Clash of the Fashion Titans: Adidas vs Nike

Thursday, 04 September 2014
This is the fifth installment of 'Clash of the Fashion Titans,' an ongoing original series from FashionUnited that examines and compares key fashion retailers from around the world. Nike and Adidas are two of the world's leading active wear retailers. While Adidas has long enjoyed its spot in the sunshine, Nike recently usurped its German counterpart for the top position in the global sportswear market. Now the two companies continue to compete, enforcing different strategies and tactics to become the world leading retailer in athletic wear.

The growing demand for active wear has lead to the increasing popularity of traditional sportswear brands such as Nike and Adidas, but what really sets these two retailers apart? Is it their brand image? The different marketing campaigns they employ? Their vast fashion collaborations? Or perhaps their approach to succeeding in foreign markets? Peter Walshe, Global Brandz director at Kantar's Millward Brown, believes that difference between Nike and Adidas can be “mainly explained by the gap in profits and the relative size of each of the brands. The brand contribution between the two is much closer than it seems.”

The BrandZ survey, which covers more than 10,000 brands a year across 30 plus countries and questions over 2 million relevant consumers, measures what makes a brand attractive to its target audience by studying three different pillars: Meaningful (how it meets consumer needs), Different (how unique it is in a positive way) and Salient (how it springs to mind and is the spontaneous brand of choice). “Nike is commonly thought of as more creative, desirable and innovate than Adidas, but also more arrogant. Adidas is seen as the more friendly, caring and idealistic brand of the two.”

Nike's admiration amongst consumers goes head to head with Adidas's affinity

“Although people admire Nike more than Adidas, it seems as if they have a greater affinity for Adidas and like it more. Nike is a strong leader, with a solid personality, but Adidas is viewed more as a friend to consumers,” points out Walshe. “The interesting thing is, one would think that there is little to differentiate the two from each other, but consumers really do make a big difference between the two brands.” If their audience make a clear distinction between the two brands, then ensuring each company has a strong, unique identity will undoubtedly help them succeed. So which steps have Adidas and Nike taken to help differentiate their brands from one another and to ensure they stand out amongst the growing crowd of athletic wear makers?

For one, both sportswear companies have invested in different marketing campaigns to showcase their wide range of collections and labels for numerous physical activities. “Pouring money into marketing is key for both brands, but it needs to be done in the right way in order to serve its purpose,” says Magdalena Kondej, head of Apparel and Footwear at Euromonitor International. “One of Adidas key weapons against competing or rival labels is marketing and communications, as their brand identity is part of their success. So Adidas could do well to make sure that it is always at the forefront of differentiating itself from other labels,” adds Walshe.

One clear example of Adidas “successful” marketing can be seen in its campaign, which targeted female consumers in China, “where women exercise less and do different types of exercise compared to the US or Western Europe,” says Kondej. The campaign featured an televised ad which depicted a famous pop singer and her friends looking forward to starting their weekend together with some physical activities, such as anti-gravity yoga, dancing and running. 'All in for My Girls,' expanded on the idea on sisterhood and sports, bringing women together in a fun, social way and included a digital campaign with the hash tag #mygirls. “Adidas managed to make significant gains on Nike in 2013 following it’s 'All in for My Girls' campaign featuring no sweat or six-packs, and instead taking a more feminine guise in line with local views on sports.”

Nike has also found success with its marketing campaign for its new Pro Bra collection in India. After launching campaigns which honed in on popular sports in the country, such as cricket and football, Nike organized a special trailing and fitting service for its new sports bra range in key stores in Mumbai, Bangalore and New Delhi last month. After discovering that almost 80 percent of women wear the wrong sports bra, Nike reportedly spent two years developing its new Pro bra collection and then introduced a bra fitting service, which aims to help women find their right size for their chosen fitness level. The US sportswear retailer is said have an eye on growing interest in running sports in the country, since rapidly becoming a community sport in India as an increasing number of young consumers take up the sport.

Both sportswear retailers are keen to tap into the growing number of consumers who are spending more money than before on athletic wear. “Active wear is the bright spot in apparel right now because the consumer has decided to wear it whether she works out at the gym or not. We haven't seen this sort of excitement in active wear since Juicy Couture’s velour jogging suit...” said Marshal Cohen, NPD’s chief industry analyst. “The consumer is creating the trend...it isn't just the youth market that’s driving activewear growth; it’s men and women who are building their wardrobes with active apparel instead of the jeans they used to buy.”

Adidas “key weapons against competing labels” lies in its strong marketing campaigns

Walshe believes that one of Adidas “key weapons against competing or rival labels” is its strong marketing and communications campaigns, as their unique brand identity is part of their recipe to ensure the German retailer's future success. “It is important to maintain a differentiation and to set up itself in ways that are different to its competitor.” One way Adidas has done is by allocating a chunk of its funding to its “product segmentation strategy”, which is increasingly focusing on its lifestyle and fashion divisions. These product divisions, which include Adidas Neo and Adidas Originals are “largely aimed at younger consumers, with teenagers in particular emerging as a key segment,” notes Kondej.

For example, Adidas Neo recently launched its Fall/Winter 14 collection, which features artist Selena Gomez as its guest designer and brand ambassador, all part of the German's retailer scheme to extend the label. “The planned expansion of Adidas’ Neo brand is a sign Adidas is serious about tapping into the teenage market,” stresses Kondej. “Neo is aimed at style-adopting teenagers, with an emphasis on fashion rather than sports performance; it has lower price positions and appears to be closer to 'fast fashion' brands such as H&M. The teenage focus means that the company is placing greater emphasis on the use of new social media and digital marketing to support the brand.”

“Nike's strength is in innovation"

On the other hand, Nike has placed more emphasis on the technical and performance aspects of its sportswear, rather than its fashion side. “Nike's strength is in innovation, which tends to lean more on the technical side than fashion or developing a fashionable/beautiful look. The fickleness of fashion is not necessarily Nike's strength,” highlights Walshe. “Nike’s number one asset is its very high levels of consumer recognition, which has been driven by years of product innovation and marketing,” adds Kondej. The US sportswear retailer is best known for its host of innovate products which include its Nike Air Max trainers with its air bubble; its 'Flyknit Racer' feather light shoes that feel more like a sock than a shoe, as well as its activity tracker and fitness monitor bracelet, the FuelBand.

“Nike is actively pursuing a strategy of premiumisation to protect its sportswear portfolio,” says Kondej. “It has done so by bringing retail in-house, spending heavily on endorsement and with high-tech product innovation.” An example of this can been seen in the launch of its women's wear fall 2014 pro line. After explaining the science and technology that went into crafting the collection, Nike then teamed up with supermodel Karlie Kloss, who spent a day working out in New York City with one of their training club master trainers, Traci Copeland, whilst wearing garments from the collection, which was compiled into a short video entitled 'Karlie Kloss: A Day With Nike,' during which Kloss discusses her love for physical fitness and the company. “Nike's work around wearables and innovation shows that the company is willing to bet on hot emerging trends,” says Daniel Lucht, Research Director at Research Farm.

However, Adidas is also keen to show its innovate side, albeit on a different playing field than Nike. This fall saw the launch of Adidas Neo's first tweeted powered fashion show for teens, which was hosted by Gomez as well. The idea behind the concept was to let Adidas fans decide and vote on all aspects of its Neo fashion show during New York Fashion Week via Twitter. “We wanted to create the most authentic and relevant fashion show for teens and what better way than having the teens create the show,” said Claire Midwood, vice president of Adidas Neo. “One of Adidas strengths is how they communicate with their consumers, by using their sponsors and their heritage, which comes through in their marketing,” notes Walshe.

“Engagement with consumers not only works for Adidas if they do it well, but it also helps turn consumers into brand ambassadors, so to speak, who spread the word about the brand , especially if its via social media outlets such as Twitter. Consumers like to engage with retailers on social media networks and if the brand appears as something they want to talk about, then they are seen as a welcomed guest when they show up on their news feed or twitter feed, which is all the better for the brand.” Kondej adds that “if Adidas can use its marketing investments to 'sign up' these new consumers to the brand as teenagers, they will be in a strong position to develop global sales alongside them going forward.”

Another investment both sportswear retailers have been cashing in on to further engage with their target audience is the ongoing evolution of the designer/celebrity collaboration. In the past Nike has teamed up with the likes of Kanye West, Mark Newson, Tom Sachs, Jun Takashi, Hiroshi Fuijwara and APC for a number of sportswear and footwear collaborations. One of its most recent collaborations, with Givenchy designer Riccardo Tisci for a Nike + R.T Air Force collection, led to over 30,000 people joining online luxury retailer Net-a-Porter mailing list to be notified when the collection was available. “It was insane. We sold out of the white style initially, but managed to get some more,” said Ida Petersson, senior footwear buyer at Net-a-Porter to WWD. “The [boot] style is a more refined taste, but even that had a 67 percent sell-through.”

Nike and Adidas both cash in on designer collaborations

However, when it comes to collaborations, credit must be paid to Adidas, who launched one of the first designer - sportswear collaboration collections with Japanese designer Yohji Yamamoto in 2003. “The collaboration with Yamamoto has really benefited Adidas, it allowed for a brand diversification (its Y3 line) and ranging architecture and has bestowed some star dust on Adidas, which was in danger of becoming a bit stale,” points out Lucht. “Adidas is increasingly seeking to collaborate with designers and artists, and in particular for its Adidas Originals brand which allows the company to borrow credibility in non-sport areas, and strengthen its street style/fashion-aligned brand equity,” adds Kondej. One of its most recent and noticeable collaborations is with singer Rita Ora, who is set to launch three seasons of fashion collections with the German sportswear retailer.

Nevertheless, despite Adidas's stellar line up of designers collaborations, which includes its line Adidas by Stella McCartney and its ongoing collaboration with US designer Jeremy Scott, Adidas has fallen behind Nike in terms of sales and market reach. Kondej believes that Adidas overall performance “continues to be hit by weak sales in its core Western Europe market.” The German group previously lowered its profit outlook for its fiscal year 2014 in July, citing negative currency effects and political tension in Russia, its third largest market worldwide, as the part of the reason.

“It is with disappointment that after such a great summer of sport, I have to report that our Group has not been able to meet the high expectations we laid out in our Route 2015 agenda,” said Herbert Hainer chief executive officer of Adidas Group, in a statement published this June. Lucht points out that the group has also reported “problems in their golf range,” in its US market alongside other issues affecting its sale and on July 31, 2014, the Adidas Group updated its full year 2014 financial outlook, predicting sales to increase at a mid- to high-single-digit rate as its gross margin is forecasted to drop to between 48.5 percent and 49 percent. “Adidas is clearly under pressure.”

“Nike has started to catch up Adidas in Western Europe"

Kondej adds: “Nike has started to catch up Adidas in Western Europe, and may overtake it if Adidas fails to turnaround its sluggish sales.” In comparison to Adidas recent profit warnings, Nike reported a 10 percent increase in revenues to 27.8 billion dollars for the fiscal year that ended May 31, 2014 on a currency neutral basis. “These results demonstrate the energy and excitement Nike brings to the market,” said president and CEO of Nike, Mike Parker this June. “Our ability to relentlessly innovate for consumers drove our growth in fiscal year 2014, and will continue to fuel it for years to come.”

Overall, Nike continues to outshine Adidas in global export, with the US sportswear firm achieving a better replenishment rate than Adidas amongst its top international online retailers, according to the latest data from Editd, global data research firm, achieving a rate of 14.5 percent versus 10.7 percent respectively. Adidas on the other hand, does not seem to have quite as a powerful global reach, despite its numerous international sponsorships and partnerships with some of the world's top football clubs.

Looking at the two sportswear retailers in terms of brand power across ten key countries, Nike has a small lead over Adidas's in seven of the ten countries, including the UK, Brazil and China. Unsurprisingly, each sportswear label is the brand leader in its own home market, “which is not unusual,” says Walshe. Nevertheless, regardless of Nike's lead, “Adidas footprint remains strong in emerging markets, it is level on share with Nike in the key emerging regions of Asia Pacific and Latin America and leads in Eastern Europe and Middle East and Africa,” adds Kondej.

“Despite the Reebok acquisition back in 2005, Adidas has struggled to build share in the US, the market set to see strongest growth in absolute value terms through 2018. Currently Adidas’ share in the US is a quarter of Nike’s share and the gap remains very significant,” continues Kondej, referring to a study from Global Information which predicts that the sports apparel market will top 180 billion dollars a year, by the year 2018. In comparison, Lucht notes that Nike continues to grow “strongly” in the US, its home markets, whilst “performing well in all regions, helped by weak dollar in overseas markets - also helped by weakness of Puma in Germany.”

"Nike is the brand leader by the hair of a whisker”

However, despite this growing pressure from Nike, Adidas may be able to take its former position back, as the athletic apparel competition takes places across many different levels and categories - with football, golf, fashion and market shares just ticking just a handful of the boxes. Walshe argues that although Nike continues to have a “much more valuable brand” according to their survey, one “should not underestimate the brand strength of Adidas. Nike is the brand leader by the hair of a whisker.”

“There is an element of underdog with Adidas that appeals to consumers which helps make them make distinct differentiations in their heads. Nike's success and Adidas's feeling of empathy both speak to consumers in different ways. Both are very strong brands, both justify their premium and have good future potential,” and will continue to attract consumers from all over the global in the years to come concludes Walshe.

Vivian Hendriksz

Images courtesy of Adidas and Nike

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