Adidas aims to fill the Nike gap at Foot Locker with expanded partnership - The Entrepreneurial Way with A.I.


Friday, May 6, 2022

Adidas aims to fill the Nike gap at Foot Locker with expanded partnership


Dive Brief:

  • Adidas seems to be picking up some of the extra space Nike is leaving in Foot Locker. The athletics giant on Thursday announced a long-term partnership with Foot Locker that includes expanding key franchises in women’s, kids and apparel.
  • The new deal makes Foot Locker the “lead partner” for Adidas’ basketball offerings, according to a company press release. Foot Locker will also play a “prominent role” in the launch of Adidas’ new lifestyle sportswear product.
  • Adidas is targeting over $2 billion in retail sales from the partnership by 2025, which nearly triples 2021 levels. In the coming year, Adidas expects to make up to 100 million euros ($105 million) as a result of the deal.

Dive Insight:

Foot Locker made waves in February when the company said it would receive less Nike product going forward. The decision was based, in part, on Nike’s shift to a more DTC-focused strategy. However, Nike had also come to account for 75% of Foot Locker’s total purchases in 2020, which Foot Locker CEO Dick Johnson said was limiting choice for consumers.

Wedbush analyst Tom Nikic views the partnership between Adidas and Foot Locker as a "positive development for both companies, as it helps [Foot Locker] offset some of the lost volume from [Nike]'s decision to de-emphasize FL's role in their ecosystem, while it may allow Adidas to gain greater inroads in the North American market (where they've long under-punched their weight, primarily due to an under-penetration at FL)."

Matt Powell, senior industry adviser for sports with the NPD Group, recently told Retail Dive that Nike’s shift away from Foot Locker opened up an estimated $1 billion in sales, an opportunity for other players in the athletics space to grab. Adidas’ former sibling, Reebok, has already expanded its own deal with Foot Locker, which includes giving Foot Locker a deeper assortment of Reebok products and teaming up on exclusive footwear.

As part of the new deal with Adidas, Foot Locker will “develop exclusive positions” in both lifestyle and performance basketball. Adidas will also set up a team dedicated to the Foot Locker partnership, and the two will collaborate on product development, exclusive access for Foot Locker, product allocation and marketing spend. Adidas products will receive an elevated presence across Foot Locker’s portfolio, with a focus on “key cities and communities.”

“This close partnership will enable us to bring consumers even more unique, pinnacle products from iconic brands, as well as accelerate our push into apparel, adding new dimension to our assortment and bringing more customers into our ecosystem,” Foot Locker’s Johnson said in a joint press release.

Adidas on Friday reported that currency-neutral sales in the first quarter were down 3% thanks to supply chain constraints, which cost the retailer 400 million euros in the period. However, sales for North America, Latin America, and Europe, the Middle East and Africa grew by a combined 13%.

The retailer added that for the year, it now expects revenue growth and net income to come in at the low-end of its guidance due to COVID-19 lockdowns in China.


Cara Salpini, Khareem Sudlow