SWOT Analysis of Adidas: Strengths &
Weaknesses 202
Company Overview
The German giant, with the iconic 3-stripe and 3-trefoils logos, is the leading sportswear
company that sells sports apparel, shoes, and sports equipment. Adidas operates in over 160
countries in the world, joining Nike and Under Amour as the trinity of global sporting goods
companies. Adidas AG owns Adidas and Reebok brands and distributes goods under those two
brands through 2,500 stores worldwide and a franchise network. While Adidas focuses on
popular sports, such as football, American football, basketball, running, training gears, Reebok is
specialized in gym apparel and target gym-goers. 90% of Adidas AG sales are accounted for by
Adidas-branded merchandise. Footwear is Adidas’s biggest product segment, which generates
around 60% of sales. The apparel segment contributes 35%, and the remainder 5% is filled with
sports equipment. Today we will go over a detailed SWOT Analysis of the company.
Table of Contents
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Adidas Strengths 2021:
Adidas Weaknesses 2021:
Adidas Opportunities 2021:
Adidas Threats 2021:
Adidas SWOT Analysis Conclusion 2021:
Adidas Strengths 2021:
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Strong brand recognition and a large marketing budget have allowed Adidas to
score large sponsorship deals with sports teams and athletes.
The company has been FIFA and UEFA’s sponsor for the footballs and apparel used in
major tournaments for many years, a position that even Nike cannot overthrow. They are
also the main sponsor for Germany National team, Manchester United, Real Madrid, as
well as famous footballers such as Paul Pogba, Lionel Messi, and Gareth Bale. Adidas
also secured a sponsorship deal with the MLS (the U.S professional national football
league) to expand the brand’s exposure in the U.S market. Apart from football, Adidas
also has sponsorships with athletes in basketball (James Harden, Donovan Mitchell),
boxing, rugby, and many Olympic teams.
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Innovative and top-quality products keep Adidas’s sales high and affirm its position
among competitors.
Collaboration with artists and other celebrities, such as Kanye West and Pharrell
Williams, allows Adidas to penetrate the premium casual fashion, where the Yeezy 350
can be sold for hundreds of dollars. The company constantly introduce new lines of
football boots with new designs and features to suit the demands of their top athletes, as
well as improving and refreshing current lines with new colors. Adidas is also in the race
with Nike for the carbon-sole running shoe market, and its latest product received
positive reviews from professional athletes.
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Strong financial performance over the last 10 years, Adidas is only second to Nike in
terms of revenue and profit.
Adidas recently divestiture its non-core brands, TaylorMade and Rockport, and it resulted
in a 55% jump in net income in 2018. Its margin also increased as the company was able
to grow sales without adding a similar proportion to the cost of sales.
Adidas Weaknesses 2021:
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Adidas’s overall sales rely too much on the footwear segment.
The segment is currently accounted for 60% of sales and it is expected to rise further in a
near future. However, the growth of footwear sales has slowed down significantly, from
23% in 2017 to only 3% in 2018. To avoid the negative effect of changing consumer taste
on revenue, Adidas should diverse its revenue to apparel and sporting equipment, or
introducing new and innovative shoes to reignite the demand.
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Fewer brands under management limits Adidas’ abilities in brand positioning
compared to Nike.
At the moment, the company markets its products under Adidas and Reebok brand, while
Nike has NIKE, Jordan, Hurley, and Converse brands to market its products, therefore
Nike could reach out to different customer groups using its lifestyle products lines.
Reebok brand does not receive the same attention from the parent company as Adidas
brand, therefore the average sales growth and profitability are much weaker, and it cannot
compete with Jordan or Converse in terms of sales volume and brand recognition.
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Too little market shares in North America even though Adidas is a global force.
According to Euromonitor, Adidas only represented 5.9% of the U.S market in 2019,
while Nike had 16.7% of it. Adidas’s main sports, football, is not a popular choice among
Americans and the company cannot win sponsorship deals with major professional
leagues, such as the NFL and the MLB. Adidas used to be the main apparel sponsor for
the NBA, however, it lost the contract to Nike.
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Adidas Opportunities 2021:
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Many opportunities on digital platforms for sales and customer engagement, given
its early-stage succession in e-commerce.
Adidas only launched its mobile application in 2017, but it is now available in 30
countries and features the latest augmented reality technology for customers to try on
products virtually. Combined with Adidas’s Creator Club, a loyalty program that rewards
shoppers with access to exclusive events and products, app sales have increased by four
times. Adidas can also merge its mobile app with digital touchpoints in stores to enhance
customer engagement. Adidas also sells products on its website, in which it is forecasted
to continue its double-digit growth rate.
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Focus on six key cities: Los Angeles, New York, London, Paris, Shanghai, and
Tokyo to expand sales and enhance customer experience there.
These urban markets are very important since they generate about 80% of global GDP
and they are expected to host 60% of the world population living there by 2030. Adidas’s
management plans to double revenues in these cities.
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Focus on penetrating the North America market to catch up with Nike in sales and
market shares, which are relatively low compared to other regions.
The company leads the German market and ties with Nike in Western Europe, however,
its market shares in the U.S is only 5.9% compared to 16.7% of that of Nike in 2019.
North America sales increased by 8% in 2019, in which Adidas brand and Reebok’s sales
rose by 7% and 12%, respectively. Adidas can further narrow the gap with Nike, in terms
of operating margin, by pushing sales of full-price items, despite higher sales and
marketing expenses.
Adidas Threats 2021:
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Since close to 75% of Adidas’s sales are outside of the Eurozone, the company is
exposed to exchange rate fluctuation.
Central banks around the world have been issued different monetary policies to fend off
the recent recession, making exchange rates harder to predict.
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Environmental–conscious consumers are on the rise and it might force Adidas to
further innovate its products to cut wastes and encourage recycling.
Every year, there are millions of old shoes end up in landfills around the world, further
worsen the problems with the environment. A few Adidas products are already made
from recycled material; however, environmentalists would demand further efforts from
sports apparel companies, for a better environment.
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Adidas lost its 3-stripe design in the EU after the general court of EU ruled it was
not distinctive enough in 2019.
The company states that “This ruling is limited to this particular execution of the threestripe mark and does not impact on the broad scope of protection that Adidas has on its
well-known three-stripe mark in various forms in Europe,”. While waiting for the appeal
court, Adidas’s design could be subjected to imitation.
Adidas SWOT Analysis Conclusion 2021:
Despite reaching its 100th birthday, Adidas has never lost its innovation touch that helps position
itself as the second-largest sports apparel and equipment manufacture. The company dominates
the market in Germany and has a very strong appearance in other Western European countries, as
well as the ones in the Asia Pacific region. Adidas has promising opportunities to expand its
sales via its mobile platform and focusing on the North American market. The company has a
long history and a competitive edge in the world’s most popular sport, football.
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