Adidas takes nuanced approach

31 August 2011

HERZOGENAURACH: Adidas, the sportswear group, is targeting older consumers in advanced markets and younger shoppers in fast-growing economies as it seeks to drive revenues upwards.

One customer segment attracting the company at present is the ageing population in many Western countries, often boasting impressive levels of disposable income.

Herbert Hainer, CEO of adidas, told the Wall Street Journal: "Thirty years ago, the average person retired at 63 and died at 65."

"Today, people retire at 60 or 61 and then live till 74 or 76. People go walking, jogging, to the mountains; people of 70 or 75 go to the gym today. They're doing sport and they're buying sports products."

Alongside this audience, young shoppers in emerging markets are another appealing demographic, as their purchasing power is rising rapidly, a shift benefitting firms like adidas.

"We don't sell highly expensive investment goods. We sell consumer goods that cost around €50 to €150," Hainer said. "If just 10% of the Chinese population can afford them then we're talking about 130m to 140m consumers."

Adidas expects to record a double-digit expansion in Chinese sales in each of the next five years, and is especially optimistic regarding Brazil, Russia and, to a slightly lesser extent, India.

More broadly, it believes a combination of North America, Russia, the Commonwealth of Independent States and China will supply 50% of growth to 2015.

Hainer has established the aims of boosting sales from €12bn in 2010 to €17bn in 2015, and delivering a compound annual growth rate of 15% across this timeframe.

Major events including the Olympic Games and UEFA European Football Championships next year, as well as the 2014 FIFA World Cup, should all provide a short term lift in sales.

Taking a long term view, Hainer argued the sportswear sector is more resilient than many other categories in periods of economic stress, as shown by the fact adidas' sales only fell by 4% in 2009 and reached a new peak in 2008.

He said: "Our products aren't that expensive, and people can still afford to buy them because they're more concerned about their health, appearance and fitness, and sport is the best option for that."

Data sourced from Wall Street Journal; additional content by Warc staff