Throughout the world, Adidas iconic three striped logo is recognized. The multinational sports brand from Herzogenaurach, Germany was dominant in the U.S. sport-shoe market around the 1970s, when Adidas shoes were worn everywhere on the American streets. From 2002 to 2013, Adidas saw share price quadruple and their eminent grasp on the U.S. sport-shoe market led to expectations of continuing success. But in 2014, Adidas lost their footing in the competitive sporting-goods industry. Their stock fell 38% from 2013 and their reported 2014 North America sales of €2.97 billion were down 7% from 2013. In contrast, their famed competitor Nike was up 10% from 2013 and reported $12.3 billion in America sales in fiscal 2014. [1]
Today Adidas struggles to maintain its grasp in the U.S, which holds 40% of the world’s sneaker market and 100% of the world’s sneaker culture. The brand’s first misstep began with upper management, where tension grew between Adidas executives in the U.S. and Germany, the latter dictating too much control over the former. Because German executives don’t understand U.S. culture as thoroughly as their American counterpart, the brand failed to capture the appeal of the targeted market. A critical example of this was failing to offer a sponsorship deal to Michael Jordan in the 1980s, who was supposedly interested in being sponsored by Adidas when he went professional. Although the U.S. executives at the time were heavily in favor of the idea, German executives allegedly did not believe the targeted market could relate to the extremely tall basketball player. This left the door wide open for Nike, who not only to this day sells the highly popularized Jordan line but maintains a hold on 90% of the U.S. basketball shoe retail market; despite Adidas deal with the National Basketball Association (NBA). From the start, Nike saw what Adidas did not, which was that the U.S. market chose shoes based on what sports stars individually chose to wear. [1]
Desperate to rectify their past mistakes, this year Adidas is giving U.S. executives more freedom to do what they believe would be best for the brand in their native market, beginning with branding and product creation originating for the first time in the U.S. Additionally, Adidas will also be quickening their product cycle for more product variations, shortening their process from drawing board to market from 18 months to 6 months. Mark King, Adidas’s new North America president, has also placed more emphasis on sponsoring American sports like football and baseball rather than soccer, which is more popular for countries found in the rest of the world. Adidas’ missteps and loss of appeal in North America demonstrates the power of the U.S. market and how the failure to understand the American culture from the inside cost a multinational company more than a sponsorship deal. But with the right strategy and leader in place, Adidas can regain its dominance in the sporting-goods industry and regain its appeal to the American people. [1]
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[1] According to How Adidas Aims to Get Its Cool Back
