The battleground between adidas, the world’s second largest seller of sporting goods, and Nike, its larger rival, is moving into China. Nike dominates not only the world market but also the Chinese sporting goods sector. Adidas wants to be able to make that claim, and to do so, it is betting on its NEO line.
Chinese consumers are frequent purchasers of sporting goods, though not necessarily for athletics. But at the same time, adidas cannot lose its connection to performance wear, because if consumers believe it has become all fashion and no sport, they are likely to replace it with less expensive, fast fashion options, or else just buy Nike.
The NEO line is casual and sporty and targeted toward teens, with prices approximately 40 percent less than other adidas brands. The related children’s products are somewhat more upscale, such as leather baby booties for $215. Adidas gambles that Chinese parents will splurge on their one child, and then as a teen, that child will want NEO products. Ultimately, an adult consumer who has dressed in adidas all his or her life is likely to purchase more upscale offerings, such as the Y-3 line of fur-trimmed leather trench coats for $3,100.
The move is dramatic: adidas is already selling in 6,700 outlets in China, compared with Nike’s 7,500 outlets, and its sales were up 28 percent from a year earlier, or $1.3 billion.
Why is Adidas focusing on the Chinese market?
Source: Laurie Burkitt, “Adidas Goes Fashion-Forward in China,” The Wall Street Journal, February 20, 2012.