article, I am going to walk you through Adidas’ strengths, weaknesses, opportunities, threats, and other internal factors that have contributed to the development of the company. Kindly read through this post as I share with you the major SWOT of Adidas Company.
Adidas SWOT Analysis
Strengths
A Reputable Name in the Industry
Since its foundation in 1903, the company has always worked hard to establish itself as one of the world’s most recognizable brands, leaving a lasting imprint on virtually every facet of culture.
When it came to hip-hop culture in the 1980s, the corporation had a significant impact on that genre’s emergence. Nike’s popular three-stripe and three-leaf logo made the company famous amongst the youth.
New Product Development
Since its inception, Adidas has always put quality above anything else. In 2021, the company invested EUR 130 million (0.6 percent of its annual net sales) in R & D, whereas in 2020 it invested EUR 115 million. One of the main reasons for the company’s expanding customer base is the availability of high-quality, cutting-edge items.
Diversified Portfolio
Despite being limited to the athletic market, Adidas has a wide range of offerings. Shoes, clothing, and other accessories are just a few of the many items available to suit a variety of sports. Adidas’s yearly sales are €21.2 billion, with footwear accounting for 53%, apparel for 41%, and accessories and gear accounting for 6%.
Financial Strength
A company’s financial strength is essential in order to maintain competitive advantage and long-term overall profitability. As one of the world’s most financially secure corporations, Adidas is able to hold off rivals like Nike and Puma with its financial might. Right now, Adidas’s revenue has increased by 16 percent to €21.3 Billion from €18.5 Billion.
Distributor Network with A Wide Range of Options
With over 2300 business retail locations and 14,000 mono-stores, Adidas has an extensive distribution network that also includes over 150,000 brand retail partnerships and wholesalers, to name just a few. With the use of e-commerce platforms, the company can target certain areas and sell directly to their customers.
Adherence to an Effective Marketing Plan
The marketing strategy utilized by Adidas relies on the right combination of promotion, advertising, and digital technologies to be successful.
It Uses Overseas Sponsorships to Build Its Brand
Supporting international organizations has given the brand the ability to reach sports fans throughout the world. From the marketing campaigns for the Champions League to the Olympic Games, to the FIFA World Cup in Russia, to the Boston and Berlin Marathons, and more.
Weaknesses
Manufacturing Outsourcing
Adidas relies on factories in the Far East to produce its products. They can save money by employing this method, but it’s one of their biggest flaws.
Adidas cedes some control over the production process to third-party vendors in other countries. Because of this, Adidas has a tough time ensuring that all of its goods satisfy the same stringent quality requirements.
Adidas is also at the hands of third-party suppliers since it outsources the manufacturing of its goods. For example, providers that are dissatisfied with their payments may choose to quit working altogether. Adidas is a huge firm, and this might soon lead to problems.
Limitation of the Products Offered
Adidas, too, has a problem with a limited product line. Adidas has not yet made the decision to broaden its product portfolio, despite its presence in a number of different price points and foreign markets. Adidas currently focuses mostly on sportswear, with a strong emphasis on footwear.
Although it’s hard to envisage the sportswear sector dropping, new competitors might enter the industry and take market share away from Adidas. By diversifying its product line, Adidas might better withstand market shifts and new competition.
A Few Endorsements
Contrary to Nike’s strategy, Adidas has made few efforts to secure endorsements from celebrities to promote its footwear and apparel. Adidas has consistently lagged behind Nike in this aspect, and it may lead to a flaw in the company.
Opportunities
E-commerce
An enormous rise in online shopping and the usage of e-commerce sites has changed recently. Online sales for Adidas jumped by 40% in the first quarter of 2019 after the company introduced Instagram’s checkout function into its supply chain.
The Growing Sportswear Industry
Sportswear demand is expected to rise steadily as participation in sports and physical fitness grows in popularity and shows no signs of slowing down anytime soon.
Investing in Smart Materials
Because of advances in technology, new artificial materials that are better and more useful than natural ones have been made.
Interest in High-End Sports Equipment
As the economy improves in emerging countries, so does the desire for luxury goods. This will give the brand an opportunity to earn more.
Adidas Threats
Competition
Adidas faces growing competition as a result of globalization and technical improvements that have allowed small businesses to enter the market. Adidas will have to battle with the likes of Nike, Under Armour, Puma and Lululemon.
Rapid Expansion and Adoption of Ecommerce
Nike and Puma, two of Adidas’ main competitors, are implementing e-commerce at a very fast rate, which could be dangerous for Adidas if they do it before them.
Advances in Technology
Competitors grow more dangerous as their technology improves. In other words, if Nike catches up to Adidas in terms of innovation, they’ll be a bigger danger.
Tensions in US-China Trade
Adidas has a global presence, which means it is vulnerable to tariffs imposed arbitrarily on a tit-for-tat basis between nations. This makes a trade war a serious danger to Adidas.
Rates of Exchange
Because it does business all around the world, currency fluctuations like those in the euro and the US dollar can have a significant impact on Adidas’ profitability.
Uncertainty in The Global Economy
Adidas, like any other corporation, suffers from economic slowdowns, such as a decrease in sales. Due to recent developments, its net income fell even more than 90% in 2020. If the economy remains unclear, Adidas may keep on losing money.
Counterfeit Products
Adidas CEO Rorsted claims that 10% of the company’s products in Asia may be counterfeit. In recent years, there have been more and better fakes of high-end shoe brands, which is a problem for shoe companies.
FAQs
What Challenges Does Adidas Face?
The presence of competitors poses the greatest obstacle for Adidas’ expansion in emerging economies such as China and India. Nike is the most successful competitor, but there are others, such as puma, that operate in the same market.
Who Is the Competitor of Adidas?
Nike, Callaway Golf, Under Armour, Eastbay, and ASICS America are competitors of Adidas.
Who Is Bigger Adidas or Nike?
Nike and Adidas are the two largest manufacturers of athletic apparel. Nike’s size is a significant advantage; Adidas cannot compete. adidas appears less expensive than Nike and has exhibited superior growth, but Nike’s high valuation is justified. Nike is better managed and has a stronger brand than Adidas.
What is Adida’s tagline?
At Adidas, they are action-oriented rebellious optimists with a desire to co-create a better future.
Conclusion
As you can see, Adidas is an extremely powerful brand in the market for sporting products. This company has a strong brand and a great way to get its products to customers.
Its only weaknesses are that it outsources manufacturing, has a small range of products and doesn’t have many famous celebrities. In this growing market, Adidas does have future prospects, such as advanced textiles, if it can keep up with its rivals. The question is whether Adidas can withstand the heat.
Resources used for this report
- https://seekingalpha.com/article/4516865-nike-vs-adidas-an-undisputed-leader
- https://www.statista.com/statistics/417949/global-randd-spending-of-the-adidas-group/
- https://www.reuters.com/article/us-beyonce-adidas/adidas-and-beyonce-to-launch-gender-neutral-collection-idUSKBN1YN22A
- https://www.adidas-group.com/en/about/profile/
- https://www.forbes.com/companies/adidas/#6e8d9a0f5e27
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