Addidas Case

Question 1

What is the problem?

Answer 1

• Digital disruption affected retail
  Impact of COVID and the need for digital and quick shopping increased. Quick development of a streamlinbed customer shopping experience.
• Two needs being addressed: personalization & convenience
  Internet & smartphones led to broad access to find the product that best fits ones needs
• Winning brands – those that provide a personalized path to purchase, along with convenient & fast customer service
• Need to reinvent the full value chain
  Back-end: supply chain, logistics, manufacturing, R & D
  Front-end: marketing, customer experience, pricing
• Put customer desires at center of all decisions, while reducing costs of operations
• Social media impact esp. by influencers

Question 2

Impact on brick-and-mortar stores

Answer 2

• Dramatic effect on lost revenues
• Government actions to fight COVID impact Adidas (& many other companies)
• Significant change in consumer behavior (e.g., masks, social distancing in stores)
• Accelerated need for Adidas to drive digital transformation
• Need to consider the impact of the internet-based model on consumers and retailers.

Question 3

What two changes would we make today

Answer 3

• Exclusive partnerships (front end)
  >Partner with influencers to sell shoes and push apps
  >Partner with college athletes and universities with successful and strong teams. Example: UM showcasing merchandise in the
  finals
• Diversify manufacturing (back end)
  >Expand manufacturing into eastern European market
  >Risk shown during COVID that if your manufacture in one place only and there is an issue then the congestion affects
  everything
  >Over 70% of all their merchandise comes from Asia including footwear. Apparel, and hardware products
  >Because they already have a strong presence in Europe they could move a larger percentage of manufacturing to Europe to
  decrease that risk. Eliminate the time between manufacturing and getting the end product to the customer
  >The currently have less than 20% of their products manufactured in Europe
  >They can set up more speed factories in Europe

Question 4

Issues we foresee

Answer 4

1. Partnerships can have a negative impact like the Kanye West partnership
   >Influencers can be very expensive
   >There’s a lack of trust with influencers
   >You could sponsor and team that doesn’t do well and don’t get any visibility from the partnership
2. Manufacturing issues
   >Consider trade relationships
   >Reaction from Asia manufacturing and moving some to Europe
   >Higher price in Europe for manufacturing