Adidas Business Model

Adidas excels in the sportswear industry by offering innovative and high-performance products. With a focus on style, they combine fashion trends with sports functionality. Operating through a global supply chain and retail network, they generate revenue from product sales, licensing, and e-commerce. Their customer segments include athletes, active lifestyle consumers, and fashion-conscious individuals.

Value Proposition:

Innovative and Performance-oriented Products:

Offering innovative and high-performance sportswear and footwear to customers.

Brand Reputation and Authenticity:

Building a strong brand reputation and emphasizing authenticity in product offerings.

Style and Fashion:

Combining style and fashion trends with sports functionality in product designs.

Operational Model:

Global Supply Chain:

Managing a global supply chain to ensure efficient production and distribution of products.

Research and Development:

Investing in research and development to drive innovation and product improvement.

Retail Store Network:

Establishing a network of retail stores and online channels for product sales and customer engagement.

Revenue Model:

Product Sales:

Generating revenue through direct sales of sportswear and footwear products.

Licensing and Sponsorships:

Expanding revenue streams through licensing agreements and sponsorships with sports events and teams.

E-commerce Sales:

Driving online sales through e-commerce channels and digital platforms.

Customer Segments:

Athletes and Sports Enthusiasts:

Targeting professional athletes and sports enthusiasts who seek high-performance sportswear.

Active Lifestyle Consumers:

Catering to individuals with an active lifestyle who prioritize comfort and style in their apparel choices.

Fashion-conscious Consumers:

Appealing to fashion-conscious consumers who value the combination of sports functionality and trendy designs.

Key Activities:

Product Design and Development:

Creating innovative sportswear and footwear designs that meet customer demands.

Marketing and Branding:

Implementing marketing strategies to build brand awareness and promote Adidas’ products.

Supply Chain Management:

Ensuring efficient supply chain operations for timely product delivery and inventory management.

Key Resources:

Brand Equity and Reputation:

Leveraging a strong brand equity and reputation built over decades.

Research and Development Capabilities:

Investing in R&D to drive continuous product innovation and technological advancements.

Retail Infrastructure:

Maintaining retail stores and e-commerce platforms for product distribution and customer interaction.

Key Partnerships:

Suppliers and Manufacturers:

Collaborating with suppliers and manufacturers to ensure the quality and availability of materials and production capabilities.

Sports Teams and Athletes:

Forming partnerships with sports teams and athletes for endorsements and promotional activities.

Retail Partners:

Partnering with retail outlets and e-commerce platforms to expand distribution channels.

Cost Structure:

Material and Production Costs:

Expenses associated with sourcing high-quality materials and manufacturing sportswear and footwear products.

Marketing and Advertising Expenses:

Investments in marketing campaigns, sponsorships, and brand promotions.

Retail Operations Costs:

Operating costs of retail stores, logistics, and e-commerce platforms.

Key Highlights

  • Value Proposition:
    • Innovative and Performance-oriented Products: Adidas offers innovative, high-performance sportswear and footwear to customers.
    • Brand Reputation and Authenticity: The company builds a strong brand reputation and emphasizes authenticity in its product offerings.
    • Style and Fashion: Adidas combines style and fashion trends with sports functionality in its product designs.
  • Operational Model:
    • Global Supply Chain: Managing a global supply chain to ensure efficient production and distribution of products.
    • Research and Development: Investing in research and development to drive innovation and product improvement.
    • Retail Store Network: Establishing a network of retail stores and online channels for product sales and customer engagement.
  • Revenue Model:
    • Product Sales: Generating revenue through direct sales of sportswear and footwear products.
    • Licensing and Sponsorships: Expanding revenue streams through licensing agreements and sponsorships with sports events and teams.
    • E-commerce Sales: Driving online sales through e-commerce channels and digital platforms.
  • Customer Segments:
    • Athletes and Sports Enthusiasts: Targeting professional athletes and sports enthusiasts seeking high-performance sportswear.
    • Active Lifestyle Consumers: Catering to individuals with an active lifestyle who prioritize comfort and style in their apparel choices.
    • Fashion-conscious Consumers: Appealing to fashion-conscious consumers valuing the combination of sports functionality and trendy designs.
  • Key Activities:
    • Product Design and Development: Creating innovative sportswear and footwear designs that meet customer demands.
    • Marketing and Branding: Implementing marketing strategies to build brand awareness and promote Adidas’ products.
    • Supply Chain Management: Ensuring efficient supply chain operations for timely product delivery and inventory management.
  • Key Resources:
    • Brand Equity and Reputation: Leveraging a strong brand equity and reputation built over decades.
    • Research and Development Capabilities: Investing in R&D to drive continuous product innovation and technological advancements.
    • Retail Infrastructure: Maintaining retail stores and e-commerce platforms for product distribution and customer interaction.
  • Key Partnerships:
    • Suppliers and Manufacturers: Collaborating with suppliers and manufacturers to ensure the quality and availability of materials and production capabilities.
    • Sports Teams and Athletes: Forming partnerships with sports teams and athletes for endorsements and promotional activities.
    • Retail Partners: Partnering with retail outlets and e-commerce platforms to expand distribution channels.
  • Cost Structure:
    • Material and Production Costs: Expenses associated with sourcing high-quality materials and manufacturing sportswear and footwear products.
    • Marketing and Advertising Expenses: Investments in marketing campaigns, sponsorships, and brand promotions.
    • Retail Operations Costs: Operating costs of retail stores, logistics, and e-commerce platforms.

Related Visual Stories

Who Owns Adidas

who-owns-adidas
Adidas is a German multinational best known as a designer and manufacturer of sportswear and related accessories. It was founded in 1924 in the Bavarian town of Herzogenaurach, Germany, and did not take on the Adidas name until 1949. The new company, known today as Adidas AG, is the holding company for the Adidas Group and the sole owner of Adidas. Some of the company’s largest shareholders include: Groupe Bruxelles Lambert SA (7.6%), Nassef Sawiris (3.3%), and Norges Bank Investment Management (2.8%).

Adidas Revenue

adidas-revenue
Revenue in 2019 was $23.64 billion. Revenue in 2020 decreased to $18.43 billion. Revenue increased in 2021 to $21.23 billion and further increased in 2022 to $22.51 billion.

Adidas Profits

adidas-profits
Net income in 2019 was $1.97 billion. Net income in 2020 dropped to $432 million. Net income in 2021 increased to $2.11 billion but decreased in 2022 to $612 million.

Adidas Revenue Breakdown

adidas-revenue-breakdown
In 2019, Footwear, Apparel, and Accessories and Gear had revenues of $13.52 billion, $8.96 billion, and $1.15 billion, respectively. In 2020, Footwear revenue decreased to $10.13 billion, Apparel to $7.31 billion, and Accessories and Gear to $0.991 billion. Revenues in 2021 increased for Footwear ($11.33 billion), Apparel ($8.71 billion), and Accessories and Gear ($1.19 billion). In 2022, Footwear revenue grew to $12.4 billion, Apparel remained relatively stable at $8.7 billion, and Accessories and Gear increased to $1.49 billion. Between 2019 and 2022, Footwear consistently generated the most revenue, followed by Apparel and then Accessories and Gear.

Adidas Distribution Strategy

adidas-distribution-strategy
In 2022, E-Commerce (Direct-to-Consumer) contributed to 20% of total revenue. Own Retail (Direct-to-Consumer) accounted for 19% of total revenue in 2022. Wholesale made up the majority of revenue in 2022, at 61%.

Adidas Employees

adidas-employees-by-department
In 2022, the company had 31,477 employees in own retail. Sales function comprised 3,112 employees in 2022. There were 8,254 employees in the logistics department in 2022. Marketing had 4,685 employees in 2022. Central Administration, Production, R&D, and IT had 5,161, 558, 1,031, and 4,980 employees, respectively, in 2022.

Adidas Production

adidas-production
In terms of Footwear production, 34% came from Indonesia, 32% from Cambodia, 16% from Vietnam, and 18% from China. Apparel production was distributed as follows: 22% from Indonesia, 17% from Cambodia, 44% from Vietnam, and 17% from China. For Accessories & Gear production, Vietnam contributed 28%, Turkey 26%, Pakistan 25%, and 21% came from other countries.

Adidas Revenue By Geography

adidas-revenue-by-geography
In 2022, EMEA (Europe, Middle East, and Africa) generated €8.55 billion in revenue. North America contributed €6.4 billion in revenue in 2022. Greater China, Asia-Pacific, and Latin America had revenues of €3.18 billion, €2.24 billion, and €2.11 billion, respectively, in 2022.

About The Author

Scroll to Top
FourWeekMBA