TRANSFORMING THE MARKETPLACE
Our Global Sales function drives the commercial performance of the company by converting brand desire into profitable and sustained business growth. It is our ambition to deliver the best shopping experience within the sporting goods industry across all consumer touchpoints. We strive to transform the marketplace by actively shaping and accelerating the growth of our profitable and integrated trade network. Our objective is to establish scalable business solutions in order to deliver premium experiences, thereby meeting and surpassing consumer expectations with an integrated brand offering.
While 2021 saw a reduction of distribution points due to market consolidation and the impact of the coronavirus pandemic on retailers, we continue to leverage a consistent global framework with nearly 2,200 own-retail stores and our own e-commerce channel, our single biggest store available to consumers in nearly 60 countries.
IMPACT OF THE CORONAVIRUS PANDEMIC
The global outbreak of the coronavirus in 2020 continued to impact our store network in 2021 with a significant number of temporary store closures – both own and partner-operated, with some markets more heavily impacted than others. The pronounced traffic reduction within the store fleet had a negative impact on our sales development.
To meet the challenges we had to face in our business, we continued our focus on e-commerce, as the one fully operational store at all times. Through targeted consumer marketing, exclusive product launches, and prioritized supply chain management we continued our sales efforts to drive continued e-commerce growth even as the overall environment normalized and despite facing significantly higher sales compared to prior year periods. Global Operations
In 2021, we continued the rapid acceleration of digital tools and omni-channel services. We also leveraged our digital capabilities to allow for safe and convenient shopping experiences when stores reopened. Health and safety guidelines and processes were a priority to protect our staff and consumers and to ensure our consumers felt safe upon returning to our stores.
2021 CHANNEL MIX
While we continued to drive the shift from Wholesale to DTC channels, we saw a normalization of the channel mix in 2021. 2020 saw exceptional growth in e-commerce as a result of retail store closures, which was counterbalanced in 2021 when stores reopened. In 2021, the share of DTC business, consisting of own-retail and e-commerce sales, decreased to 38% (2020: 41%). Wholesale accounted for 62% of total net sales (2020: 59%). Our membership program has reached Club’240 million members across 26 countries, enabling us to build direct relationships with our consumers.
In e-commerce, we showcase our brand differentiators such as exclusive products or engaging member experiences. Through scaling and expanding our e-commerce platform, we create business impact and efficiencies. Our own e-commerce grew 4% in 2021 to € 3.942 billion, as we leveraged strong momentum from major sporting events like the UEFA EURO 2020 and Tokyo 2020 Olympics as well as ‘Run for the Oceans’ and the launch of new product across our key categories. We continued to focus on digital acceleration by moving available inventory to e-commerce, expanding our digital content studio in Amsterdam, Portland, and Shanghai, as well as focusing our marketing and tech budget toward digital, assuring our day-to-day decisions were data-driven with a clear focus on consumer insights and trends.
We continued the work toward premium, connected, and personalized shopping experiences that enable direct relationships with our consumers. In addition to our adidas e-commerce platform, which is available in 58 countries, our adidas app strategy continued to fuel our mobile and member focus and has reached over 45 countries across all major markets, achieving a significant share of business in the adidas digital ecosystem. The adidas app is where we amplify our key brand territories such as sustainability and innovation. It is our gateway between online and offline and it provides a premium experience with immersive storytelling, personalized content, frictionless checkout, seamless order tracking, and access to our membership program. Members collect points from interactions across all our touchpoints (.com, apps, retail stores), climbing up different levels and unlocking rewards including personalized experiences. One of these experiences is ‘Members Week,’ a digital week-long activation for members only that we launched in 2020. To continue the success of ‘Members Week 2020,’ we decided to hold the event twice in 2021. In addition, our sports apps contribute to amplifying our purpose ‘Through sport we have the power to change lives,’ and sports engagement is proving to drive increased sales and membership. As an example, in 2021, we have set new participation records in engagement activities such as ‘Run for the Oceans,’ which reached five million participants with our sports apps and connected partners. The success of our membership program is visible in key metrics such as increased consumer satisfaction as well as a consumer lifetime value that is more than twice as high compared to non-members.
As our latest and most premium touchpoint for sneakerheads and style, we expanded the Confirmed app to Europe, Japan, and Canada, continuing its contribution to revenue growth in digital and increased consumer engagement. This app brings our most coveted and premium product to our consumers in the easiest, fairest, and most elevated way.
Our nearly 2,200 own retail stores are a vital part of the consumer journey. They are the best place for our consumers to directly interact with our brand, product, and teams, and to touch and try our products, feel inspired by our stories, and experience what we stand for as a brand. Through premium experiences and the human connection with our teams and communities we aim to build brand loyalty and increase consumer lifetime value. With our fleet of brand flagship stores focusing on premium experiences, concept stores with a more commercial focus and factory outlet stores for the value-seeking consumer, we provide an environment to satisfy all our consumers’ needs when shopping for our product and connecting with the essence of our brand.
In 2021, we again increased the number of flagship stores and brand centers with a clear focus on digitalization, personalization, and a seamless premium consumer experience across all touchpoints. Brand flagship stores continue to be our focus in ‘Key Cities.’ We continue to elevate these Key Cities with additional flagship stores to drive premium experiences and next-level human connection. The new flagship store in Berlin leads with a strong women focus and an enhanced sustainability area that supports our global sustainability focus. The new flagship store in the center of Moscow will, for the first time, provide dedicated space to our members, connecting the physical and digital space. In Shanghai, we opened our first Terrex flagship store, designed as a destination that integrates sustainable design concept and interactive digital technologies to push the limits of connecting the consumer experience with outdoor adventure. Within our concept stores, we landed our latest retail concept, adidas ‘Home of Sport.’ We opened our new brand beacon store in Hamburg in November, which celebrates our past and embraces the future in retail. At the other end of the scale, we are working on shifting our factory outlet business from a clearance-focused channel to a commercial engine driving profitability. In North America, we piloted our first factory outlet store with ‘The Pulse,’ our newly developed retail concept for the value channel, designed to elevate brand storytelling, showcasing our products and integrating omni-channel solutions.
In 2021, customers returned to an environment of digitally enabled physical multi-brand stores which led to strong growth in wholesale. Our main objective in wholesale is to win market share in critical consumer touchpoints on- and offline, especially in key trade zones and high streets. We continued to proactively manage our orderbook to make stock accessible to all channels and customers, both online and offline. We invested in further digitalizing our sales processes, leveraging our digital tools and infrastructure to facilitate remote sell-in meetings, and we increased profitability by reducing the number of undifferentiated accounts. We have identified our 80 most important multi-brand and franchise customers. These ‘Alliance Accounts’ consist of 40 key accounts to deliver consumer reach and 40 influencers to authenticate the brand. Our top Alliance Accounts in North America, EMEA, and Latin America drove the 2021 wholesale growth, and as part of our wholesale transformation, we will elevate our service level towards the accounts to drive even further growth. Through leveraging our strong cross-functional partnerships with the Alliance Accounts in sales and activation, we see considerable success in landing our products, services, and stories. This is critical to ensure a holistic consumer journey.
We continued our focus on and invested into digital capabilities to team up with our accounts to win online together. Our ‘Partner Program’ platform brings us one step closer to where the consumer shops by providing strategic partners with access to our products by connecting our systems to their digital platforms so they can gain access to our inventory. 2021 saw the roll-out of our ‘Partner Program’ to new partners, markets, and locations, enabling us to fill gaps in their size availability and offer an extended range of products to their consumers. Furthermore, our investments into digital capabilities have allowed us to deliver an enhanced and consistent shopping experience in digital wholesale by making our product images and descriptions flow seamlessly into their systems to power their website and app experiences.
We have additionally invested into digitalizing our sales processes. In 2021, we have progressed well in making our teams, tools, and processes future-proof to further scale in 2022. We continued to invest into digitalization in wholesale through roll-outs and improvements of tools in new markets like North America and China. There are now five out of six digital tools live and ready to scale: ‘Click’ – our B2B online shop, ‘S.Core’ – our one-stop-shop for sales, ‘Assist’ – our one-stop-shop for customer service, ‘Marketing Cloud’ – our customer engagement and communication tool and lastly the ‘Digital Showroom,’ which has allowed us to design our remote sell-in meetings in a much more engaging way using 3D digital samples and even improve our orderbook compared to previous seasons.
‘Creators Club’ is a membership program that helps us deepen the relationship with our consumers. Linking all adidas apps, events, communities and channels into one single profile, the program rewards members with points for interacting with the brand, e.g., when making a purchase or using the ‘adidas Running’ or ‘adidas Training’ apps. Depending on the number of points, exclusive benefits are unlocked, including access to hype sneaker and apparel drops or invitations to special events.