In the Coastal segment, adidas targets a young consumer
group inspired by action sports. This includes a continued
focus on the brand’s successful skateboarding-inspired product
offering.
To ensure future sales growth in the sports lifestyle market, adidas will offer new concepts and – at the same time – further differentiate and segment distribution at wholesale and in adidas own-retail stores.
SPORT STYLE: BUILDING A FASHION BUSINESS ON THE SUCCESS
OF Y-3
Another key element in the Sport Style division is
the high-end Y-3 fashion collection developed in collaboration
with designer Yohji Yamamoto. Introduced five years ago, the
Y-3 business has grown substantially and has become a key
image driver for the adidas brand. Through Y-3, adidas has
created its own niche in the highly competitive world of fashion.
New collections are launched twice a year at the New York
fashion week. To drive the Y-3 business worldwide, adidas
focuses
on controlled space initiatives with high-end retailers
as well as own-retail activities. In 2008, adidas expects to
grow sales in the fashion category at a double-digit
rate.
OPTIMIZING WHOLESALE BUSINESS
Success in both Sport
Performance and Sport Style requires an effective distribution
strategy. The right presentation and availability of consumerrelevant
product as well as excellent customer service at the
point-of-sale are critical in this context.
adidas generates around 83 % of its revenues through its wholesale business – where adidas sales subsidiaries sell footwear, apparel and hardware/accessories to retail partners. In general, the brand’s customers include sporting goods, sport specialty, athletic specialty and family footwear retailers as well as high-end department stores and directional accounts in the Sport Style division. To preserve the premium image of the adidas brand, it generally does not sell its products to value or discount chains.
In a few markets, where adidas does not have its own sales
subsidiaries, the brand partners with third-party distributors
that sell its products to retail. To have maximum brand control,
however, adidas’ strategy is to continuously buy back distribution
rights and establish own sales organizations as appropriate. 
see Risk and Opportunity Report.
In 2008, adidas will also continue to optimize its wholesale proposition by further segmenting its product offering to retailers. After the successful introduction of the new distribution model in the UK, the brand plans to roll out similar models in other major European markets.
EXPANDING CONTROLLED SPACe
In line with the Group’s
distribution
strategy, see Group Strategy the adidas brand
focuses
on the expansion of controlled space:
By further growing its own-retail business and extending
the mono-branded store network particularly in emerging
markets,
By diversifying its own store formats and establishing a
multi-dimensional store portfolio comprising Metropolitan
stores, concept stores, e-commerce and factory outlets, and
By accelerating its roll-out of shop-in-shops with key retail
partners in mature markets.
In 2007, adidas made significant progress in all these areas.
The brand’s own-retail sales and store number continued to
increase strongly. Own retail now accounts for 17 % of adidas
brand revenues.
see adidas Business Performance The number
of mono-branded stores in emerging markets and the number
of shop-in-shops also grew significantly.
In 2008, adidas plans to further extend its controlled space initiatives. Together with its retailer partners, the brand will continue to open shop-in-shop formats in mature markets and new mono-branded stores in emerging markets. In markets with an underdeveloped retail landscape and where market access via partners is not possible, adidas plans to further extend its own-retail business.
As part of the continued growth of its own-store network, the adidas brand will open its largest store in the world in Beijing in spring 2008, which will showcase both Sport Performance and Sport Style products. Going forward, the brand expects to introduce more such Metropolitan stores as appropriate. adidas will also further diversify its store base introducing category-specific concept store formats. Moreover, the brand will pilot its first European online shop in the Netherlands in the first half of 2008.
GROWING AVERAGE SELLING PRICES AND PROFITABILITY
adidas offers the vast majority of its footwear, apparel and
hardware products at high- and mid-level price points. The
brand’s goal is to strengthen both its market position and revenues
by driving continuous growth in average selling prices
and increasing profitability. adidas believes a strong brand
image
is the best defense against a promotional retail environment
(i. e. competition at retail via price wars) and is prepared
to give up short-term revenue opportunities as necessary to
preserve the long-term market position. see Risk and Opportunity Report
