• Anne Heaney, Director

Adidas has a Clever Plan to Stay Relevant

In 2011, Adidas made a bold decision: to stop releasing one of its classic sneakers, the Stan Smith.

The plan was to clean out the marketplace. Lack of supply would create pent-up consumer demand, which Adidas meant to stoke slowly with hard-to-get releases before officially reintroducing the shoes. It did that in 2014, and just as expected, the Stan Smith blew up.

The Stan Smith and another retro sneaker, the Superstar, have been major forces in Adidas’s stunning revival over the past few years. The brand continues to grow, including in the important North American market, where sales rose 16% in the second quarter. Yet for the past 18 months, Adidas has been pulling back distribution of the two sneakers, CEO Kasper Rorsted told investors during an earnings call Thursday (Aug. 9).

Sales of Stan Smiths and Superstars have long been cooling in certain markets. But Rorsted said there is actually more demand than Adidas wants to satisfy; the company is thinking long-term about its “brand integrity.” If in two or three years, the shoes’ popularity rises again, Adidas can hike up distribution. Rorsted called it an example of “disciplined life-cycle management.”

Much of the sneaker business—and fashion generally—relies on scarcity. Adidas has launched—and carefully distributed—new styles that are more than making up for the pullback on Stan Smiths and Superstars.

At this point, Adidas doesn’t have just one or two burning-hot styles fuelling growth. It has a slow burn going under a broad base of sneakers. To keep its brand hot, Adidas knows how to stay cool.

Buying Intelligence tracks the products in your market's life cycle from delivery to exit.

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