Despite Covid-19 e-Commerce Growth, Adidas Will Keep Investing In Physical Stores

Despite a surge in e-commerce sales during the novel coronavirus pandemic, Adidas will continue to make investments in brick-and-mortar stores, said the CEO of the German sportswear company, Kasper Rorsted, in a televiosn interview.

“There’s no doubt that online has accelerated two to three years into the future … but I actually think if you asked most people, there’s a big social element about going out and shopping and just seeing and feeling the products again,” Rorsted said in the interview.

“So, we’ll continue to build stores. We’ll announce that in March of next year, where we’re going to build and create a great store experience,” he added.

In the third quarter a 51 per cent growth in its online sales was reported by Adidas compared to the same metric in the same period a year ago. That was preceded by a 93 per cent year on year surge in its online sale in the second quarter even though the company had reported a 34 per cent drop in its overall currency-neutral revenue for the period.

Rorsted said that the company has now forecast revenues of more than 4 billion euros ($4.9 billion) from its online sale channel for the entire year, which was a marked upgrading in online revenues for of roughly 1 billion euros about four years ago.

Going forward, the in-store shopping experience for consumers will be influenced by by the company’s growing e-commerce strength, said Rorsted, who has been the chief executive of Adidas since 2016.  “We think the stores are still here to stay, but coupled much closer to the online experience,” he said. “I think most people are really bored of sitting at home,” Rorsted added.

A process that it termed as “assess strategic alternatives” for Reebok had been initiated by it, Adidas announced earlier this week. The German company said that the options being considered by it for Reebok also includes a possible sale of the brand which it had acquired in 2006.

The reason for Adidas rethinking its “assess strategic alternatives” for Reebok was “not at all” related to the current pandemic situation, Rorsted reaffirmed in the interview. Instead the crisis created by the pandemic has actually improved the underlying fundamentals for the sporting goods industry, he said, as there has been an increase in demand for casual wear by more people as they continue to work from home as well as an increased  participation in recreational activities.

“I think it’s going to be a very long way back before people want to go back to a suit and brown shoes. That trend was ongoing. There’s no doubt the pandemic has really accelerated that,” Rorsted said. “Working from home and having a much more casual lifestyle is actually playing very much back into a lot of the clothing we have,” he added

(Adapted from CNBC.com)

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