Adidas targets social media followers for sales growth

FRANKFURT • Passed over for the top job, Adidas' global brands director Eric Liedtke (above) plans to stick around and has fresh marching orders - translate the sporting-goods maker's digital street credibility into sales.

Mr Liedtke, who lost out to former Henkel leader Kasper Rorsted in a race to succeed chief executive officer Herbert Hainer, is now turning his attention to a different battle as he seeks to make it easier for Instagram and Snapchat followers to buy popular sneaker styles.

His end goal is to keep fuelling one of the biggest corporate turnarounds of the year.

"Adidas is my life's work and I'm not ready to run away from it because I didn't win," says the United States-born Liedtke in an interview.

Less than two years ago, the company was in the midst of a slump as it scrapped financial targets and lost market share to main rival Nike. Its shares fell 38 per cent in 2014, though since then they have more than doubled as the company revived some classic sneaker lines and collaborated with Kanye West on "Yeezy" branded gear.

To help sustain the turnaround, the company will introduce versions of its retro-cool Stan Smith and Superstar sneakers in the next two months that incorporate Adidas' bouncy Boost technical sole, Mr Liedtke said.

Potentially the biggest opportunity lies in converting Adidas' throngs of social media followers into paying customers. The Adidas Originals brand has 14 million Instagram followers and more than 28 million likes on Facebook. To assess the possibilities, Mr Liedtke just spent six weeks in the US, including one week in a Bay Area rental car calling on Apple, Facebook, Google and Tesla Motors.

"I'd call it a roadshow with key Silicon Valley companies we want to work with," said the executive, who started at Adidas in 1994 and turns 50 this year. He is also talking to Pokemon Go developer Niantic about applying virtual-reality gaming technology to the sport-shoe world.

Digital savvy and the introduction of models, including futuristic-looking ones, have given Adidas appeal among millennials, says Mr Neil Schwartz, an analyst at Sports One Source.

"Adidas didn't have awareness or cache among millennials and now it does," he said.

The company is regaining ground in the US and leapfrogged Under Armour to reclaim its No. 2 position there, according to Sports One Source. The shares are up 62 per cent this year, by far the best performance among Germany's benchmark DAX index.

Maintaining the momentum will be no sure thing at a time when growth is coming from casual sneakers, whose fashion-oriented buyers can change brands on a whim.

Profit is also an issue. Adidas' projected 7.5 per cent operating margin this year is still about half of Nike's and it will be a challenge for Mr Rorsted to cut costs at a time when the price of sports marketing is soaring.

Then there is the question of how much value Adidas can reap from its on-the-block golf business after Nike said it is exiting the business entirely. Nike's decision potentially hurts Adidas golf's value, Mr Liedtke said.

"The more experience I have, the more I realise editing is the critical thing," he said. "And it could allow us to be more profitable too. If Kasper wants to come in and reshape the group, that's why we hired the man."

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on September 08, 2016, with the headline 'Adidas targets social media followers for sales growth'. Print Edition | Subscribe