Think of it as specialized shops offering specialized products to attract the right audience interested in what is in the store.
Challenges to correctly manage
- Store branding will be key so consumers are not confused or disappointed by going to the wrong store.
- The stores should be seamlessly integrated so a customer can be led from one store to the one carrying what they are looking for. I.e. if someone interested in basketball gear walks into a store focused on fashion, what happens? Will a customer take the time to go to the other store if far away?
- Consider dominating real estate by crowding out competitors. Think of Starbucks being across the street from each other.
- How to determine which stores (and franchisees) focus on which niche?
- Marketing will be key to making sure consumers understand what the adidas brand stands for as the brand will be split at the retail level.
Implement first in company-owned stores, then roll out to franchise stores
To persuade China franchisees to adopt the new niches, adidas is first making changes in its company-owned stores. Leading by example is smart. adidas is then in a position to show the results to franchise owners.
However, before it can really roll out nationwide across China where adidas has about 7,000 stores, 90% which are franchisees, adidas must, and is, tightening control over inventory management. adidas is analyzing sales data of franchise partners and overseeing ordering.
Test, prove, expand
Adidas tested this new retail strategy in China's central city of Wuhan. It took 5 identical adidas stores and split them up to focus on different crowds: e.g. basketball players, fashion, etc. The results were promising. Sales at the revamped stores jumped 80% in 2012 compared with a year earlier.
Source: "Adidas Sportswear Is Hot on Nike's Heels in China", Wall Street Journal, March 7, 2013.
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