Nike and Adidas are trying opposite strategies to take over the US market
- Nike and Adidas are two of the small number of retail companies faring well in the retail apocalypse.
- But, the companies disagree on whether to reach their customers through scale or quality.
- Watch Nike's stock price move in real time here.
Amid an ongoing retail apocalypse, athletic fashion companies like Adidas and Nike have stood out as bright spots, faring better than malls and department stores. But, the brands have been fiercely battling each other to expand their shares of the athleisure and sneaker markets and they have very different ideas about how to do that.
Nike's plan to outmaneuver the competition involves a "massive transformation" according to CEO Matt Parker. A big part of Nike's plan involves improving how it presents itself to its customers and focusing on the perceived quality of the brand. Nike decided to cut back its number of retail partners from 30,000 to just 40 as a part of its transformation. The ones remaining are willing to work with Nike to offer unique branded experiences for the company's products.
Adidas, on the other hand, is taking an entirely different approach, instead focusing on scale. The company's CFO, Harm Ohlmeyer, talked with UBS about how it wants to try to get on as many US shelves as possible.
'The focus in North America remains firmly on winning market share for the adidas brand as a way of creating scale-based leverage, ahead of driving profitability outright," Fred Speirs, an analyst at UBS, said in a note about meeting Ohlmeyer.
Speirs said Adidas is balancing its long-term ambitions to capture as much market share as possible with short-term demands from shareholders. Speirs notes, however, that the sporting goods market is especially fickle and subject to changing brand popularity.
A waning grasp of customers' preferences is what led Nike to rethink its strategy. Jordan shoes, one of Nike's biggest brands, is a good example. The brand lost its crown as the undisputed king of the sneaker market because Nike's production process was too slow and the presentation wasn't quite right.
Nike has grown its share price 9.21% this year and was trading around $56.74 Wednesday afternon. Adidas has risen 23.05%.
