SWOT Analysis of Adidas in 2020

By

Adidas is the most popular sports brand in the world. It is the leading athletic sportswear company and the brand is well-known to most of the people. The brand is associated with sportswear and fashion brands.

The sports shoe industry of the brand has grown immensely as is extremely competitive with Nike, Under Armour that leads the industry. When you associate the presentation of Adidas to Nike, it has outperformed the Nike brand.

The international sports shoe industry is bound to raise at a strong rate over the next few years.

The brand is a genuine sports brand. Its founders were a true athlete whose main objective was to make equipment for athletes better. The brand sees a continuous improvement in all the areas of their business right from the product technologies that would help athletes to perform better.

The SWOT analysis of Adidas differentiates the brand’s strengths, weaknesses, opportunities, and threats that would be useful for the company to grow. Read out this article, to get an understanding of where Adidas stands.

Before we begin in-depth on the SWOT analysis of Adidas, let us understand a bit of the background of the company Adidas.

Adidas Background

The following points provide you a bit of Adidas’s background:

  • The company is known with the name Adidas AG.
  • Adidas was established during the year 1924 and its headquarter is set up in Germany.
  • The company logo is shown in Image 1.
  • The various products produced by the company are the following:
    1. Apparel
    2. Sportswear
    3. Accessories
  • Its catalog includes the following:
    1. Men’s shoes
    2. Men’s clothing
    3. Women’s shoes
    4. Women’s clothing
    5. Kid’s shoes
    6. Kid’s clothing

The SWOT analysis of Adidas highlights the strengths of the brand and its weakness for the company to look at. It also mentions the opportunities that the brand sees and the various benefit it gets out of it and the threat that the brand likely to face.

For the brand to meet the long-term competitive advantage it must address the various concerns highlighted in the SWOT analysis of Adidas.

Let us discuss on the SWOT analysis of Adidas.

Strengths in the SWOT Analysis of Adidas
Strengths in the SWOT Analysis of Adidas

  • Brand Value – Adidas is the most respected sports brand and as per Forbes, it is ranked in the third position having a brand value of about $6.8 billion. It is a powerful brand and is the main strength of the brand. It is one of the main sportswear brands that are popular across the globe. Not only is the brand spread across the globe it is also a positive brand image. The various products of the brand are fashionable and are of high-quality. Moreover, Adidas’s brand being so powerful is the main part of the way it tries to capture a large portion of the sportswear sales.
  • Iconic Brand – Adidas is being nurtured as a strong and significant heritage over its long journey. It has influenced and shaped many aspects of society worldwide. This is a big strength to the brand and is seen in its growth.
  • Innovative New Products – Ever since its founding, Adidas has always set the top priority for its product quality over any other kinds of stuff. It innovates new products regularly and these products are one of the driving forces to get customers to their brand.
  • Varied Portfolio – Even though the brand is popular for its sportswear industry, the company’s products are varied across. It provides many products that are produced to fit into a wide sports range that includes apparel, footwear, and hardware accessories.
  • Youngsters Preference – The brand has a continuous focus on its product quality and hence it has a strong and loyal customer base. Its customer base is mostly young adults and teens. Youngsters prefer this brand where the style and price would be feasible for them.
  • Efficient Supply Chain Management – For any successful business, supply chain management plays an important role. For Adidas, it works the same way where most of its manufacturing processes are outsourced. Adidas works with main strategic partners that make sure of the entire supply chain.
  • Strong Financial Position – Maintaining strong finance is important to protect market share and the long-tern profits and sustainability of the business. Adidas is one of the strongest financially stable companies in the world and makes use of the financial situation is superior than its competitors.
  • Strong Distribution Network – Yet another strength of the brand is its distribution network. From the logistics point of view, the Adidas distribution network is a strong one and ships many millions of goods worldwide in less time. When the products are ready and available for retail, customers will have a lot of choices in the ways they can purchase. The brand sells its products in the traditional store worldwide, few in the branded store of Adidas and other is some large-scale sportwear shop. Apart from the offline store, the brand also has a strong online presence. Adidas products are available for purchase on the website of Adidas or through various online stores like Amazon.
  • Highly Skilled Workforce – This is one more strength of the brand. Adidas pride lies in its highly skilled and professional workforce to innovate and manufacture its products. The company invests a lot of money in its training and development of its employees so that the employees can learn new methodologies and implement it for the company.
  • Effective Marketing Strategy – The marketing strategy adopted by the brand has led taken it to great levels. It makes use of the succeeding marketing strategies for its products.
    1. Branding by means of international sponsors – Sponsoring many international companies gives a chance to advertise to the sports lovers directly. For example, having the marketing campaign for Olympics, FIFA world cup, etc.
    2. Sponsoring of high-profile athletes – Sponsoring high-profile sports stars like Sachin, David Beckham, etc. is a big strength to the brand.
  • Celebrity Endorsements – Adidas has struggled to preserve and increase its recognition for its brand through endorsements from various celebrities. This is a big strength for the brand.

Weaknesses in the SWOT Analysis of Adidas

Weaknesses in the SWOT Analysis of Adidas

  • Shortage in Supply Chain – Adidas outsources many of its product manufacturing to third-party vendors or to independent manufacturing suppliers mainly in Vietnam, China, and Cambodia. This has made Adidas be more dependent on foreign suppliers. When there is so much dependency on foreign suppliers, its sales depend on the availability of the product subject to the suppliers. This is a weak point on the brand and might affect its sales as well.
  • Expensive Products – Adidas’s products are priced a little high. The products are charged at a high price where normal people could not afford it. This is yet another weak point for the brand that would lessen its sales.
  • Less Product Line – The Adidas Group has only two major brands under its portfolio, they are Adidas and Reebok. This has restricted the brand only within sports apparel, sports shoes, and sports accessories. When there is a low demand for sports products, it would hit the brand to a great extent.
  • Increase in operating Expense – There is always a rise in the price of labor and raw material and hence Adidas’s operating expenses keep growing. There is an increase in Adidas’s revenue and so is its operating expenses. The brand has invested more in marketing and this has led to an increase in its operating expense. When the operating expense increases, the profit margins shrink and would affect the net income to a great extent.
  • Fewer Endorsements – Unlike the top brand Nike, Adidas has invested very less to get a celebrity endorsement. This is a great weak point for the brand and it constantly lags from the Nike brand. The Adidas brand is strong as of now, and when it gets paid endorsements it would increase the brand value and drive sales directly.

Opportunities in the SWOT Analysis of Adidas

Opportunities in the SWOT Analysis of Adidas

  • Online Commerce – Recently, online customers are increasing or using online commerce websites has increased vastly. Adidas have included Instagram’s checkout feature into its distribution network that would lead to an increase of 40% in online sales. It can replicate this success on various other social media platforms like Facebook, Snapchat, etc. Having more focus on online sales would increase your sales to a great extent.
  • Increase in Sportwear Industry – Sports and fitness domain is being so popular in the current generation, and there is no sign of that being slowing down, meaning that there will be a reliable demand rise for various products on sportswear. Hence, the brand sees a huge rise in the domain that would help for an increase in sales.
  • Investing in Smart Materials – Advancements in technology have enabled to develop new smart materials that are better than conventional materials. So, investing in more smart materials would bring more opportunities for the brand to increase its sales. When the brand invests in various technological development and for manufacturing new material, it sees an edge over its competitors.
  • Premium Sports Products Demand – The increased economic situation in many developing countries has also increased the purchase and demand of the brand’s premium products. This brings a huge opportunity for the brand and it can capitalize on this by expanding into many other countries where it is likely to have more sales.
  • Broadening into Sporting Equipment – Although Adidas has a hugely varied portfolio, there is still an opportunity for its product line expansion. It can try to venture into various kinds of sporting goods like golf clubs, tennis rackets, hockey sticks, and many more.
  • International Expansion – There is a speedy growth in the emerging markets of Asia, Africa, and South America and this provides a profitable opportunity for expansion in these areas.

Threats in the SWOT Analysis of Adidas

Trademark Loss

  • Competition – The brand sees an increased competition because of various technological advancements and globalization that has provided a room for entry and penetration of small and medium companies. This would mean that the brand sees huge competition against its competitors from Under Armour, Nike, and Puma along with new entrants.
  • Dominant from Suppliers – The statistic that Adidas is so much dependent on external resources for their product is a big threat to the brand. It subcontracts most of its manufacturing to the suppliers who tend to have more negotiating power with the company. This twisted power has exposed the brand to the threat of being held inmate by its suppliers.
  • Trademark Loss – During the year 2019, the brand has lost the trademark case of its logo in the European Union General Court, that would expose the brand to the imitation threat.
  • Technology Advancements – Most of the brand’s competitions are so advanced with technology and it is a serious threat to the brand. This means that a competitor like Nike would project a great threat in case they include advanced technologies than Adidas.
  • Trade Pressures of US-China – As the brand operates globally, the company is vulnerable to the uncontrolled reciprocal tariffs imposition between the two countries. A trade war between the two countries is a threat to the brand as Adidas second-largest market in the United States and many products are manufactured in China and many other Asian countries.
  • Fake Products – Few products are sold by misusing the brand name but not the brand in actual. The fake products of its shoe brands have increased more that has shown a big threat to the brand.

Conclusion

The SWOT analysis of Adidas mentioned in this article has highlighted the main strengths of the brand that comes up from its brand value, product quality, product innovation, varied products, customer segment of young adults, efficient supply chain management, strong financial position, strong diversified network, and its effective marketing strategy.

The brand sees a huge weak point from the shortage faced in the supply chain, its expensive products, and an increase in operating expenses. It sees an opportunity from increasing more on online sales, evergreen growth industry, and having international exposure.

It sees a threat from its competitors, dominance from suppliers, and the availability of fake products of the brand’s products.