A series of collaborations and partnerships are setting Adidas up to follow through on its digital and direct-to-consumer (D2C) growth ambitions, meeting consumers where they are instead of waiting for the feet to find them.
Earlier this week, the German footwear giant and Xbox unveiled a limited-edition sneaker to celebrate the 20th anniversary of the gaming console, with translucent green details and the Xbox logo. Over the next few months, the companies plan to launch additional sneakers “inspired by past and present Xbox console generations,” including styles available for purchase by consumers.
“This is just the beginning of our partnership with Adidas,” James Monosmith, senior sales and marketing manager at Xbox Consumer Products, wrote in a blog post.
Earlier this year, Nike, Sony and basketball player Paul George collaborated on sneakers inspired by the PlayStation 5, more than two years after Nike and Sony created a previous pair of PlayStation sneakers in 2018.
At the same time, Adidas is also collaborating with thredUP on a resale program, called the Choose to Give Back program, that allows consumers to send back used products from any brand to be reused or resold. Utilizing thredUP’s Resale-as-a-Service (RaaS) platform, the program is currently available through the adidas Creator’s Club app but will roll out more widely online and in stores in early 2022 — giving consumers one more reason to visit.
Adidas earlier this year said it plans to double its eCommerce business over the next five years as it shifts to a D2C-centric strategy, which includes tripling its loyalty program to 500 million members and digitizing its 2,300 retail stores and 10,000 branded franchise locations.
See more: Adidas Looks to ‘Own the Game’ With Focus on eCommerce, D2C, Women
CEO Kasper Rorsted said in August that the company expects the vast majority of its growth (approximately 80%) over the next five years to come from its D2C channel, alongside a continued consolidation of wholesale partners.
“The likes of Dick’s, JDs, et cetera, will get an increasingly larger importance within our portfolio due to their capability,” he told analysts on a conference call. “And there has no doubt been an acceleration of the slow going-away from smaller wholesale partners that have either no digital capability or have a very generic character.”
Confronting Supply Chain Realities
Part of the impetus behind the new resale program could be the production delays that Adidas and other companies are facing amid a surge of COVID-19 cases in southeastern Asia, as well as increased transit times because of capacity restrictions. Adidas executives said in August that they were working to secure additional production capacity in other regions after factories in Vietnam were forced to close in mid-July, with many factories not starting to reopen until this past week.
“Demand is definitely not our issue at the moment,” Rorsted said. “It’s the supply side of things, but we have been making great progress … in mitigating these impacts.”
Last month, competitor Nike said it had lost at least 10 weeks of production because of factory closures in Vietnam, with Chief Financial Officer Matt Friend also noting that transit times are nearly twice as long as they were prior to the pandemic, primarily because of port and rail congestion. The Oregon-based company said these factors mean that its holiday and spring merchandise will likely be delayed.
See also: Factory Closures Cause 10+ Weeks of Lost Production for Nike
BTIG analyst Camilo Lyon said in a report to clients that manufacturing troubles are likely to cause issues through the fourth quarter and into the first half of the year, CNBC reported, as it will take five to six months for factories to be back up and running normally after lockdowns.
“Many brands have proactively cut orders in anticipation of capacity constraints and backlogs once factories are back up and running post-lockdown,” Lyon said.
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