Adidas digital transformation helps in increase in operating margin

Adidas CEO Kasper Rorsted has disclosed that the global footwear and apparel maker has achieved new milestones after its investment in digital transformation.
Adidas retail shop
Digital transformation spending, according to research firm IDC, will reach $2.3 trillion in 2023.

Discrete and process manufacturing will deliver the largest digital transformation spending, accounting for nearly 30 percent of the worldwide total. Retail will be the third largest industry for DX spending with omni-channel commerce platforms and omni-channel order orchestration and fulfillment the leading DX use cases.

Fumbi Chima, the group chief information officer (CIO) of Adidas, is responsible for the company’s digital transformation. Fumbi Chima spearheads transformation of the IT capabilities foundation into a digital environment at an industry leading record pace, without business interruption.

Germany-based Adidas said its e-commerce revenue grew 14 percent in the second quarter of 2019 as it started expanding digital platforms to drive consumer engagement on sales conversion. It promoted Snapchat video game in partnership with DICK’s, where users can buy products directly through Snapchat.

The company has also completed the integration of Runtastic into the digital ecosystem. The Runtastic running and training apps have been rebranded into adidas by Runtastic. Creative Club members can collect points through workouts that they record in the adidas by Runtastic apps.

“This will help us drive traffic across different digital platforms and drive revenue growth on our eCom platforms,” Kasper Rorsted said.

Adidas invests in IT areas, which form part of its digital agenda. It announced its decision to set up two new tech hubs, one in India and one in Bogota, Colombia, to support its digital agenda. These two tech hubs will be on top of the digital hubs that it already established in China, in Shanghai, and in Zaragoza in Spain.

“They’ve always supported our growth in our digital agenda, specifically on the adidas app and on e-commerce. All of this is reflected in our confirmed fiscal year outlook, which calls for an operating margin expansion of 50 to 70 basis points to a level of 11.3 percent to 11.5 percent,” Kasper Rorsted said.

Adidas digital store, opened in London, at the end of November, is the most digital globally with over 100 digital consumer touch points.

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