Business War: Adidas vs. Nike

Adidas used to dominate the shoe industry but made mistakes, like losing the endorsement of Michael Jordan to Nike. Adidas also created designs that didn't interest people anymore. Nike's success came from spotting potential players like Jordan and investing in advertising. Nike's designs are popular not only in sports but also in fashion. Nike's acquisition of Converse also helped them. The future of the shoe industry looks promising with expected growth. It's still uncertain who will win the battle between Nike and Adidas, as both have their strengths. Adaptation and innovation will be key for success. Hello, our listeners. Welcome to Versus Wars, Nike vs Adidas. I'm your host, and this is our guest speaker. Thank you for coming. Hello, everyone. Together, we will uncover the stories and all of the game-changing moments that have shaped the sneaker industry. The story began a few years back. Adidas owns 60% of the market share in the shoe industry, but it has turned around because of some mistakes the company has made. So, what exactly are those mistakes? Could you share with us? Yes, definitely. I would say one of the biggest factors leading to the difficult situation of the Adidas empire is that they lost the potential endorsement to Nike. In 1960, the reign of basketball started, and in 1970, 80% of all basketball players were wearing Adidas, and that was when they started creating custom sneakers for players. Adidas owned a quarter until they passed the potential collaboration with Michael Jordan. It was the biggest mistake that Adidas has ever made because Michael Jordan started to get famous, Nike started to shine as well, and up until now, Nike is earning millions of dollars from their endorsement with him. Yes, it's a pity for Adidas to lose their position in the basketball shoe market, and as far as I am concerned, Adidas was known for creating custom sneakers, which was considered one of the things that attracts potential customers, especially the young, who expect unique fashion products after all. So, why did Adidas still end up being the loser in this battle? Yes, I totally agree with what you said, but the problem is they have created so many sneaker designs that are no longer getting people interested. They were no longer listening to the market and decided to create sneakers that they think they would sell. However, with the sales and the branding of Nike getting hype, Adidas slowly lost its loyal customers. How interesting the information that you've given to us regarding Adidas not keeping up with the design, and I want to ask you a question. In the 1980s, Adidas started to align for apparel not connected to the brand location elsewhere, and was that another reason for the failure? Yes, for sure, and I can assume that this was a wrong decision that negatively affected the brand positioning. There are more mistakes that Adidas has made, but the most overlooked reason for their downfall is their brand positioning. Rather than focusing on getting their market back, they started to a new line thinking that casual outwear would boost their sales again, making this decision counterproductive. So, as you may have known, the competition in the shoe industry has been long-lasting and short-cutting. For several years, Adidas has been running the shoe industry, but after Nike's hard work and various tactics being deployed, the business war finally commenced, and I heard that there are secrets underlying Nike's success. What are they? Spotting potential players is one of them's assets. Nike actually paid because of their sponsorship and partnership with Michael Jordan, and Nike reinvested a large proportion of their revenue in advertising, and it paid off. They are now the number one company in the shoe industry. Thank you for your sharing. I once heard that Nike had a group of really good designers compared to Adidas. It came into a pause when Nike's employee Lowe's, the company Adidas, said admitting to poaching is a fact or fiction. Yes, that is true. The second factor contributing to Nike's superiority is design. Nike is not only known in the sports industry. Their designs are not only fit for players, but also for runways that even Hollywood stars wanted to wear them as sneakers. Nike also practices innovation, and year after year, they take advantage of the technology, such as the very thick self-lacing shoe. And that is mind-blowing indeed. Nike bought out Converse in 2003, experts deemed this to be Nike's wisest investment, as Converse sales kept on growing and growing after the release of the classic Chuck Taylor all-star sneakers. Does this decision also lead to Nike's victory in the battle against Adidas too? Yes, that is correct. Buying out competition is one of the most extraordinary strategies that Nike has executed. Nike now owns the majority of athlete footwear companies in the United States. Thank you. Finally, we will move on to our last part, future of the shoe industry. And now, I am going to provide some statistics. May I ask you your opinion on these figures? Yes, definitely. So, according to the Allied Market Research that was released in April 2020, the shoe industry is already valued at $365.5 billion, and in 2027, it is expected to reach $530.3 billion. With the shoe industry continuing to expand in different countries, it could definitely reach the expected value in 2027, or might be even higher than that. And here are the questions. Has the shoe industry reached its summit, and is it Nike or Adidas, the ultimate winner of this battle? Well, I think it's still not final. As time will come, then new competitors will arise. But what is good about this competition is that it makes the companies produce better products. Hence, businesses will be better too. As Philip Knight once said, the company who will be on top is the company who isn't afraid to fall. The winner of this war has not been decided, especially that the sneaker war is entering a new era. Adidas has a good history, while Nike is more focused on technology. Nike's technology is great, but Adidas still has a large market share, and it's making a comeback by producing their old lines of sneakers. The market takes changes every time, and the best way to be on top is to adapt to the grades. Customers just have to wait for what Nike and Adidas have in store for the crowd. So thank you very much for your sharing. I hope that the guest speaker's sharing has made you come away with invaluable knowledge concerning the business war between Nike and Adidas. And that is the end of our podcast. Thank you for listening.