Adidas, the German sports giant, has unveiled its strategy to double its e-commerce sales by 2025 as part of its efforts to boost profitability and rival Nike. The company’s five-year plan also focuses on sustainability and targeting the women’s market, with a partnership with Peloton in the pipeline.

The collaboration with Peloton, known for its on-demand workout programs on exercise bikes, aims to tap into the combined strength of both brands to engage and excite their communities. Although specific details have not been disclosed, Adidas plans to surprise and delight its highly engaged audience through various initiatives.

Aside from the Peloton partnership, Adidas aims to achieve online sales of up to €9 billion ($10.7 billion) per year by 2025. The company also seeks to increase its operating profit margin to 12-14%, compared to the 11.3% achieved in 2019 before the onset of the pandemic. Despite the challenges faced by the sporting goods industry due to store closures during the pandemic, Adidas has seen a surge in online sales as more people turn to activities like running and yoga amid lockdowns.

To support its e-commerce goals, Adidas will invest over €1 billion in digital transformation by 2025. This investment will involve enhancing the agility of its supply chain to ensure prompt delivery of online orders. Adidas predicts that e-commerce will make up more than 40% of the industry’s sales by 2025, with online sales growing three times faster than offline. The company already boasts over 150 million members on its online platform and plans to continue expanding its digital footprint.

Adidas plans to allocate an additional €1 billion in 2025 for brand investments, including marketing and sponsorship. The company aims to introduce sports-inspired lifestyle products alongside its existing performance and Originals fashion categories. Like its competitors Puma and Nike, Adidas will place greater emphasis on the women’s market, recognizing its potential for growth.

Sustainability is another key focus for Adidas, which aims to make nine out of 10 products more sustainable by 2025. This involves incorporating more recycled and biodegradable materials into the manufacturing process. Adidas intends to lead the industry in sustainability with the launch of a Stan Smith tennis shoe made from a mushroom-based leather substitute later in 2021. With an increasing number of consumers prioritizing sustainability, Adidas believes its commitment will resonate with its target audience.

Recognizing the significance of the Chinese market for its growth, Adidas will handle the greater China region separately from the rest of Asia to capitalize on its potential. However, the company anticipates a decline of approximately €250 million in operating profit due to expenses associated with making its struggling Reebok brand an independent company. Adidas plans to either sell or spin off the Reebok business, with an expected impact of one-third of the costs in 2022 and none in 2023.

With its ambitious plans for e-commerce growth, sustainability, and market expansion, Adidas aims to establish itself as a dominant force in the sports and athleisure industry. By catering to the needs and desires of its consumers, Adidas seeks to close the profitability gap with rivals, particularly Nike. In a rapidly evolving market, Adidas understands the importance of innovation, digitization, and sustainability to secure its future success.

Useful links:

Adidas Group Investor Relations Performance Presentation
Adidas Sustainability Initiatives