Adidas plans shift to DTC-led business model in new “Own the Game” strategy
Echoing the move by Nike to cut its ties with third-party retailers and focus on direct-to-consumer (DTC) sales, Adidas has revealed its new “Own the Game” strategy – designed to significantly increase sales and profitability as well as gain market share until 2025.
As a result, the company’s DTC business is projected to account for around half of the company's total net sales by 2025, which will generate more than 80% of the targeted top-line growth.
The company's digital transformation will be driven by investments of more than €1bn (£856m) until 2025, and the company’s e-commerce business is forecast to double to €9 billion (£7.7bn).
The strategic focus will be on brand credibility, consumer experience and sustainability.
From a market perspective, the company will focus on Greater China, Europe, Middle East, and Africa (EMEA) and North America. Overall, the three strategic markets are expected to account for around 90% of sales growth until 2025.
Driven by the significant top-line growth and bottom-line expansion, Adidas will generate “substantial cumulative free cash flow” until 2025. The majority of that, up to €9 billion (£7.7bn), will be distributed to shareholders through regular dividend pay-outs.
Adidas CEO, Kasper Rorsted, said: “To successfully execute our strategy, we will continue to significantly invest in our people, our brand and the digital transformation of the company.
“‘Own the Game’ will enable us to continue growing in an attractive industry, gaining market share, and creating sustainable value for all of our stakeholders. By 2025, Adidas will be stronger, more sustainable and more digital than ever before.”
More than 95% of sales growth is expected to come from five strategic categories: Football, running, training, outdoor, and lifestyle.
Additionally, the Adidas Originals offer will be extended in the premium segment to ensure a stronger distinction of the respective product offerings going forward.