The “speed” component of the Adidas Group's new strategic plan is inspired by the business model that the group has adopted for Neo, the fast-fashion label developed by Adidas in the recent years, which reached sales of more than €850 million in 2014. While the entire company has already reduced lead times and shifted some production closer to markets in apparel, the Neo label has also implemented fast development methods for footwear.
Claire Midwood, the general manager for Neo and Adidas Style, explained that the Neo brand is working with two main speed programs: in-season creation and planned responsiveness. She said that about half of the brand's footwear business come from a program in which lead times may be reduced to 45 days from briefing to shelf. The second program calls for the company to take full advantage of sell-through information to quickly adjust products to the in-store response.
The concept is used in Neo's own stores and from 2012 it was adopted with wholesale partners such as Deichmann, Sports Direct or Famous Footwear. Last year the Originals range adopted some of the same speed programs, and Reebok is starting to work with them as well.
By the end of its five-year plan, Adidas wants to deliver about half of its products using these speed programs. Liedtke said this should lead to an increase of 20 percent in full-price sell-through across the ranges issued from these programs. They are most relevant to style-driven products, while the performance-oriented products are less likely to require fast change. The focus on speed is to lead to more full-priced sales, reduced risk of overbuying, higher inventory turns and fewer markdowns.
The speed programs are enabled by technology such as digital creation and modular design. But the Adidas Group is also working on what it calls the speed factory, consisting of automated modular production cells. A major attraction is that they could be placed almost anywhere, close to the relevant markets. Adidas should have a first production cell of this kind tested at its existing facility in Scheinfeld, Germany, in two years' time. Further down the line, such modules could even lead to in-store production in about 15 minutes.
The group's investments in such production techniques are supported by the German economic affairs ministry, through a program involving other German companies. Some of the robotics were displayed in the room where the investor meeting was held, such as a pick-up robot with a hand that could perform many of the same functions as humans.
The “open source” part of Adidas' strategic plan chiefly relates to marketing. Adidas wants to reinforce its connection with consumers through digital engagement, encouraging athletes as well as assorted bloggers and opinion leaders to create content. This open source concept also involves creators, partners and communities.
The group is setting up “creator farms” in places such as Brooklyn and Berlin, and “newsrooms” in cities such as Rio de Janeiro and Moscow. This strategy could take the shape of a pop-up newsroom, as occurred for the launch of the Ultraboost shoe in New York.
Adidas boasted a community of about 135 million people across platforms such as Facebook and Twitter as well as the Adidas CRM. Its goal is to enlarge this community to 250 million by 2017, which would form a media channel in its own right.
Since Adidas started changing its management and its approach last year, the company is already reaping some of the benefits of the more focused strategy. Several managers said that the shift transpired in the group's performance for the first quarter of this year, which will be published in May.
