Despite significant investments in IT and logistics, sportswear giant Adidas reported sluggish online sales, revealing challenges in its digital transformation efforts. The company disclosed spending nearly half of €504 million in 2023 on technology and logistics, yet failed to see substantial growth in online revenue. Specific figures regarding technology investments were not disclosed.
Germany-based Adidas witnessed a 27 percent decrease in capital expenditure, totaling €504 million in 2023 compared to €695 million in the previous year. Nearly half of this investment was directed towards new or renovated retail stores, with the remainder primarily allocated to IT and logistics infrastructure, Adidas revealed.
The company’s total revenues experienced a 5 percent decline, falling from €22.51 billion in 2022 to €21.42 billion in 2023. Notably, Adidas attributed a 5 percent decrease in e-commerce business to the impact of the Yeezy line. Despite this setback, the company focused on reducing discounting activities and enhancing the full-price sales on its own online platforms, resulting in significant improvements in overall profitability.
However, in the fourth quarter of 2023, e-commerce revenues plummeted by 12 percent. Despite efforts to reduce discounting, Adidas struggled to maintain growth in online sales. Adidas reveals that 20 percent of its total sale is from online channels thanks to its investment in digital transformation initiatives over the last few years. This indicates that €4.3 billion worth of revenue was through digital platforms for Adidas.
Adidas has posted its first annual loss in more than 30 years and warned sales in North America would drop again as sportswear retailers in the U.S. struggle with high level of inventories.
CEO Bjorn Gulden expressed optimism for 2024, citing major sporting events like the Olympics and Euro 24 as opportunities to showcase the brand and engage with fans. In its annual report for 2023, Adidas emphasized its strategy to redefine the role of e-commerce, prioritize profitability, and focus on premiumization.
Adidas has introduced innovative initiatives such as immersive digital race experiences and expanded its adiClub membership program to strengthen consumer engagement. Notably, athlete Tigist Assefa set a new women’s world record while wearing Adidas’ Adizero Adios Pro Evo 1, underscoring the brand’s performance in the sporting arena.
Looking ahead, Adidas plans to enhance digital race offerings and further leverage its ‘Confirmed’ app as a premium touchpoint for enthusiasts. The company also highlighted the competencies of board members Thomas Rabe and Christian Klein in driving digital transformation.
Despite these efforts, wholesale remained Adidas’ largest sales channel, comprising 59 percent of total net sales in 2023. Direct-to-consumer (DTC) sales, including own retail and e-commerce, accounted for 41 percent of total sales. The adiClub membership program has been established in approximately 50 countries to foster direct relationships with consumers.
In 2023, Adidas made strides in optimizing its distribution center landscape through automation and system upgrades, resulting in improved e-commerce service levels and expanded product availability. The company’s distribution network comprises 65 distribution centers, reflecting its commitment to enhancing operational efficiency and customer experience.
Baburajan Kizhakedath
