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Jul 20, 2016
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Adidas to focus on speed, key cities and open source

By
Fibre2Fashion
Published
Jul 20, 2016

Global sporting goods leader, Adidas has launched a new initiative ‘Speed Factory’ to actualise its 2020 business plans based on its three keywords or strategic choices: Speed, key cities and open source – and stay ahead in the race.


Adidas has launched a new initiative ‘Speed Factory’. - Adidas


Describing the ‘Speed Factory’ initiative as ‘industry-changing’, the Group claimed it would be a game changer and herald a new era in footwear creation with the inauguration of its two new facilities in Germany and United States next year.

The new ‘Speed Factory’ facility is all set to go commercial in Germany and will begin large-scale production in mid-2017 while the second such facility in the US at the end of next year will bring the total annual capacity up to 1 million pairs, with further acceleration of the rollout possible for the years thereafter, the company said in a status update report on its 2020 strategic business plan.

With ‘Speed Factory’, we are challenging conventions and disrupting the status quo of our industry," said Gerd Manz, Vice President Technology Innovation. "The consumers of today live in a constantly changing world. This shapes their behaviour and expectations. They demand newness and immediacy without compromise.

‘Speed Factory’ will allow us to fulfil the consumer's demand for speed, aesthetics and performance better than ever before and better than anyone else," Manz recently told investors at the company headquarters in Herzogenaurach, Germany while updating them on the status of the 2020 business plan, introduced in March 2015.

Based on what adidas calls its 'strategic choices' of speed, key cities and open source, ‘Speed factory’s flexible model challenges the idea of centralised production and makes product close to where the consumer is.

It opens doors to creation of product completely unique to the fit and functional needs of consumers, through a combination of the craft of shoemaking and cutting-edge technology.

Detailing its ambitions on ‘speed’ strategic choice, the release said that the adidas Group will ensure that consumers always find fresh and desirable products at any given place and point in time. By re-shaping its entire business model end-to-end, from range planning to product creation, sourcing, supply chain, go-to-market and sales, the adidas Group expects to significantly improve its speed-to-market.

As part of these efforts, the Group would significantly enhance its capabilities to reproduce seasonal best-sellers to fulfil higher consumer demand (Planned Responsiveness) and improve its ability to create or capture the latest industry trends (In-Season Creation).

In addition, the company will expand its programmes for products that are replenished on a constant basis to ensure the most iconic and desired products are permanently available and ‘Never Out of Stock’.

Driven by these 'Speed' initiatives the Group expects to significantly reduce the risk of overbuying stock, capture additional revenues and notably increase margins: By 2020, the company forecasts to generate 50% of its net sales with speed-enabled products.

In addition, the Group's share of full-price sales across all speed ranges is forecasted to improve by 20% over the next five years.

"Our goal is to give consumers what they want when they want it. Speed is one of the most powerful levers for our Group to do so. It will change the way we create, manufacture and distribute our products. It will revolutionise our current business model," said Franck Denglos, Vice President Speed. "Speed will be a key competitive advantage for us as we transform the adidas Group into the first true fast sports company."

Underlining the significance of key cities as a strategic choice, Mr Christopher Williams, Vice President Commercial Planning and Development said, the influence of global metropolitan areas on trends and brands cannot be overstated. If we want to be successful in the future, we need to win in key cities, where the fate of most global brands is decided.

Therefore, the Adidas Group has identified six cities – Los Angeles, New York, London, Paris, Shanghai and Tokyo – to focus its efforts on and that would serve as role models for the rest of the world. The choice, it said, was based on their global influence, their commercial relevance and relevance for sports and street culture.

Across these cities, the Adidas Group will “disproportionately” invest in marketing and retail experiences with the goal of maximising brand experiences, the status update report said.

"Our focus on key cities enables us to activate our categories in the right areas and engage with communities in the most relevant neighbourhoods. All of this ensures that our brands shine where they have the biggest impact to drive brand heat. That is both within and - through the halo effects created - also beyond city borders," Mr Williams said.

Open Source, the group’s third strategic choice, is an endeavour to build a unique collaborative network and invites athletes, creatives, consumers and other partners to help shape the future of sport and sports culture.

To increase its own creative capital and gain new perspectives, the Adidas Group is providing these externals with access to internal tools, including the archive, materials, factories and data.

The collaboration with Kanye West, which, in 2015, translated into unrivalled reach of the Yeezy Season 1 fashion show and an unprecedented global sell-through rate of all Yeezy Boost sneakers since then, is a prime example of how the Group started to bring this aspect to life, the report cited.

Another example of a game-changing Open Source initiative will be the opening of the first 'Creator Farm' in New York City in the fall of 2016. The design studio and creation centre will invite urban creative talent to fuel creativity and innovation in sports, outside the regular seasonal product creation calendars.

"We are the first sports company that invites athletes, consumers and partners to be part of our brand," said James Carnes, Vice President Brand Strategy Creation. "Our portfolio of creative influencers and innovative partners such as Kanye West, Stella McCartney, Disney, Parley for the Oceans, Red Bull Media House, BASF and Google offers incredible opportunities for us to leverage our brands, showcase our creative potential and inspire consumers more than any other sports company. Together, we will co-create the future of sports."

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