- For the past several years, Nike and Adidas focused on direct sales.
- On a call with reporters Wednesday, new Adidas CEO Bjørn Gulden reiterated his belief in wholesale.
At a Wednesday press conference, new Adidas CEO Bjørn Gulden admitted he was about to say something that "might be different than what we said before."
Then he seemed to take aim at the industry's recent direct-to-consumer focus.
"I still believe this is a wholesale-driven business," he said. "We need to show up at wholesale as the best partner for the retailers so they can make money from us."
"You cannot own the consumer," he added." You can only earn the consumer."
For the past several years, industry giants Adidas and rival Nike, as well as many startup sneaker brands, have been focused on growing sales on their apps, websites, and in their stores. But Gulden's comments Wednesday hint that a shift is coming. He's not alone in his thinking. In December, Nike reported quarterly earnings that showed its wholesale business grew faster than its direct business. Nike executives are also talking up visits with wholesale partners recently. Allbirds, once a DTC darling, also is looking to build out its wholesale channel.
Allbirds, known for its sustainable wool sneakers, already sells through Nordstrom, REI, Scheels, and Dick's, a departure from its initial strategy.
After a calamitous earnings report on Thursday sent its stock careening, cofounder and co-CEO Joey Zwillinger said it's considering adding more wholesale partners. It's also slowing the pace of opening its own stores."We will consider selectively evaluating some additional partners, whether that be on the physical brick-and-mortar side of the wholesale marketplace or even in digital," Zwillinger told analysts.
Over the past several months, analysts have also increasingly pointed out the perils of direct-to-consumer sales.
—Lois Sakany (@LoisSakany) March 8, 2023
In 2020, Nike announced the Consumer Direct Acceleration, a business plan built on 2017's Consumer Direct Offense. Both strategies focused on direct, digital sales. Nike's been building out its store fleet as part of the push.
Since 2017, Nike's direct business has grown 106%, and its wholesale business has grown 11%.
In 2021, Adidas said it expected to "shift to a DTC-led business model" and to get around half of its revenue from direct sales by 2025, including more than 80% of its top-line growth.
In recent months, those sweeping direct-to-consumer plans have been challenged by analysts.
On a December earnings call, Nike CEO John Donahoe said the company's core strategy "remains very much the same."
"Consumers in this day and age want to get what they want, when they want it, how they want it," he said.
But he also acknowledged Nike's recent efforts to work more closely with wholesalers, including a September visit with wholesale partners on Nike's campus, the first in three years.
Donahoe also said Nike executives "spent a lot of time with (new Foot Locker CEO) Mary Dillon" in the company's most recent quarter.
"There's a lot of excitement. I would say, with our wholesale partners and what we can accomplish together," Donahoe said.
At Adidas, in addition to his belief in wholesale, Gulden said the end of the Yeezy business will drive change in the company's mix of direct and wholesale.
The Yeezy business, given the high demand for the product, was mostly direct-to-consumer.
"The business model going forward, surprise, surprise, of course, will be more service-oriented towards wholesale," Gulden said on a subsequent call with analysts. "As we stop selling Yeezy, you will see that the (direct-to-consumer) share will go down."
Gulden, who started at Adidas in January, said it will take time for the company's new mix of wholesale and direct sales to sort itself out.
"It will be a more targeted brick-and-mortar strategy and it will continue to be a strong (e-commerce) strategy," he added. "But I think the way we go to market, I think it will be more wholesale first and then (direct sales) afterwards."