Adidas’ Retail Transformation: Scoring Big in Direct-to-Consumer Strategy

What happens when one of the world’s most iconic sports brands decides to take on a large-scale retail transformation? Adidas isn’t just tightening its laces - it’s rethinking the entire race. With data-driven decisions and a seamless blend of digital and physical retail, Adidas is positioning itself for a gold medal in direct-to-consumer (D2C) strategy.

So, how does a brand known for “Impossible is Nothing” make the impossible, possible? By putting the customer first, every step of the way.

According to Paul Tips, Director of Product Ownership, Adidas' retail transformation is firmly planted in its overall ambition to become the best sports brand in the world. While global reach through partners like JD and InterSports remains essential, Adidas recognizes that its own D2C channels, including both digital platforms and physical stores, offer the greatest potential to connect with consumers. In this space, Adidas has complete control over the customer journey - from the initial interaction to the final purchase. The transformation aims to balance its business model, increasing D2C revenue by leveraging data-driven insights.

Pillars of Adidas' Digital Transformation

The first step on the transformation journey was to identify three main pillars:

1. Data-driven decisions: Making informed choices by expanding beyond internal data and considering external factors, enabling Adidas to be more consumer-centric.
2. Consumer-centric processes: Shifting focus to the consumer’s experience, especially in flagship "Halo" stores and clearance channels, ensuring brand consistency across all interactions.
3. Optimized operations: Streamlining processes, from product segmentation to assortment planning, by placing data at the heart of allocation and replenishment operations.

Allocation & Replenishment

One of the most significant components of this transformation is Adidas’ journey to overhaul its allocation and replenishment processes. These processes ensure the right products are available in the right stores at the right time, enhancing consumer satisfaction and maximizing sales potential.

Before the transformation, much of this work was manual, with teams relying heavily on Excel spreadsheets and historical sales data. This manual approach was inefficient, especially for a global brand like Adidas, which operates across multiple markets with varying consumer demands.

Adidas’ partnership with o9 Solutions plays a pivotal role in transforming these processes. The vision is to create an automated, scalable system that is user-friendly, integrates advanced real-time reporting, and utilizes artificial intelligence (AI) to predict demand. The goals of the replenishment strategy are:

• Automation & scalability: Creating a solution that can be replicated across different markets, reducing redundant efforts.
• User-friendly interface: Engaging teams early in the development process to ensure the system fits their needs.
• Real-time reporting: Providing up-to-the-minute data to make informed decisions quickly.
• AI integration: Predicting demand to improve replenishment timing and stock management.

By centralizing these capabilities, Adidas aims to create a more responsive and agile retail network that adapts to consumer demands in real time.

Building Internal Expertise

A critical aspect of Adidas’ transformation is its focus on empowering internal teams. This involves developing a "center of excellence" within Adidas, where teams can take ownership of the allocation and replenishment processes.

Rather than relying solely on external partners, Adidas wants its teams to be equipped to manage rollouts and make minor system adjustments independently.

This initiative fosters a sense of ownership among Adidas’ product teams, allowing them to respond quickly to market demands and optimize product allocation across stores. The result is a more agile, resilient organization capable of meeting the challenges of modern retail.

Synchronizing with Broader ERP Transformations

Adidas’ retail transformation doesn't just happen alone. It is closely tied to the company's broader efforts to upgrade its enterprise resource planning (ERP) system from SAP R3 to S4. This migration aims to simplify operations, reduce manual efforts, and create a more streamlined tech environment.

While ERP transformations are often viewed as technical upgrades, Adidas ensures that these changes directly address the pain points of business users, such as reducing manual work in allocations and providing better in-season forecasting capabilities.

By aligning the ERP transformation with the retail transformation, Adidas delivers more than just a technical upgrade. It offers users tangible benefits that make their day-to-day tasks easier, fostering excitement and engagement with the new systems.

The Human Touch

One of the key lessons Adidas has learned is the importance of change management; transformations, especially those involving technology, can be disruptive. And so in recognizing this, Adidas has made it a priority to involve its users from the very beginning.

This agile approach, which includes regular sprint reviews and feedback sessions, ensures that users feel part of the journey and can provide input as the systems evolve.

Adidas also understands that change takes time. Some team members have been doing their jobs in a certain way for years, so it's important to bring them along on the transformation journey from the start. Weekly sessions are held to answer questions and address concerns, creating a culture of openness and continuous improvement.

The Path Ahead

By combining data, technology, and a consumer-centric mindset, Adidas is well-positioned to continue strengthening its D2C business and offer top-shelf consumer experiences across all touchpoints.

By focusing resources on agility, internal empowerment, and change management, Adidas is not only transforming its retail operations but also creating a clear route forward for success in the global retail sector.

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