Adidas Sales Insights

Executive Summary

Objective:

To analyze Adidas' sales performance across retailers, regions, and sales methods using data from 2020-2021. The goal is to identify growth opportunities, optimize underperforming areas, and improve profitability.

Key Metrics:

• Total Revenue: $899.9M
• Total Profit: $332.1M
• Units Sold: 2.5M
• Operating Margin: 36.9%
• Profit per Unit: $134

Problem Statement

Current Scenario: Adidas’ sales performance is uneven across different retailers, regions, and sales channels. While certain retailers and regions are contributing significantly, others are lagging. The brand needs a strategic approach to optimize these areas and increase both sales and profitability.

Challenges to Address:

1. Disparity in sales contributions from retailers.
2. Regional sales distribution is skewed towards the West.
3. Online sales channel underperformance compared to in-store and outlet sales.
4. Improving operational efficiency to enhance profit margins.

Retailer Performance Analysis

Sales by Retailer:

• Top Performers:
  • West Gear: $243M
  • Foot Locker: $220.1M
  • Sports Direct: $182.5M
• Underperformers:
  • Amazon: $77.7M
  • Walmart: $74.6M

• Key Finding: The top three retailers account for ~71% of total sales, signaling heavy reliance on specific partners.
• Opportunities:
  • Amazon and Walmart: These online giants have underperformed, potentially due to lack of digital focus or stock management issues.
  • Optimization Strategy: Leverage e-commerce marketing, adjust inventory, and introduce exclusive online products to boost their performance.

Temporal Sales Insights

Sales Over Time :

• Highest Sales Month: July 2021
• Lowest Sales Month: June 2020
• Trend Observation: Sales grew significantly in 2021 compared to 2020, reflecting market recovery post-pandemic.

• Seasonality Effect: Strong sales in mid-2021 indicate a potential seasonal demand spike. Capitalizing on similar periods in future years with targeted marketing campaigns could drive higher sales.
• 2020 Impact: Lower sales in 2020 are likely influenced by global disruptions, pointing to the need for agile strategies to respond to external factors like supply chain issues.

Regional Performance Breakdown

Sales by Region :

• West Region: 30%
• Northeast Region: 21%
• Southeast Region: 18%
• South Region: 16%
• Midwest Region: 15%

• Key Finding: The West region dominates sales, while the Midwest significantly underperforms.
• Opportunity for Growth:
  • Midwest Expansion: Invest in new retail outlets, enhanced distribution, and localized marketing campaigns to boost Midwest sales.
  • Northeast & Southeast Focus: With 21% and 18% respectively, these regions have potential for further growth through improved targeting of customer demographics and expansion in underpenetrated cities.

Channel Performance Overview

Sales by Method:

• In-store: 40%
• Outlet: 33%
• Online: 27%

• Online Channel Growth:
  • Online sales underperform in comparison to physical outlets despite the global shift towards e-commerce.
• Opportunities: - Digital Transformation: Enhance digital marketing efforts (SEO, social media campaigns), streamline online shopping experiences, and offer exclusive products online. - Omni-channel Strategy: Improve online-to-offline integration (e.g., click-and-collect), and create a seamless customer journey between digital and physical stores.

Profitability Analysis & Efficiency Opportunities

Operating Profit Margin: 36.9%

• Profit Per Unit: $134

Strategic Insights:

• Efficiency Improvement:
  • While the 36.9% margin is competitive, there are still opportunities to increase efficiency across supply chains, warehousing, and logistics to reduce operational costs.
• Focus Areas: - Cost Reduction: Negotiate better terms with suppliers and retailers, optimize distribution routes, and reduce operational waste. - SKU Rationalization: Focus on high-margin products and reduce the volume of low-performing SKUs to increase overall profitability.

Actionable Insights & Solutions

Retailer Strategy:

1. Amazon & Walmart: Increase focus on digital sales strategies, enhance inventory management, and offer exclusive products.
2. West Gear & Foot Locker: Continue nurturing top-performing retailers, potentially offering them higher stock of limited-edition or new products to maintain sales growth.

Regional Growth Opportunities:

1. Midwest Focus: Expand presence through new outlets, targeted marketing campaigns, and improved distribution.
2. Southeast & Northeast: Strengthen penetration in key cities, and tailor marketing to regional preferences.

Sales Method Optimization:

1. Online Growth: Invest in improving the online shopping experience and enhancing digital marketing.
2. Omni-channel Approach: Integrate online and offline strategies (e.g., click-and-collect, online-to-store promotions).

Key Business Impact

Revenue Growth Potential:

• By optimizing underperforming retailers and regions, there’s a potential to boost overall revenue by 10-15% in the next fiscal year.

Enhanced Profit Margins:

• Operational improvements could increase profit margins by 2-3%, resulting in $25M-$30M additional profit.

Strengthening Digital Presence:

• Expanding the online channel could lead to an additional 5-10% revenue growth in the e-commerce segment alone.

Conclusion & Next Steps

Conclusion:

• Adidas is performing well, with strong sales and profitability, but there are key areas for growth. Retailer and regional discrepancies, underperforming online channels, and operational inefficiencies are the primary challenges to address.

Next Steps:

1. Develop targeted retailer-specific strategies to improve sales performance.
2. Focus marketing and sales efforts on underperforming regions like the Midwest.
3. Invest in digital transformation and enhance the e-commerce experience.
4. Implement cost-reduction initiatives to improve operational efficiency and boost profit margins.