The move by adidas-Salomon AG last week to appoint current global marketing chief Erich Stamminger to the additional role as head of adidas America is either a move to create a new U.S.-centric marketing strategy or an effort to exert more German control over their troubled North America business. Whatever the outcome of the move, we should see some interesting headlines in the months ahead.
adidas-Salomon made the announcement early last week that Stamminger, a Member of the Executive Board of adidas-Salomon responsible for Global Marketing, had been appointed president and CEO of adidas America, effectively ending the external search for a permanent replacement for Ross McMullin, who took a leave of absence for health reasons in September. As a result of the appointment, McMullin has resigned his position with the company. Jim Stutts, the former CEO of TaylorMade-adidas Golf and head of the Asia/Pacific region that stepped in as interim CEO during McMullins leave, will return to TM-aG as Chairman of that unit.
It was also announced that “key global marketing functions and personnel” will relocate to Portland as well, making that city home to the marketing functions of the worlds two largest sports brands.
The company was reportedly quite concerned about the depth of issues at the U.S. unit and moved quickly to put someone in place that has the full confidence — and ear — of adidas-Salomon chairman and CEO Herbert Hainer, abandoning its external search that had many familiar industry names vying for the top spot in Portland.
The move of the global marketing unit is seen by some as a move of necessity to keep the team close to Stamminger rather that a fundamental shift in the companys strategy or thinking. The company still apparently feels it is on the right track with its strategic marketing direction that has the brand message and product development driven from Germany. Those issues are expected to remain unchanged.
But the company has to be concerned with a strategy that has seen the U.S. market stumble as three-stripe fashion product comes in and out of favor with the consumer even as they strive to re-assert their performance message worldwide.
Nike has continued to eat into adidas market share in the critically important soccer business. They continue to sign influential soccer clubs and national teams that were once the sole domain of the adidas brand. Nike has also made a concerted effort in Europe, challenging adidas on its home turf for the mindshare of the performance athletes in many sports.
In the U.S., adidas has failed to create any real momentum in basketball, a critical focus here, even as they have ramped up the marketing spend for athletes and messaging.
Unfortunately, the company has struggled on the product front after its failed Kobe product and continued missteps with its Tracy McGrady product after good early success there. Perhaps the gap in the understanding of the basketball consumer is central to this issue, exemplified by Hainers comments in a BusinessWeek.com article last week.
“At the moment, virtually none of the current NBA stars wear Nike,” said Hainer in the BW article. “In my eyes, this is the reason Nike was prepared to spend an outrageous amount of money for an 18-year-old”, referring to Nikes LeBron James deal. Hainer was evidently unaware that two of Nikes NBA endorsers, Vince Carter and Kobe Bryant, lead the East and West vote tallies for the 2004 NBA All-Star game or that LBJ or Carmelo Anthony both have the inside track for Rookie of the Year.
But Hainer admits that “North America is key” to the companys success and they will tie its “Global Marketing organization and adidas America closer together.”
After releasing its third quarter results, adidas-Salomon said that they had learned a lesson in the U.S. over the last twelve months and planned to focus more on putting the right product in the right place going forward.
The shift doesnt appear to be happening soon enough though as SEW noticed in our Black Friday retail review that we saw fewer adidas styles at full price on shoe walls and that some chains had already started to promote the recently-released TMac3.
The North America business was essentially flat for third quarter when measured in currency-neutral terms, but was down almost 16% in the reported Euro currency. The bigger issue is clearly the forward-looking backlog figures for the region, where Footwear backlogs fell 29% and Apparel decreased 16% at quarter-end in currency-neutral terms.
The company still seems to be in some denial though, as Hainer said in a conference call that adidas actually grew market share in the U.S. in the first nine months of the year. He also said that the shrinking order backlog was hurt by a tough comparison with the last year.
Hainer said in the call that a campaign to “re-energize” the adidas brand in North America will have a “significant” media budget to drive it in 2004. Overall marketing expenditures are not expected to grow above the 12% to 14% of sales expects this year, so something will have to give since the company is already committed to a heavy focus at the Athens Olympics next summer. Is Stammingers move the answer?
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