It is 60 years since Adolf 'Adi' Dassler set up his sports shoe firm; it should, then, be a time for celebration. The folk in the brand's birthday ads certainly seem to be having fun, mingling with David Beckham, Estelle, Missy Elliot and the like.
However, last month, Adidas posted some unimpressive financial results. It is not all cake and goody bags at Nike either, though. Indeed, it could be argued that 2009 is a big opportunity for Adidas to steal a march on its rival.
This year there is no FIFA World Cup, Rugby World Cup, European Championships or Olympic Games. Instead, the sporting highlights are the British & Irish Lions tour of South Africa, and the first home Ashes series since 2005. The Lions and England cricket team are both sponsored by Adidas, which, now, more than ever, needs to ensure it squeezes every drop of value from the tie-ups.
Adidas has not blamed its poor performance solely on the downturn.
It bought Reebok in 2006 hoping to boost the brand's sales and image, but progress has been slower than expected.
Following its latest results, Adidas also admitted its need to 'get closer to the consumer' and announced that it aims to save more than €100m by shutting unprofitable retail outlets.
Can Adidas get back on top and prove that 'Impossible is nothing'? We asked Peter Gandolfi, a former director of brand strategy of England football partner Nationwide and chairman of Gandolfi Consultants, and Tim Bourne, chief executive of Exposure, which handled the launch of Umbro's latest England football strip.
Peter Gandolfi chairman, Gandolfi Consultants
The hardest job in the world is trying to rebuild a business off the back of a massive drop in profits.
It is rather like trying to control an aircraft in a tailspin. Adidas' senior management is under the cosh from shareholders, distributors are screaming, the marketing team is suffering a crisis of confidence and we're in the midst of the biggest recession anyone has ever seen.
However, the Adidas brand is incredibly strong and resilient, and Reebok, rather like England football teams since 1966, has lots of potential.
In its battle to the death with Nike, Adidas does appear to be chasing just now. This is not unusual in duopoly markets. However, I suspect the senior management of Adidas watched the Champions League Final, featuring two Nike-endorsed clubs, with about as much enthusiasm as John Terry, the captain of beaten semi-finalists Chelsea. The latter team is, after all, a flagship Adidas football club endorsement.
Adidas is the real deal in sport, especially football. It has an authenticity and grittiness that true fans recognise and that, like elegance or class, can't be faked. However, it has suffered from a lack of innovation compared with its nemesis, and, as M&S has found, just because a consumer likes a brand, that doesn't mean they are going to buy it.
Remedy
- Do original things that get noticed - great advertising that people talk about and online innovations that kids engage with .
- Reposition Reebok. The market likes niche offerings.
- Make the website easier to use, more tailored and less fussy. Think bbc.co.uk and less like a trendy music label.
Tim Bourne chief executive, Exposure
Adidas is blaming raw material costs, the devaluation of the rouble and price pressures for its troubles. However, while it has been worrying about these things, it has taken its eye off the brand.
Adidas still inspires affection, but lately it has been playing catch-up with Nike. Its marketing and product innovation are less convincing, including a number of ventures that mimic Nike, such as its tie-in with Samsung and the recent 'Spark' football boot ad.
The purchase of Reebok in 2006 was ill-advised or maybe just ill-timed, because Adidas simply wasn't ready to invest in and sufficiently develop the brand. In addition, Adidas' branded shops are incoherent and don't work.
However, there was a time when Adidas did some great things. The Y3 and Stella McCartney collaborations gave the brand a hold in territories that Nike can't penetrate. It has some core products that appeal to vital audiences, like the Forest Hill range with the 'football casual' market. Its 'Graffiti' campaign initiative was also strong.
The brand needs to rationalise, start looking at product and marketing as one, and, above all, act with bravery.
Remedy
- Redefine brand communications around a language that it can own - and stop copying Nike.
- Rethink the owned retail space and either completely overhaul the stores or close them down.
- Have a clearer segmentation strategy within retail, so consumers know which products are for them.
- Invest in emerging talent. The dividends take longer to realise but the credibility is immediate and the potential for real upside is huge - witness Puma and Usain Bolt.