Adidas Business Model

The Adidas Business Model revolves around creating and selling high-quality athletic apparel, footwear, and accessories to consumers worldwide. With a strong emphasis on innovation, performance, and style, Adidas has become one of the leading brands in the sports industry.

Founded in 1949 in Germany, Adidas has built its reputation on its commitment to providing athletes with the best products to enhance their performance. The company’s product portfolio includes various offerings, ranging from running shoes and soccer cleats to workout clothes and accessories.

Adidas continues to evolve and adapt to changing consumer preferences and market trends through its robust business model. The company’s commitment to innovation, collaboration, and sustainability sets it apart in the sports industry and ensures its continued success in the years to come.

A brief history of Adidas

Adidas’s roots can be traced back to a small shoe-making business founded in Herzogenaurach, Germany, in 1924 by brothers Adolf Dassler and Rudolf Dassler. Initially, the company was called Gebrüder Dassler Schuhfabrik, and it specialized in athletic shoes. 

The Dassler brothers shared a passion for sports and were determined to create footwear to enhance performance and give athletes a competitive edge. Their dedication to quality and innovation soon caught the attention of athletes, and their shoes gained popularity in the sports community.

One of the most significant milestones in Adidas’s history came in 1936 when Jesse Owens won four gold medals at the Berlin Olympics while wearing Dassler shoes. This achievement showcased the footwear’s performance capabilities and marked a turning point for the company’s reputation.

However, as World War II erupted, the brothers’ relationship became strained, leading to the dissolution of their partnership in 1948. Rudolf Dassler established his own company, Puma, while Adolf Dassler renamed Adidas, combining his nickname “Adi” with the first three letters of his last name.

Under the new name, Adidas continued its commitment to producing high-quality sports shoes. The company’s innovative approach to design and development led to the creation of groundbreaking products that revolutionized the athletic footwear industry. In the 1950s, Adidas introduced the first football boot with detachable studs, allowing players to customize their footwear based on field conditions.

Over the years, Adidas expanded its product range beyond footwear, introducing sports apparel and accessories. The brand’s commitment to performance, innovation, and collaboration with athletes significantly established Adidas as a global sports powerhouse.

In the 1970s, Adidas further solidified its position in popular culture by introducing the iconic Superstar sneaker, which became a staple in street fashion and hip-hop music. This crossover success showcased the brand’s ability to bridge the gap between sports and lifestyle.

Adidas’s 2006 acquisition of Reebok marked a strategic move (Reebok was sold to Authentic Brands in 2021 for $2.5 billion), allowing it to expand its presence in the American market and diversify its portfolio. This merger brought together two iconic brands and created opportunities for synergies and cross-selling.

In recent years, Adidas has continued to innovate and adapt to changing consumer preferences. The company has embraced sustainability and ethical practices, launching initiatives such as the “Parley for the Oceans” collaboration transforming ocean plastic waste into performance products.

Adidas remains dominant in the sportswear industry, with a wide range of products catering to athletes and lifestyle consumers. The brand’s commitment to innovation, quality, and rich heritage continue to propel its success in an ever-evolving market.

Who Owns Adidas

Adidas is owned by Adidas AG, a multinational corporation based in Germany. As of July 15th, 2024, Adidas AG’s ownership is distributed among various shareholders. Let’s examine the major institutional shareholders and mutual funds holding stakes in Adidas AG.

• Groupe Bruxelles Lambert SA: This investment company holds 13,714,524 shares of Adidas AG, representing a 7.619% ownership stake. Groupe Bruxelles Lambert SA is known for its diversified investment portfolio spanning various sectors;

• Flossbach von Storch AG: With a shareholding of 6,417,822 shares, Flossbach von Storch AG holds a 3.565% stake in Adidas AG. Flossbach von Storch AG is an investment management company specializing in asset management across different asset classes;

• ADIDAS AG: Surprisingly, Adidas AG owns a portion of its shares, holding 1,450,916 shares, which accounts for 0.8061% of ownership;

• MFS International (UK) Ltd.: Holding 728,413 shares, MFS International (UK) Ltd. possesses a 0.4047% stake in Adidas AG. MFS International (UK) Ltd. is an investment management firm known for its global expertise and diversified investment strategies;

• Amundi Asset Management SA (Investment Management): Holding 639,008 shares, Amundi Asset Management SA represents a 0.3550% ownership stake in Adidas AG;

• State Street Global Advisors Ltd.: With 378,617 shares, State Street Global Advisors Ltd. holds a 0.2103% stake in Adidas AG. State Street Global Advisors Ltd. is a prominent asset management firm renowned for its index-based investment strategies;

• Silverbay Capital Management LLC: Holding 301,230 shares, Silverbay Capital Management LLC possesses a 0.1674% ownership stake in Adidas AG.

Adidas Mission Statement

The Adidas mission statement is “to be the best sports brand in the world.”

How Adidas works

Adidas’ business model is based on offering its customers a diverse range of products, including shoes, clothing, and accessories for various sports and activities. The company aims to provide high-quality and innovative products that enhance performance and meet the needs of athletes and sports enthusiasts worldwide.

Customers can access Adidas’ products by visiting the company’s website or retail stores. They can browse various products and choose the ones that best suit their preferences and requirements. Adidas’ website and stores provide detailed information about each product, including its features, materials, and design.

Adidas leverages technology and data to enhance the customer experience and provide personalized recommendations. The company’s website and mobile app use algorithms and machine learning to analyze customer preferences, purchase history, and browsing behavior. This allows Adidas to suggest relevant products and offers to individual customers, making their shopping experience more convenient and tailored to their needs.

Once customers have selected their desired products, they can check out and choose their preferred payment method. Adidas accepts various payment options, including credit cards, debit cards, and mobile payment solutions. The company ensures secure transactions and protects customer data to maintain a high level of trust and confidence.

After the purchase, Adidas provides reliable and efficient shipping services to deliver the products to customers’ locations. The company has distribution centers in multiple countries to ensure timely delivery and minimize shipping costs. Customers can track their orders and receive updates on the status of their shipments through the Adidas website or app.

Adidas also offers additional services and features to enhance the customer experience:

• Adidas Creators Club is a loyalty program that allows customers to earn points for purchases and engage in various activities. Members can redeem their points for exclusive rewards, discounts, and early access to new product launches;

• Adidas Training and Coaching Apps provide customers with personalized fitness and training programs. These apps leverage advanced technologies to track and analyze athletic performance, offering tailored workout routines and guidance to help individuals achieve their fitness goals;

• Adidas Originals is a product line showcasing the brand’s heritage and iconic designs. This collection pays homage to Adidas’ rich history while offering trendy products that appeal to a broader audience.

How Adidas makes money

Adidas operates a diverse business model that generates revenue through various channels. The following are the primary ways through which Adidas makes money:

Sale of sporting goods and apparel

Adidas is a global leader in the sporting goods and apparel industry. The company designs, manufactures, and sells sports-related products, including footwear, apparel, and accessories. Adidas offers multiple sports and activities products, catering to professional athletes and enthusiasts. The sale of these products through retail stores, e-commerce platforms, and wholesale distribution channels contributes significantly to Adidas’ revenue.

Brand partnerships and endorsements

Adidas collaborates with athletes, sports teams, and celebrities to showcase its products and enhance brand visibility. These partnerships involve endorsement deals, sponsorship agreements, and co-branded collaborations. Adidas aims to attract consumers and gain a competitive edge in the market by associating its brand with high-profile individuals and teams. The revenue generated from such brand partnerships and endorsements is a significant revenue stream for the company.

Licensing and royalties

Adidas licenses its logo, trademarks, and other intellectual property to third-party manufacturers and retailers. These licensing agreements allow other companies to produce and sell products featuring the Adidas brand, expanding its reach and generating additional revenue. Adidas earns royalties from these licensing deals, which contribute to its financial performance.

Adidas Business Model Canvas

The Adidas Business Model can be explained in the following business model canvas:

Adidas Customer Segments

Adidas caters to a diverse customer segment of individuals, athletes, and businesses. The following segments make up Adidas’ customer base:

• Individual Consumers: Individual consumers comprise a significant portion of Adidas’ customer segment. These are regular people of various age groups and genders interested in athletic footwear, clothing, and accessories. They may purchase Adidas products for sports activities, casual wear, or fashion. 

Adidas offers products for men, women, and children, ensuring a broad range of choices to suit individual preferences. The brand caters to the needs of athletes, fitness enthusiasts, and even fashion-conscious individuals who appreciate the brand’s style and quality;

• Athletes and Sports Teams: Adidas has a strong presence in the sports industry, making athletes and sports teams a crucial customer segment. Professional athletes, sports teams, and leagues often partner with Adidas for sports apparel, footwear, and equipment.

Adidas collaborates with various sports organizations and sponsors individual athletes to enhance its brand image and align with the world of sports. These partnerships help promote Adidas’ products and create credibility and trust among athletes and sports enthusiasts;

• Fitness and Wellness Enthusiasts: Adidas recognizes the growing demand for fitness and wellness products and caters to enthusiasts in this segment. The brand offers a wide range of athleisure and fitness-focused products, such as yoga apparel, running shoes, fitness trackers, and accessories.

This customer segment seeks performance-oriented products that align with their health-conscious lifestyles. Adidas’ innovative technologies and stylish designs appeal to fitness and wellness enthusiasts who seek both functionality and fashion;

• Fashion and Streetwear Consumers: Adidas has become a prominent player in the fashion and streetwear industry, appealing to consumers beyond athletic endeavors. The brand’s collaboration with fashion designers and celebrities has elevated its status in the fashion world.

Fashion-conscious consumers, including urban youth and trendsetters, are attracted to Adidas’ iconic designs, limited editions, and streetwear collections. Adidas’ partnership with celebrities, influencers, and social media campaigns contributes to its appeal among streetwear and fashion-conscious customers;

• Retailers and Business Partners: In addition to individual consumers, Adidas also focuses on building relationships with retailers and business partners. These include sports retailers, fashion boutiques, department stores, and online marketplaces.

By partnering with these retailers, Adidas ensures its products are accessible globally to a wide range of consumers. Collaborations with retailers give Adidas visibility and distribution channels, strengthening its market presence and expanding its customer reach;

• Corporate Customers: Adidas provides customized apparel and merchandise solutions for businesses, sports teams, and organizations. These corporate customers can personalize Adidas products with logos and branding for promotional purposes, team uniforms, or corporate events.

Adidas offers a range of customization options, including embroidery, screen printing, and heat transfers. This segment allows Adidas to tap into the corporate market and establish long-term partnerships with businesses seeking branded solutions.

Adidas Value Propositions

Adidas value propositions consist of:

• For Individual Consumers: Adidas offers consumers a compelling value proposition by providing high-quality athletic footwear, clothing, and accessories that combine performance, style, and comfort. They strive to meet the diverse needs and preferences of individuals of all ages and genders, offering a wide range of products suitable for various sports activities, casual wear, and fashion-forward looks.

Their commitment to innovation and advanced technologies ensures customers can rely on Adidas products to enhance their athletic performance while making a fashion statement;

• For Athletes and Sports Teams: Adidas recognizes the unique requirements of athletes and sports teams and tailors its value proposition accordingly. It offers high-performance athletic apparel, footwear, and equipment designed to enhance athletes’ performance and deliver maximum comfort, durability, and support. 

Adidas collaborates with professional athletes, sports organizations, and teams, leveraging their expertise to develop cutting-edge products that meet the specific needs of sports professionals;

• For Fitness and Wellness Enthusiasts: Adidas understands the evolving demands of fitness and wellness enthusiasts and positions itself as a brand that supports active and healthy lifestyles. They offer a value proposition that combines the latest in fitness technology, functional design, and on-trend style. Adidas provides fitness enthusiasts with a wide range of athleisure products, such as yoga apparel, running shoes, fitness trackers, and accessories, that seamlessly transition from the gym to everyday life.

By choosing Adidas, fitness and wellness enthusiasts can enjoy products that enhance their performance and reflect their personal style and commitment to a healthy lifestyle. Adidas’ value proposition to this customer segment centers on delivering products that inspire and empower individuals to reach their fitness goals and live their best lives;

• For Fashion and Streetwear Consumers: Adidas offers a value proposition that combines athletic heritage with contemporary style for fashion and streetwear consumers. Their collaborations with fashion designers and celebrities create limited-edition collections and streetwear staples that capture the attention of trendsetters and fashion-conscious consumers. Adidas’ commitment to quality materials, craftsmanship, and iconic designs appeals to those seeking fashion-forward looks that make a statement.

By wearing Adidas, fashion, and streetwear, consumers can express their individuality and stay on-trend while enjoying the comfort and durability the brand is renowned for. The value proposition in this segment revolves around offering products that merge the worlds of sports, fashion, and street culture, allowing consumers to make a distinct style statement;

• For Retailers and Business Partners: Adidas provides retailers and business partners with a value proposition encompassing high-quality, innovative products and a trusted and globally recognized brand. Their extensive range of athletic footwear, apparel, and accessories appeals to a broad customer base, ensuring retailers can cater to diverse consumer preferences.

Adidas offers strong marketing support, including impactful brand campaigns, in-store displays, and collaborative marketing initiatives. These help retailers drive sales and increase brand visibility. By partnering with Adidas, retailers and business partners can leverage the brand’s reputation for quality and style, attracting loyal customers and enhancing their brand image;

• For Corporate Customers: Adidas offers a value proposition centered around customized apparel and merchandise solutions for corporate customers. By partnering with Adidas, businesses, sports teams, and organizations can personalize products with their logos and branding, effectively promoting their brand identity and enhancing their visibility.

Adidas’ customization options, including embroidery, screen printing, and heat transfers, enable corporate customers to create unique and professional branded apparel and merchandise for corporate events, promotional campaigns, and team uniforms. Adidas’ value proposition to corporate customers lies in providing them with tailored solutions that reflect their brand identity, drive brand recognition, and foster a sense of unity and pride among their employees and stakeholders.

Adidas Channels

Adidas channels consist of:

• Wholesale: The company uses traditional wholesale channels by selling its products to various retail partners, including department stores, sports retailers, and online marketplaces;
• Direct-to-Consumer: Adidas operates its e-commerce platform, allowing customers to purchase products directly;
• Branded Retail Stores: Adidas has a network of branded retail stores worldwide where customers can browse and purchase its products in person;
• Licensing: Adidas also generates revenue through licensing agreements with other companies that produce and sell products using the Adidas brand.

Adidas Customer Relationships

Adidas customer relationships consist of:

• Brand Engagement: Adidas focuses on building solid relationships with customers through engaging marketing campaigns, sponsorships, and partnerships with sports teams, athletes, and celebrities;
• Customer Service: Adidas emphasizes delivering excellent customer service by offering easy returns and exchanges, personalized recommendations, and responsive support through various channels;
• Social Media: The company maintains a strong presence on social media platforms to directly engage with customers, gather feedback, and address inquiries;
• Loyalty Programs: Adidas offers loyalty programs, such as the Adidas Creator’s Club, which provides its members exclusive benefits, rewards, and experiences.

Adidas Revenue Streams

Adidas revenue streams consist of:

• Footwear Sales: Adidas’s most significant revenue stream comes from the sale of athletic footwear, including running shoes, sneakers, and other sports-specific footwear;
• Apparel Sales: Adidas also generates significant revenue from selling sports apparel, such as jerseys, athletic clothing, and accessories;
• Accessories: The company earns revenue from selling accessories like bags, socks, hats, and sports equipment;
• Licensing and Sponsorship: Adidas generates additional revenue by licensing its brand and logo and signing sponsorship deals with sports teams and athletes. These deals allow Adidas’s name and logo to be used in various promotional activities.

Adidas Key Resources

Adidas key resources consist of:

• Brand: Adidas’ strong brand reputation and recognition are vital resources that help drive customer loyalty and sales;
• Supply Chain: The company’s extensive network of suppliers and manufacturing facilities ensures a reliable and efficient supply of products;
• Research and Development: Adidas invests in R&D to develop innovative products, technologies, and materials, contributing to its competitive advantage;
• Retail Stores and E-commerce Platform: Adidas’ physical stores and online platforms are essential resources for showcasing its products and providing customer accessibility;
• Marketing and Advertising: The company’s marketing and advertising capabilities, including partnerships with athletes and sponsorship of major sporting events, are crucial resources for brand promotion and customer acquisition.

Adidas Key Activities

Adidas key activities consist of:

• Design and develop athletic products
• Market and brand products
• Manufacture and source materials
• Conduct R&D and innovation
• Manage distribution and logistics
• Operate retail and e-commerce
• Sponsor sports and endorse athletes
• Drive sustainability and CSR efforts

Adidas Key Partners

Adidas key partners consist of:

• Suppliers and manufacturers
• Retailers and distributors
• Sports teams, leagues, and athletes
• Designers and fashion influencers
• Fitness centers and gyms
• Technology and software providers
• Non-profit organizations
• Advertising and marketing agencies

Adidas Cost Structure

Adidas cost structure consists of:

• Cost of goods sold
• Marketing and advertising expenses
• R&D investments
• Retail operations and rentals
• Logistics and distribution costs
• Sponsorship and endorsement deals
• Employee salaries and benefits
• IT infrastructure and technology
• Administrative and overhead expenses

Adidas Competitors

Adidas faces tough competition in the sportswear and athletic footwear market. Some of its key competitors include:

• Nike: Nike is Adidas’ biggest competitor and dominates the global sportswear market. It offers a wide range of product categories and has a strong brand presence around the world;

• Puma: Puma is another major competitor of Adidas. It focuses on sportswear, athletic footwear, and accessories. It has a distinct brand identity and competes aggressively with Adidas and Nike;

• Under Armour: Under Armour is a relatively new player in the market but has been gaining significant market share. It primarily focuses on athletic apparel and performance wear and is known for its innovative products;

• New Balance: New Balance is a famous brand, especially in the running and athletic footwear category. Its products emphasize comfort and durability and target a niche market segment;

• Lululemon Athletica: Lululemon is a leading competitor in the activewear market, particularly for yoga apparel. Although it mainly focuses on women’s products, it has also expanded into men’s clothing;

• Skechers: Skechers mainly competes with Adidas in the athletic footwear market. It targets a broad consumer base with its casual and comfortable shoe offerings.

Adidas SWOT Analysis

To gain a comprehensive understanding of Adidas’ position in the market, it is essential to conduct a SWOT analysis. This analysis examines Adidas’ strengths, weaknesses, opportunities, and threats to provide valuable insights into the company’s current and prospects.

Adidas Strengths

• Strong Brand Image: Adidas is a well-established global brand known for its quality and innovative products in the sports industry;
• Wide Product Range: Adidas offers various sports apparel, footwear, and accessories catering to multiple sports and fashion trends;
• Technological Advancements: The company invests heavily in research and development to incorporate the latest technologies into its products, enhancing performance and comfort;
• Sponsorship Agreements: Adidas has strategic partnerships with sports teams, leagues, and individual athletes, providing extensive exposure and brand visibility.

Adidas Weaknesses

• Overdependence on Footwear: Although Adidas has expanded its product portfolio, it still heavily relies on footwear sales, which can make the company vulnerable to market fluctuations;
• Limited Market Share in Emerging Countries: Adidas faces challenges in penetrating emerging markets where local competitors often dominate, limiting its growth potential;
• Supply Chain Management: Adidas’s complex global supply chain poses challenges in ensuring timely delivery, risk mitigation, and maintaining sustainable practices;
• Premium Pricing: Some consumers perceive Adidas products as expensive, which might hinder its market share among price-sensitive customers.

Adidas Opportunities

• Growing Global Sportswear Market: The increasing adoption of fitness and sports activities worldwide presents Adidas with an opportunity to expand its market presence;
• E-commerce Expansion: The rise of online shopping creates opportunities for Adidas to reach a broader customer base, make personalized recommendations, and gain insights through data analytics;
• Sustainability and Ethical Practices: The growing consumer demand for sustainable and eco-friendly products provides Adidas an opportunity to develop innovative solutions and improve its brand image;
• Collaborations and Partnerships: Adidas can leverage partnerships with fashion designers, streetwear brands, and influencers to create unique and trendsetting collections that attract a broader target audience.

Adidas Threats

• Intense Competition: Adidas faces competition from global sportswear giants like Nike and Under Armour, as well as local brands, which can impact market share and profitability;
• Economic Factors: Economic fluctuations, currency exchange rates, and changes in consumer spending patterns can affect Adidas’ sales and profitability;
• Counterfeit Products: Adidas faces threats from counterfeit products, which can harm its brand reputation and dilute its market share;
• Changing Consumer Preferences: Shifting fashion and lifestyle trends can impact the demand for Adidas products, requiring continuous innovation and adaptation to stay relevant in the market.

-> Read More About Adidas’s SWOT Analysis

Conclusion

Adidas has successfully developed a business model that combines innovation, brand recognition, and a sustainable approach to drive its growth in the competitive sports apparel market. By prioritizing customer-centric strategies, embracing digital transformation, and establishing strategic partnerships, Adidas has effectively connected with its target audience and created products that resonate with their needs and aspirations. 

Adidas’ commitment to sustainability and responsible business practices enhances its brand image and positions it for long-term success in an increasingly conscious consumer market. The company’s business model is a prime example of how a company can adapt and thrive in a rapidly evolving industry while staying true to its core values and mission.