Adidas, the German sportswear company, is gearing up to close stores to focus on investment in digital initiatives, as it aims to meet an ambitious goal of more than doubling eCommerce sales in two years’ time.
According to a report in Financial Times, Kasper Rorsted, chief executive of Adidas, said the plan is to spend €900m in 2018, with much of the spending going to digital operations such as logistics and infrastructure, including fulfillment warehouses for online orders. “Our website is the most important store we have in the world,” Rorsted said. “It has priority when we hire, when we allocate our resources and when we build our infrastructure.”
Rorsted said it is necessary to invest money on logistics, because it is totally different in an online world. “When you ship to a big retail chain, you ship pallets of shoes – but when you sell to the end customer, you ship maybe one pair of shoes, some socks and maybe some shorts,” the executive said, noting the company will hire 200 employees who have a digital focus.
The goal is for revenue from online sales to more than double to €4bn by 2020. In 2017, Adidas saw online sales jump 57 percent to close to €1.6bn, which has garnered accolades for the company. “That growth rate is impressive,” said Piral Dadhania, an analyst with Royal Bank of Canada, adding that the “relatively ambitious” 2020 goal shows Adidas’ upbeat outlook for online sales.
Adidas has already been going after the digital market in a bigger way. It launched a mobile app in the U.S., U.K. and Germany that gives customers the ability to personalize their sneakers. The app is slated to launch in France, Spain and Canada during 2018, noted the report.
Adidas is one of Germany’s best-performing stocks, with shares up 21 percent so far in 2018, compared to a 5 percent decline in the DAX index in the country. The company recently announced a €3bn share buyback and a 30 percent increase in its dividend.