Adolf “Adi” Dassler is responsible for establishing Adidas, a manufacturer of sporting products and footwear based in Germany.
Sportswear manufacturer Adidas was the largest in Europe and the second largest in the world at the beginning of the 21st century.
The German multinational sportswear manufacturing firm known as Adidas was founded in 1949.
Adidas is the most successful business in Europe and the second most successful globally, after only Nike. The company Adidas produces footwear, clothing, and a variety of other accessories for athletic use.
As of 2019, the firm had a total sales of 25.961 billion US dollars, a profit increase of approximately 1.22 percent compared to 2018, and a yearly turnover of 25.961 billion US dollars.
Adidas was founded in 1924 by Adolf Dassler, working out of his mother’s home. The company’s products are imprinted with the three-strip logo, which the manufacturer uses as a logo.
The Adidas website states that more than 57,000 employees worked for the company worldwide in 2018. Adidas headquarter is in Herzogenaurach, located in the state of Bavaria in Germany.
Historically, Adidas items have been branded with a three-stripe emblem, which is now included in the company’s “trefoil” and “mountain” trademarks but was originally used as a standalone symbol. Adidas is derived from the company’s founder, Adolf Dassler (“Adi”).
A strengths, weaknesses, opportunities, and threats (SWOT) analysis of Adidas look at the brand from these four perspectives.
Adidas SWOT analysis examines internal and external factors, in which strengths and weaknesses are considered, and opportunities and threats are considered.
The SWOT Analysis is a tried-and-true management framework that gives a brand like Adidas the ability to measure its own business and performance compared to its rivals. Adidas is one of the most successful lifestyle and fashion retail brands.
The following article provides a SWOT analysis of Adidas, which identifies the company’s strengths, weaknesses, opportunities, and threats.
It also discusses the company’s key rivals, target market, segmentation, positioning, and unique selling proposition (USP).
Adidas is not a little fish, given that it earns annual earnings in the billions of dollars. The fierce competition between the two companies in the athletic goods industry has created some extremely intriguing dynamics in the business world.
Adidas’s potential for positive and negative outcomes will astound you once you analyze the company’s SWOT (strengths, weaknesses, opportunities, and threats) analysis in more detail.
Adidas SWOT Analysis
|Company Name||Adidas Group|
|Industry||Apparel and Lifestyle Products|
Adidas SWOT analysis can benefit Adidas since it can help the brand strengthen its market position by addressing its weaknesses, opportunities, strengths, and threats. Let’s get started with the SWOT analysis of Adidas:
Strength of Adidas.
The strength of Adidas that offers it a competitive advantage in the market is the one that is considered to be the company’s strength.
Brand strength can be determined by its financial performance, the skills of its workforce, the unique quality of its products, and intangible assets such as its brand value. According to their SWOT analysis, the following is a list of Adidas’ strengths:
Adidas is often regarded as the best athletic brand globally. The brand is the one that sports fans turn to for their gear. According to Forbes, Adidas is ranked third, and its current worth is approximately $6.6 billion.
In 2019, Adidas climbed to the 61st spot on the list of the most valuable brands in the world. The value of its brand is the company’s primary asset.
The financial status of a firm can be understood in terms of its brand value, which refers to the perception of customers regarding the amount of money they are prepared to pay for a product.
According to Interbrand’s rankings, Adidas comes in at 45 worldwide, and its brand value in 2019 is estimated at 11.99 billion dollars. On the other hand, the worth of the Nike brand is estimated at $32.4 billion.
Innovation for New Products
Adidas has always prioritized ensuring that its products are of the best quality. The constant production of high-quality products is a major reason behind the brand’s ever-expanding customer base.
The company’s primary goal has been to provide high-performance goods while maintaining an environmentally and socially responsible approach since its conception.
In 2018, Adidas invested approximately 153 million Euros in research & development, 0.7 percent of its total revenues.
Adidas was awarded the “German Innovation Award 2018” for the company’s speed factory, which competed in the category for large businesses.
Adidas has always prioritized product quality ahead of everything else since its founding.
In addition, Adidas puts a significant amount of money into research and development to manufacture exceptional-quality items. The expansion of their consumer base can be directly attributed to the quality of their products.
Adidas’ supply chain management is one of its biggest strengths. A large portion of its manufacturing is contracted out, and it maintains complete control over the supply chain by working with strategic partners.
The Adidas distribution network is well established and efficient and has a strong positive brand image.
The Adidas distribution network can ship millions of items in a fair amount of time all over the world. This is accomplished on a logistical level.
There is a wide variety of options available to buyers regarding where and how to buy things when they are ready for retail sale.
Brick-and-mortar locations are one of the primary distribution channels for Adidas’s products. These stores can be either Adidas-branded or larger-scale sportswear retailers.
Adidas is well established in the online retail space, along with its traditional storefront business. The Adidas e-commerce platform and Amazon are two online retailers where you can purchase these products.
The supply chain is a very crucial component in the successful operation of any firm, and Adidas has developed a very effective and efficient system in this regard.
According to one study, Adidas contracts out the production of practically all of its goods, and the corporation collaborates closely with several of its business partners to ensure that its operations are carried out without a hitch.
Adidas’ products cover a wide range of categories, even though they are exclusively sold in the athletic industry.
Adidas offers a wide range of products designed to meet the requirements of various sports, including clothes, accessories, and hardware.
Adidas is a company that produces athletic footwear and fashion accessories under its brand name. Reebok is the company’s subsidiary that provides its other mid-range products. Adidas’s product portfolio covers a wide variety of market areas.
Adidas’s product range is not restricted to consisting solely of athletic clothing. Adidas customers can choose from a wide variety of products, including footwear, athletic wear, apparel, and accessories.
Weaknesses of Adidas
There are certain facets of a company’s operation that the company, to strengthen its position, even more, needs to work on improving. These are the brand’s weaknesses.
Adidas has certain weaknesses when it lacks certain attributes or excels in areas where its competitors do better than it does. Adidas could improve the following areas based on its SWOT analysis:
Adidas Endorsement Deals
Nike has a significantly greater number of athletes supporting its products than Adidas, Under Armour, or any other company.
Adidas failed to secure a sponsorship deal with Michael Jordan, a prominent American basketball player, in 1980.
However, Nike managed to land an endorsement deal with Jordan, and to this day, the brand is one of the most successful in the industry, bringing in billions of dollars in revenue.
Because of this objectively problematic aspect, Adidas has consistently lagged behind Nike’s expansion rate.
Adidas is already an immensely powerful brand, but paid endorsements will only serve to strengthen it further.
The importance of endorsements should not only be kept in mind but also that they increase sales immediately.
Adidas’s global goods are manufactured by Far East manufacturers. However, this tactic remains the most significant area for improvement for the company, despite the ability to reduce expenses through its use.
Adidas’s products are manufactured by third-party suppliers in other countries, putting them somewhat outside Adidas’s control.
Adidas faces tremendous challenges in ensuring that every one of its goods meets the same strict quality standards.
Additionally, Adidas is at the mercy of companies that supply its goods because the company depends on outside companies to manufacture them.
It is also possible for the providers to stop working if, for instance, they are dissatisfied with the compensation. This may soon lead to problems for a firm of Adidas’s size and scope.
Adidas cannot attract lower-income customers because its products are sold at premium or high prices.
The only customers who can purchase shoes that cost more than $100 fall into the high and middle-income brackets.
Adidas has been able to make its products less accessible to customers from middle-class income brackets and less economically developed regions since it has adopted a premium pricing approach.
The primary driver of premium pricing is cutting-edge production techniques and technological advancements.
Adidas’ products are expensive, making them unaffordable for lower-income consumers. A shortcoming of the brand is that it caters to people with high incomes, which is its primary target market.
A single pair of Adidas shoes cost up to $120, so claiming they are premium is an understatement because only upper-class and middle-class consumers can afford them.
Narrow Product Line
Adidas’ limited product selection is another significant weakness. Adidas hasn’t yet decided to expand its product line beyond its existing range of price points and international markets.
Adidas’ products are almost entirely related to athletic wear, particularly footwear.
There is a limited selection of sports clothes, sportswear, and accessories available from the Adidas Group since it owns only the Adidas and Reebok brands. Adidas and Reebok are the only two brands in the Adidas Group’s portfolio.
It is difficult to conceive of the sportswear business is even more limited in size, but it is not difficult to conceive of new competitors breaking into the market and taking a significant portion of Adidas’ market share.
Adidas would be better able to weather changes in the market or the entry of new competitors if it offered a wider variety of products.
Opportunities For Addidas
A brand can improve its business in several areas, and many of those opportunities exist for every brand. You can find the prospects of a brand in different areas, such as regional expansion, product innovations, improved communication, etc. Adidas’ SWOT analysis identified the following opportunities:
Growing Sports Industry
The physical activity and competitive sports industries are showing no signs of slowing down, which is fortunate considering the number of people who enjoy these activities.
Sports products will continue to be in high demand, offering a significant business opportunity for the company.
The expanding market for athletic gear could very well be the most promising possibility for Adidas.
Health and fitness topics are more popular than ever, and there is no indication that this trend will abate anytime soon.
There will be a continuous increase in the number of people participating in sports, thereby requiring a constant increase in athletic apparel consumption. However, Adidas is not the only company that may take advantage of this potential.
Adidas will have to devise cunning strategies to stay ahead of other athletic manufacturers in the same expanding market.
Investing in Smart Materials
The progress of science has been greater than ever. The world of materials is full of discoveries every week, and every one of them has several advantages over its predecessors. People are also constantly looking for products with superior construction.
Combining these two aspects presents a new possibility for Adidas: the utilization of intelligent materials.
Adidas may be able to produce a superior product to its competitors if the company continues to spend on researching, developing, and producing novel materials that may be utilized in athletic apparel.
The ability to stay ahead of the competition requires Adidas to make consistent and increasing investments in the research and development of new technologies and the production of novel materials.
Adidas has said it will broaden its product offerings by using newly introduced materials from recycled marine plastic and polyester.
For instance, Adidas could invest in researching and developing new fabrics that are breathable to keep athletes extra cool during the warm summer months.
Additionally, Adidas could research and develop a variety of gums and rubbers to improve the response of running shoes with each step.
Online shopping or e-commerce has gained popularity recently, as clients conduct their shopping online or use e-commerce sites.
Adidas increased its online sales by forty percent during the first quarter of 2019 by integrating Instagram’s checkout feature into its distribution network.
Shoppers engage in e-commerce activities such as shopping online or using websites that facilitate online shopping at an increasingly high rate in recent years.
Adidas saw an increase of 19 percent in its overall online sales in the fiscal year 2021 due to including other forms of e-commerce into its distribution network and including checkout options on Instagram.
Adidas may be able to replicate this success on other social media platforms, including Facebook and Snapchat. Adidas expects to reach €8 billion in online commerce by 2025.
Investing in Emerging Markets
The business will be able to thrive in the future only by expanding into new markets since existing economies are so competitive.
Brands in the garment and footwear industries have opportunities for dynamic growth in emerging markets.
Adidas should take advantage of the low levels of competition in new markets and the difficulty in competing in established economies.
Threats For Adidas
Almost every company faces threats from variable factors that can negatively impact the company. Various elements can pose threats, including increased competitors’ activities, government policy changes, alternative goods and services availability, etc. The following are the threats that are identified in Adidas’s SWOT analysis:
The industry of sportswear is riddled with imitation goods. It should not be surprising to learn that many customers seek a cheaper alternative with the same powerful brand as premium sports gear brands like Nike and Adidas because of the heavy price tags that come with these brands.
The brand has done a great job convincing customers to purchase genuine Adidas products, even though there are already counterfeit versions of Adidas products on the market.
The amount of counterfeit products for luxury shoe brands and the quality of such counterfeit products has substantially increased over the recent past, providing a challenge for enterprises that make shoes.
However, suppose Adidas were to get into a dispute with one of its overseas suppliers. In that case, there is a real possibility of significantly increasing counterfeit products. This is an exceedingly terrifying idea.
Adidas’ biggest challenge is competing with the increasing number of brands producing sports gear.
Increasing competition has been facilitated by both technological progress and globalization, enabling smaller and medium-sized businesses to enter the industry. Adidas is competing with several other companies.
Globalization and technological advancements have resulted in smaller and medium-sized businesses entering the market, which has increased the number of competitors Adidas faces.
Adidas must thus compete against major industry rivals like Nike, Under Armour, Puma, Lululemon, and Patagonia while simultaneously defending market share against new entrants and competitors.
Dependence on Suppliers
Adidas produces most of its products at third-party facilities. Based on the supply chain structure, Adidas items are estimated to be manufactured in more than 55 countries.
Countries in Asia such as China, India, Indonesia, and Korea are responsible for producing 68 percent of their goods.
The fact that third parties manufacture most of Adidas’s products indicates that the companies providing such services have greater negotiating power than the company itself.
Because of the unbalanced power distribution, Adidas risks being held ransom by its most important vendors.
The company focuses primarily on fostering long-term relationships with suppliers, but they also have significant bargaining power.
Adidas’s products are partly manufactured by third-party manufacturers, giving them greater negotiation power than the company itself.
Global Economic Condition
Adidas’ global operations make it vulnerable to economic slowdowns, which lower its sales.
The slowdown in economic activity worldwide negatively impacts Adidas’s business since fewer sales are made worldwide when economic activity slows.
Economic slowdowns have a detrimental effect on Adidas, just as they do on the rest of the world. These effects may be seen across the board.
Adidas’s net income in 2020 was reduced by more than 90 percent because of recent pandemics. Adidas could continue to lose if economic worries persist.
Final Words on Adidas SWOT Analysis
A SWOT analysis of Adidas indicates the corporation has a strong brand value worldwide. In addition, Adidas possesses all cutting-edge and well-known product portfolios and maintains a healthy financial stage for the corporation.
This powerful branding, in addition to the company’s superb distribution infrastructure, is only held back by a few modest flaws, such as
The availability of limited products, insufficient supply chain length, and additional restrictions are also present.
However, many exciting prospects are awaiting the company in the coming years, including the growth of the e-commerce market and the popularity of athletic apparel.
If the company can satisfy all the needs that the potential market has, then there is a significant chance that it will have an advantage over its rivals.
I hope you got anything out of this SWOT analysis of Adidas, and if you did, keep checking back for more marketing articles.