Manifestations, Insights and Underlying Logic Behind adidas' Digitalization Strategy

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Aug 12, 2022, 10:07 ET

SHANGHAI, Aug. 12, 2022 /PRNewswire/ -- As part of its China for China strategy, world-famous German sports brand adidas has recently launched a series of localized digital marketing campaigns, including Yeezy Day and Tmall Super Brand Day. Perhaps, the nearly 100-year-old brand, which continues to be one of the most influential and trendy sports brands among young consumer groups, can serve as a good example to answer the above question.

In the world of math, there is a puzzle: Does NP=P? It is an NP-complete problem.

NP refers to a class of problems for which the accuracy of a solution can be effectively verified, while P represents a set of problems for which a solution can be effectively found. The NP-complete problem is all about whether NP problems can be transformed into P problems.

Every consumer brand faces the same NP-complete problem. On the left side of the equation is the question: Is it possible to capture, or, even more importantly, how does one capture the growing cohort of Gen Z consumers? And the problem on the right side seeking a solution is whether digitalization, which serves as the greatest common denominator between brands, is able to make this equation hold true?

To put it simply, what kind of digitalization can enable brands to attract Gen Zers?

Going Digital: Embracing Social Interactions That Appeal the Most to Gen Z

Today, Gen Z is emerging as a new consumer group that cannot go unnoticed. As digital natives, they have grown up in a world where digital technology is ubiquitous, and where their real and virtual lives have become one. On the consumption side, they expect a unique, personalized, customized digital shopping experience, especially in terms of social interactions and immersiveness.

To this end, more and more name brands are embracing the digitally-enabled models of social interaction that are most trendy and popular with younger generations, especially Gen Z, such as the metaverse.

adidas took the interactive route to its utmost extreme. On this year's Tmall Super Brand Day, the top sports brand created a virtual neighborhood based on the metaverse by creating an online queue digital game that provides a virtual queuing experience, coupled with new products to reproduce the sneaker culture.

To add to the experience, based on the 50th anniversary edition of adidas Originals, the sports brand tied up with Taobao Life, an immersive virtual world integrated with China's largest mobile shopping destination, to deploy the new "digital collectibles + physical items" marketing approach and launch the exclusive Gen-Blue Creator Tee, Gen-Blue Creator Classic Shorts and the 50th anniversary edition of Superstar. The three digital collectible set is Taobao Life's first wearable digital collection.

Taobao has also launched the adidas Super Brand Day series of 3D outfits, creating an exclusive meeting place for fans of the adidas brand. adiCLUB members can jump directly to the store to buy what they have just tried on in the virtual world after they are 100% satisfied with how the outfit fits and looks.

The view was expressed that being social, fun and interactive plays a vital role for brands that want to get up close and personal with their young audiences. For Gen Zers, just like the members of generations that preceded them, especially, those born in the 80s (known in China as members of "the Beats") and 90s (known in China as the "Decadent generation"), felt that their personalities were often misinterpreted due to stereotyping, while, in reality, each generation's members each have their own distinctive personalities due to their different upbringing. The metaverse provides them with a space where they have unlimited possibilities to express themselves. There, they have the freedom to create their own virtual selves, to express themselves as they see fit and gain recognition, to talk with peers of similar upbringing about the hobbies that they share in common and that are often difficult for their parents and other adults in their life to understand, and to freely immerse themselves in diverse digital social activities and shopping experiences.

This is exactly what sets adidas apart from many other brands. The company has been committed to incorporating creative play and innovative power into the sneaker culture, and, by doing so, helping Gen Z to better unleash their personalities and asserting themselves rather than just following the crowd.

Take this year's Tmall Super Brand Day as an example: in addition to digital collectibles, adidas also provided shoppers with free access to a lineup of Taobao Life props. They can clothe their avatars as they wish, choosing from a number of T-shirts and pants as well as from the vast lineup of footwear, capturing the essential spirit of adidas Originals through their virtual creations.

All of this is just the beginning of adidas' digital differentiation efforts to gain the attention of Gen Z.

Insights into Digitalization: Gen Z Redefines Consumer Culture

adidas' digital differentiation strategy was put together following intensive research and the development of deep cultural insights into what young consumers, especially members of Gen Z, are seeking. It goes far beyond simply keeping in shape and leading a healthy lifestyle to embrace the excitement and thrill that one derives from engagement in trendy sports. They are not only interested in what is popular when it comes to equipment for conventional sports, such as running, football, basketball and other traditional pursuits, but also the creation of brand recognition reflecting a more stylized modern culture.

From adidas Yeezy Day, which, this year, celebrated its seventh anniversary, to the new Confirmed App and this past May's OZ Future Concert hosted by adidas Originals, they all serve as highly representative interpretations of these cultural insights.

Yeezy, one of the biggest and most trendy names among adidas' product lines, is an enduring topic in the mouths of many sneakerheads who love sneakers and sneaker culture. The sense of belonging and self-identity engendered by the sport itself is what resonates with them, forming a cultural community that is unique to their community.

The Confirmed App, which was conceived as an exclusive limited edition shopping platform, is a place where the well-known Yeezy and Superstar series can be found. At variance with adidas' existing local app, adidas App, Confirmed App delivers a new digital experience to sneaker lovers with the launch of exclusive limited edition products alongside other creative content and a focus on community. At the same time, adidas will combine a new product release mechanism and digital security technologies to ensure that shoppers can purchase products in a fair, fast and secure way, maintaining to the highest degree possible the simplicity of the cultural community.

Just this past May, adidas Originals partnered with TMELAND, the first virtual music festival organized by Tencent Music Entertainment Group, as a prelude to the OZ Future Concert. The event is a huge party for sneakerheads where they can step into the TMELAND virtual music festival in the guise of their avatar and experience the online performances of OZWORLD's star lineup of Jay Park and Ouyang Jing.

The value of these cultural communities and circles lies in the fact that they are the result of self-generated cultural spaces among consumers rather than deliberate products with artificial interventions. adidas' involvement is more like a craftsman who ignites the passion of the crowd. People in the circle are acting as viewers and participants, while the attention of those outside the circle is drawn to the point that they also stop and watch the action.

Most notably, though, to embrace the hip sports culture of young consumers, adidas has gone even further than these rejuvenation and digitalization efforts.

In terms of new and trendy sports such as cycling, skateboarding and Frisbee throwing, which have grown in popularity among members of these generations, adidas has continued its efforts to vastly diversify the experience for young sports enthusiasts. The sports brand has rolled out indoor, urban commuting, road, gravel road and other lineups of professional cycling equipment for all occasions.

In June of this year, adidas launched a skateboarding video challenge.

adidas is sponsoring the 2022-2023 China Frisbee League, which kicked off on August 6, and will hold an Ultimate Tournament during the upcoming National Fitness Day on August 8...

Underlying Logic of Digitalization: the China for China Strategy Serves As an Anchor to Promote Localized Digital Transformation

In the view of adidas, going all digital is increasingly emerging as a key for brands who seek to communicate with Gen Z. As part of its latest five-year roadmap, the company's digital transformation, to which it has given the moniker Own the Game, has been listed as one of the brand's three key focus areas. For this reason, adidas is increasing its investment in digital technologies. adidas' financial report revealed that investment topped 667 million euros in 2021, distinctly higher than the 442 million euros spent in 2020. By 2025, adidas is expected to invest some billion euros to drive its going digital efforts, covering the entire value chain from production to final sales and significantly enhancing the strategic position of its technology division.

To better serve Chinese sports fans, adidas Greater China developed the China for China strategy. Based on this approach, adidas has put its stake in the ground in terms of investing and further expanding its footprint in China, developing and distributing localized products and services as well as creating and publishing localized digital games for Chinese consumers.

Adrian Siu, Managing Director of adidas Greater China, said in an earlier interview, "Greater China has become one of the most important strategic markets for adidas. Facing the evolving expectations of the Chinese market and Chinese consumers, we have built a more sophisticated team to take a closer look at and serve the market. adidas has been bullish on the market's huge potential, demonstrating our strong confidence in the region. Our company will continue to increase its investment and R&D activities in China, in response to the changes and challenges with a proactive, responsive and innovative approach in terms of product, marketing and channels. Looking ahead, we will strengthen our personalized services and focus more on our ongoing digital efforts to enhance the links with Gen Z, making Greater China an integral part of adidas' 2025 Own the Game Strategy."

To fully localize its in-China digitalization process and get closer to Chinese consumers, as early as 2019 adidas had already started making some substantial investments in the Digital Hub in Shanghai, making the sneaker producer a pioneer in the digital transformation of the sports industry through attracting outstanding talents and building a digital ecosystem. Worth noting is that adidas' localization is even more radical as its data centers are wholly located in China and all collected personal information is fully encrypted to protect consumer privacy in all respects.

As a key component of adidas' digitalization efforts, the Digital Hub currently houses the company's data analytics and digital platforms, as well as consumer digital touchpoints, with the aim of enhancing the digital transformation with tailored solutions. The Digital Hub allows the sports brand not only to make its R&D and production more efficient in the upstream of the whole value chain, but also to optimize the marketing and consumer experience in the downstream.

A unique and important feature of the Digital Hub is a creative insights platform dedicated specifically to the Chinese market, with the ability to provide powerful insights and to synchronize market intelligence in near real-time. By sharing insights into consumer expectations and in-depth analysis of market trends alongside product distribution data, the platform can serve adidas China's cross-functional teams as a strong contributor to business growth.

On the sales side, adidas reaches young shoppers via the Digital Hub's multiple data analysis and digital platforms, while its wide range of digital marketing touchpoints include the app, the WeChat ecosystem, and the official website. At the same time, the teams that support the Digital Hub are making every effort to gain visibility in front of young consumers through diverse approaches including membership benefits, content sharing and live streaming, in a move to drive their engagement and promote the cool street culture. As of the end of 2021, adidas China boasted 58 million members.

To date, adidas has completed the first phase of its 5-year digital strategic plan, with the establishment of its DTC business from the front-end digital matrix to the back-end big data middleware support. In the next phase, adidas will continue its efforts to customize personalized digital experiences for consumers across channels, chains, and lifecycles, and to create a variety of immersive, high-tech digital experiences as part of its mission of enriching what it means to engage in sports, whether as an amateur or as a professional.

Based on the consumer culture characteristics of these up-and-coming generations, a digital full value chain has been created that covers production to final sales, which not only makes adidas, a brand that has nearly 100 years of history, remains one of the most influential, relevant and trendy sports brands among younger sports enthusiasts, but also assists the company in easing the pressures on offline retail as a result of the pandemic. According to adidas' financial reports, e-commerce channel revenue has grown steadily in recent years, having risen from 1 billion euros in 2016 to 4 billion euros in 2021.

Half of the people who embark on a one hundred mile journey may fall by the way side. But going digital is undoubtedly one of the best solutions for brands like adidas who seek to become a part of the life of a Gen Z consumer and prove the NP=P equation.

resource：https://mp.weixin.qq.com/s/xgUBZptDwQA1J1bz9O7gSQ

SOURCE adidas