Sunday, June 5, 2016

The Adidas Illness

As has been disclosed here more than a few times, I work from time to time with brands on marketing, sales and pr/media projects as an independent freelancer.   I am currently ensconced in a few very intriguing projects, and in the midst of doing some analysis this weekend I was reminded of some very interesting passages I read in Barbara Smit's Sneaker Wars.

Shamelessly borrowed from the INFOWEB

The brief outline , Sneaker Wars is about the birth of Adidas, and subsequently Puma and the complicated and sad rise and fall of the Dassler family.  And yes, that is very interesting reading.  But what plucked my attention was the parallel story of the rise of Nike and Reebok in the 80s, and the refusal of Adidas to recognize what was happening and adapt.  This was particularly borne out in anecdotes about the "Waffle" trainer from Nike, and the "Freestyle" from Reebok.  In both cases it was a vivid example of an almost criminal lack of imagination.  Clearly, nobody (except maybe Nike) had an inkling as to how big the recreational jogging market would be.  And although the Freestyle was admittedly a happy accident due to a mix-up at the factory, it became one of the hottest selling shoes in the US due to the aerobics and fitness boom of the 80s and 90s.

And of course you probably know where I am going with this.  The fundamental issue that the watch industry is struggling against is change.  Change in distribution models, change in marketing approaches, change in purchasing patterns, change in expectations.  But here's the funny thing - there are clearly still people buying watches.  But the days of the brands, brand CEOs, brand marketing chiefs, brand PR folks telling people what they should and will buy are now over.  And what is intriguing is that some brands (both solid and dubious) have recognized and harnessed the importance of communication.  Not merely with their distributors and retail partners, but with the actual people who will make the actual purchase.  And they clearly understand that communication is a group activity that is best utilized when the ears are open from time to time.  When you have a focus group of one, it is highly unlikely that you will have an accurate sample, and it's safe to say that the projections will never match the actuals.

Had Nike only focused on what retailers or prevailing logic and sales histories would have told them, they never would have made the Waffle, and likewise Reebok would never have made the Freestyle.  Sooner or later, you have to adapt.

Ironically, a lot of the difficulties the industry faces are not necessarily about product - although that is a familiar and popular excuse.  The North American Sales Manager will insist up and down the if she/he had better product then all would be well.  Sorry, I'm calling bullshit on that one.

The current crisis was not brought on by poor product offerings.  If Hublot is able to still dog-paddle in the rising tsunami of problems, then clearly the product is not necessarily what is holding brands back.  It is back to some very simple points:

1.  Supply and demand - if you flood the market with too much supply, the demand may still be there, but not at the prices you would like to collect.  Discounting, dumping, grey market all ensue.

2.  Performance based employment and pay - sounds harsh, I realize.  But if you are paid a six-figure salary to sell, those six-figures should not be guaranteed.  There has to be a REAL performance component.  But that performance must be REALISTIC.  Meaning that if the expectation for the sales manager is to sell 1,000 pieces in a market that can only support 300 pieces, that is not a "stretch goal".  That is an invitation to cut corners, dump stock, and do whatever it takes (ethical or otherwise) to make the goal.  Realistic performance is what has been forgotten, and that as much as anything is what has got us to where we are now.

3.  Better marshaling of resources - if sales are poor, per diems and travel expenses need to be brought back in to contextual realities.

4.  Connect with your real customers - even if you are a mega-brand, someone on your team should be keeping track of customers.  A gesture as simple, and inexpensive as a holiday card goes a long way towards fostering brand loyalty.  SWATCH, Richemont and LVMH have more than enough people on staff to put something like that together.

5.  And what I mentioned in the beginning - never assume that you're "the nuts".  As soon as you assume that you and only you know which way the industry is going, you should put on your parka and hop on the ice floe.  You are done, whether you know it or not.  

Because let's face some facts - if the big dogs in Switzerland and Germany were always right, the industry would not be in the situation it is now.

Adapt, or die.

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