In-Depth SWOT Analysis of Adidas | Adidas Business Strategy

SWOT Analysis of Adidas

Adidas AG is a German multinational corporation that designs and manufactures athletic clothing, shoes, and accessories. The company’s headquarters are in Herzogenaurach, Germany. It is the largest sportswear manufacturer in Europe and the second biggest in the world.

Adidas, along with Nike and Under Armour, operates in over 160 countries around the world, forming the multinational sporting goods trinity.

Adidas AG owns the Adidas and Reebok brands and distributes merchandise under those two brands across 2,500 stores and a franchise network around the world. While Adidas focuses on mainstream sports like football, American football, basketball, biking, and training equipment, Reebok specializes in gym apparel and targets gym-goers. Adidas-branded apparel accounts for 90 percent of Adidas AG revenue.

Adidas’s most profitable product category is footwear, which accounts for about 60% of total revenue. The apparel segment accounts for 35% of the total, with sports equipment accounting for the remaining 5%. Today, we will go over the company’s comprehensive SWOT Analysis.

Company	Adidas Group
Brands Owned	Adidas, Reebok.
Industry	Sports shoe & apparel.
Founded	1949
Headquarters	Herzogenaurach, Germany.
CEO	Kasper Rorsted
Revenue 2019	€ 12.3 Billion
Revenue 2020	€ 9.8 Billion
Competitors	Nike, Under Armour, Puma, Fila, New Balance.

Adidas is one of the most valuable sports brands. According to Forbes, it is ranked third (Nike is first and ESPN is second) with a brand value of $6.8 billion.

Over its long and distinguished history, Adidas has cultivated a powerful and prestigious reputation and tradition by affecting and shaping various facets of culture around the world.

In 2020, the Adidas Group announced a gross profit of approximately 9.8 billion euros, compared to 12.3 billion euros in 2019. The drop could be attributed to the COVID 19 pandemic that affected businesses globally.

SWOT Analysis of Adidas

Adidas is one of the world’s leading and most well-known sportswear and athletic goods manufacturers. Adidas earns the bulk of its money from boots, with the rest coming from clothing, athletic goods, and accessories. Here is the Adidas SWOT Analysis

Adidas Strengths:

What are Adidas’ Strengths?

Adidas is an expansive brand with a well-recognized logo, which gives them an edge over cheaper brands that consumers may not know. The company’s roots are in Germany (1949). All have been made there since with a loyal following of loyal customers to the German manufacturing quality and traditions of the product line.

Adidas is one of the most valuable sports brands. According to Forbes, it is ranked third (Nike is first and ESPN is second) with a brand value of $6.8 billion.

Over its long and distinguished history, Adidas has cultivated a powerful and prestigious reputation and tradition by affecting and shaping various facets of culture around the world.

The company has a strong marketing strategy that fuels the demand for its products. Adidas is a big player in the athletic wear market and focuses on making high-quality products that are also stylish.

Since its inception, Adidas has put a premium on product quality above all else. In 2018, EUR 153 million was invested in research and development (0.7 percent of its annual net sales). One of the driving forces behind its ever-expanding consumer base is high-quality, creative products.

Although the Adidas brand is limited to the sportswear market, the company’s products are diverse. It provides various items designed to appeal to a wide range of sports, such as boots, clothing, and hardware accessories.

Adidas Weaknesses:

What is Adidas’ Weakness?

The company’s image has not been as successful as its competitors like Nike.  U.S. consumers do not view the brand as highly as their European counterparts do. Also, Adidas’ products are more expensive than its competitors and other apparel brands.

One of the weaknesses of Adidas is that it is limited to certain countries, which can be a problem in terms of expanding their business.

Technology has to be improved in order to stay ahead of the curve.

One weakness for Adidas is the high prices on their products in comparison to other brands. Adidas competes with other companies such as Nike and Puma, and it’s challenging to maintain a competitive advantage.

To overcome this weakness, Adidas could lower the prices of their products to match the market prices of similar competing brands. This would make Adidas more affordable for consumers. If they increase sales from these customers, they will cut costs by making less expensive products.

Adidas is a high-priced brand; however, its products are of high quality and last for a long time. Their clothes will hold up better than the cheaper versions from other vendors that last only one or two seasons. The higher prices from Adidas reflect their high-quality clothing.

Adidas Opportunities:

What are Adidas Opportunities?

Adidas can expand into new markets if they are able to increase sales volume. Even with its low brand image in the U.S., the company is still very well-respected among serious athletes, which could result in a positive response by the casual fitness market if they begin to market toward this group of people. Adidas can also be successful by marketing its products at higher-end retail stores where it will have better shelf display.

Improved technology and better designs can continue to increase sales.

Expanding the market and adding new stores is key to Adidas’ success. Although Adidas has been around for decades, their expansion into Eastern Europe and other areas of Asia will help them continue to grow.

Adidas’ revenues across e-commerce platforms are increasing. Adidas global e-commerce platform was one of the fastest rising channels in 2018. Adidas’ e-commerce revenue increased by 36% year on year.

However, in order to achieve faster growth, the brand must also make use of other e-commerce brands, such as global and local e-commerce sites. Partnerships with e-commerce brands such as Amazon, Flipkart, Alibaba, and others will help the company expand its revenue globally.

Adidas needs to find out what the majority of consumers want to know, what they need, and what they want to enter a new market. When Adidas enters a market, they need to make sure they are able to meet the demand. If they are unable to meet this demand, then it will hurt their overall sales. Their clothing is mainly purchased by younger generations, which are more tech-savvy. This generation has grown up with technology being a part of their everyday life, which has created an expectation for better product performance.

Adidas Threats:

What are Adidas’ Threats?

Growing competition is a threat to Adidas’ success. Adidas faces heavy competition in the athletic apparel industry from Nike and Under Armour. Adidas, Nike, and Under Armour are competing for market share. As competitors increase their marketing budgets, it increases the difficulty for Adidas to maintain its market share.

Many of the newest designs are now being made by other companies, and Adidas is behind in making new designs.

Another threat is government regulation on the fair trade of goods. If governments are looking into using fair trade methods for their market, then it will hurt sales.

Market conditions in key regions where Adidas sells its goods, such as North America, China, and the Asia Pacific, may cause Adidas sales to slow and revenue to fall. A drop in economic activity in each of these regions will lead to a drop in sales and profits for the brand. Currency exchange rate fluctuations may also result in brand losses. The earnings of sports shoe companies are also being harmed by a stronger dollar.

Note:

Adidas’ SWOT review highlighted the company’s core strengths, which stem from its brand identity, product quality, product innovation, diverse products, young adult customer group, efficient supply chain management, strong financial position, strong, diversified network, and aggressive marketing strategy.

The brand sees a significant weakness as a result of the supply chain shortage, its costly goods, and a rise in operating expenses. It sees an opportunity to increase online sales, be in an industry with evergreen growth, and get international exposure.

It highlights a challenge from rivals, supplier domination, and the availability of counterfeit goods of the brand’s products.