After only two years, Adidas announced the closure of its largest global flagship store in South China, and almost no one visited its other surviving offline stores. Not long ago, Adidas released its Q2 2023 financial report, with a revenue of RMB 42.015 billion in the second quarter, a significant decrease of RMB 11.344 billion compared to the same period last year.
At the opening ceremony of the South China store, the confident Adidas directors never expected that the Xinjiang cotton incident a few months ago not only completely angered the Chinese people, but also pushed Adidas into the abyss.
Once upon a time, Adidas was seen as a symbol of "fashion trends". In 2021, the annual revenue reached 21.234 billion euros, with gross profit accounting for 50% of the revenue, reaching 10.765 billion euros. Adidas, who once had unlimited fame, claimed that "Chinese people need Adidas.".
There is an old saying that goes "things will turn around when they reach the extreme". Western fashion giants led by the United States are trying to unite and fight against China's clothing industry, but Adidas is openly following the trend and unreasonably rejecting Xinjiang cotton.
The angered Chinese rushed into the Adidas live broadcast room and demanded an apology. Caspar Rothschild, then CEO of Adidas, is quite confident: there is no need to worry about the impact. We are the largest sports brand in China, and after their boycott, sales will actually be higher.
However, this time their calculations fell through. As of the latest financial report data, it has achieved eight consecutive quarterly declines. Without the Chinese market, Adidas has lost its position as the world's second largest player.
The former CEO left behind a statement that "we made a mistake in the Chinese market" and simply threw the mess out. The newly appointed CEO, Bjorn Gurdon, is constantly visiting China in an attempt to salvage the Chinese market.
The debut of new executives also seems to be difficult to shake off the shadow of Adidas for many years: the loss of the Yeezy series, the closure of 2000 stores, and the evaporation of market value of 180 billion yuan, etc.
Adidas, which cannot be sold offline, has also embarked on the old path of discounts. During on-site visits, Adidas stores almost always carry out inventory clearance activities, and every time a new product is launched, the regular price can only last for two months. Unfortunately, even discounts cannot solve Adidas' survival difficulties in China.
Product innovation is the core competitiveness of the brand. Adidas has been silent for several years, and domestic brands have taken off by virtue of the concept of "New China-Chic", which is almost equal to the international first-class brands. It is unimaginable that Adidas was placed ten years ago. In fact, the quality of "Made in China" has improved, and now Chinese consumers are more confident in their consumption. A similar rise also occurs in the field of biological manufacturing.
In the domestic market, a group of local brands that explore national styles have become "new favorites". In 2020 alone, the market share of domestic brands in China has reached 72%. ANTA's FILA series has entered the middle class market, targeting the high-end fashion market. On the other hand, in the past two years, apart from the popular "coconut shoes", it has been difficult for Adidas to make a name for itself.
In May of this year, Adidas resumed the Yeezy series and received 4 million orders with an estimated value of over 500 million euros after it was re launched, leading to a 23% year-on-year decrease in inventory.
The performance has shown signs of recovery, giving Adidas hope. CEO Gurdon has repeatedly stated in interviews that he wants to "return to the Chinese market" and has also raised his performance expectations for the full year of 2023.
However, the last batch of coconut shoes will also be discontinued before the end of 2023, and it is urgent to build a new sales engine, leaving little time for Adidas.