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[Angelus Errare]

Adidas really doesn't know what the fuck they're doing.

I wouldn't be at all surprised if sponsorship deals with Lionel Messi had a bigger effect on Adidas earnings than Kanye.

Well since as Messi products are mass produced and not limited to 50k units it wouldn't be too surprising.

 

[GeordieMark]

Well since as Messi products are mass produced and not limited to 50k units it wouldn't be too surprising.

I meant by affiliation, rather than Messi-branded products.

 

[see5harp]

Yeah I notice Under Armor has really exploded but I'm curious as to why? Apart from it being just a good product, but that's usually not enough to cause so much growth.

Why have they gotten so big lately?

All of the active brands are doing crazy. I don't like any of Under Armour but am fine with Lululemon. Both are doing crazy.

EDIT: and I actually went to an Adidas store this weekend and found a bunch of their shoes quite appealing. Much more so than the big name Nike basketball shoes. I think the Kobe's are the only new basketball shoe I'd ever wear outside.

 

[trixx]

do a fucking crazy limited release of these to build hype:

then mass produce these:

It's not that difficult. Even Jordan releases decently easy to find pairs of highly coveted shoes, like the 1s or XIs. But if you want the Breds? Or Space Jams? Or Concords? Good fucking luck. Those releases create the excitement, and when you strike out, people settle for what's available.

That's the problem with Yeezys. When you strike out, there's NOTHING available. People aren't just going to buy a shitty pair of Adidas. They want Yeezys.

It's that simple. You're charging $200+ and it's extremely limited so it shouldn't be a surprise really be a surprise. If it was more reasonably priced and more available I'm sure it will sell like crazy.

Not many great Adidas shoes in the mid tier. The Japanese brand is cool but way too premium.

 

[nib95]

Adidas really doesn't know what the fuck they're doing.

Well since as Messi products are mass produced and not limited to 50k units it wouldn't be too surprising.

Of course they do. They're at hype and status building stages with the Yeezy's right now, as a result making profit is less of a priority than building demand along with the brand itself. More of a long term strategy. They're also using it to indirectly advertise, promote and influence the tech and designs in the rest of their shoes, like Boost and Tubular. My guess is they start ramping up production over the course of the next year, maybe even lowering prices.

 

[GatorBait]

The author is one shitty analyst. When your line is limited to less than 50,000 pairs, the revenue from that line isn't going to appreciably raise the bottom line, especially after backing out "endorsement" costs. Conversely, when the endorsement costs are only $10M, it's not a particularly significant cost for a brand with $3B in revenues per year.

But in Powell's view, the Yeezy line's actual sales performance is proof that superstar endorsements rarely pay off, particularly when the brand fit is off.

He says: "In footwear, it all comes down to product. If the product is wrong, the greatest marketing campaign will not matter.

"Adidas’ products were wrong for the US market. I do not believe that so-called "influencers" have a great impact on sales. Product is much more important than who is getting paid to wear shoes."

But the Yeezy line sells out immediately with every release. If the revenue from a line that sells out hasn't covered Adidas' costs, it isn't due to the line's sales performance. It's due to supply constraints or pricing that is below market relative to demand.

I'd love to hear the argument why Adidas doesn't raise the retail price of Yeezys or produce more to meet the overwhelming demand. Perhaps they think the exclusivity is going to drive marketing appeal for the overall brand, but the flaw in that thinking is Kanye himself doesn't have a lot of individual appeal or broad market cachet. I don't think Kanye himself is the primary reason attributed to why (most) people are buying the shoes; it's because they like the product itself.

 

[Fixed2BeBroken]

I'd love to hear the argument why Adidas doesn't raise the retail price of Yeezys or produce more to meet the overwhelming demand. Perhaps they think the exclusivity is going to drive marketing appeal for the overall brand, but the flaw in that thinking is Kanye himself doesn't have a lot of individual appeal or broad market cachet. I don't think Kanye himself is the primary reason attributed to why (most) people are buying the shoes; it's because they like the product itself.

its part kanye, part the power in the name/brand of yeezy itself, part exclusivity, part actual design. yeezys are one of the most coveted shoe. kanye being kanye definately has something to do with it because he went from Nike to Adidas and the results remained the same. there were people predicting that his shoes wouldnt be as coveted once he switched over to adidas because while real sneakerheads fucked with adidas, most hypebeasts were nike or bust. before yeezy switched over to adidas, they didnt have nowhere near the impact in the reseller world compared to nike (where sneaker companies determine the thirst) until yeezy started releasing. now adidas is way more relevant in the sneaker game. I gotta give Ye credit for making adidas legit in hypebeasts eyes and Adidas for hopping on Kanye recognizing the potential.

 

[bedlamite]

Yeezys, NMDs, even the Ultraboosts. Consumer demand for these shoes are through the roof but Adidas simply isn't making enough to fulfill demand, and in the case of the Yeezys and especially the NMDs, stupidly limiting production. i can understand the exclusivity thing but doing so at a detriment to your business seems pretty fucking dumb to me. Adidas needs to wake the fuck up.

 

[beat]

As someone who isn't a hardcore sneakerhead and only vaguely aware of Kanye's shoes... adidas doesn't promote the line sufficiently as being affiliated with adidas. Most people talk about them as purely and only Yeezys. Great for Kanye, great for hype, but there's no halo effect if no one knows they're from adidas.

And artificial scarcity is dumb.

 

[KyanMehwulfe]

yeezys never really exploded on social media until 2015 and were as big or bigger in europe and china

and no mention of margins... i mean, 50k yeezys should have generated twice the revenue of his signing figure.

so US data up to 2014 seems rather incomplete

 

[Complex Shadow]

just give me 750's please. thats all i want T__T

 

[Anth0ny]

As someone who isn't a hardcore sneakerhead and only vaguely aware of Kanye's shoes... adidas doesn't promote the line sufficiently as being affiliated with adidas. Most people talk about them as purely and only Yeezys. Great for Kanye, great for hype, but there's no halo effect if no one knows they're from adidas.

And artificial scarcity is dumb.

I mean, you could say the same about Air Jordan's. Jordan 2s were famous for being the first Nike shoe without the swoosh.

I agree that they do need to do a better job associating yeezys with adidas, though. Less than 2 years ago Air Yeezys were Nike shoes.

You know what's an easy way to do that? GET A YEEZY ON SHELVES. They don't even hit the shelves before they're all sold out because they make so god damn little of them.

 

[Hasphat'sAnts]

I think people need to realize that fashion footwear/sneakers is a fairly small piece of the core business. Gets a lot of attention yes, but where Nike really made its bones is marketing its running shoes, its training apparel to the average gym goer.

 

[Citizen_Insane]

It's crazy how popular Adidas has gotten ever since they signed Kanye. They've pretty much replaced Nike here in California.

 

[The Beard]

What the fuck did they think would happen when they don't make nearly enough?

Strange article, the analyst answered their own question on why they don't have an impact.

He mentioned the "halo" effect. As in, you have a special product that you don't necessarily make money on but it draws attention to your brand because of its uniqueness. Apparently the "halo" effect hasn't paid off either, and that's most definitely what Adidas was hoping for, because they could easily produce more Yeezy's if they wanted to. By producing more you risk making Yeezy's less desirable and bringing less attention to the brand.

 

[reKon]

Kinda want to try these on:

I love lighter kicks

 

[KyanMehwulfe]

nike total revenue was slightly positive but close to flat the first 4 years after signing. wasn't until the 6th year and 'Just do it' that their total rev began to explode. nike growth (in apparel( before and after lebron (signed to footwear) was growing but the upward trend was rather unchanged.

marketing guys like to talk a lot of brand equity built by the halo effect but there's not a lot of statistical evidence that shows it working, even less establishing a time frame for it or without sample bias (the nature of it makes it natural to pick brands that use obviously popular or unpopular 'halos'). there's actually a pretty good book on it that picks apart a lot of commentary on the topic.

it's a pretty silly article... it seems more like a response to kanye or an excuse to put kanye in a headline lol and some intern got stuck with finding data that could suffice as relevant by third year marketing class standards ;p

 

[Sho_Nuff82]

Take a second and ask yourself why a company that wants to make as much money as possible would limit the production and availability of a non-legacy product that would supposedly net them a whole bunch of money.

Once you realize it makes absolutely no financial sense to limit a product that would supposedly make a whole bunch of money, you should then explore three possibilities:

1) The limitation in production and availability is done because the signature shoe (in this case, Kanye West shoes) belongs to a non-athlete and thus promoting and creating visibility for the shoe is done without the support of major sports leagues with a global reach of millions and billions of viewers, meaning that promoting the shoes is a nightmare that involves further deals with non-athletes, leading to a complicated mess of contracts and meetings with people with next to no idea on how the footwear market works.

2) The limitation in production and availability is done because the majority of the hype for the product is artificial and based on actual internal data from forecasting and demand planning, the signature shoe is only desired in a handful of markets and a small as a pinky demographic that would not -- even with the most creativest of accounting and number fudging-- lead to a noticeable return in the investment.

3) The limitation in production and availability is done because an extensive association between your brand and a high risk self-admitted clinically depressed individual who supports a man who has admitted to drugging women is not a smart idea.

Sometimes you have to take a step back and look at this stuff from a different perspective. Just take a minute or two and think about the following. If you're a really popular music artist and you struggle to sell 1 million copies of your $9.99 product in a market with over 320 million people, what does that tell you about your audience? Will your audience -- the very same one that would know when you're selling shoes -- come out in droves to purchase a $199.99+ product from you that has absolutely nothing to do with music and has no performance and or athletic value?

The truth is that you can't sell something without buyers. Shoes, jackets, videogames, eye lashes, pencils, dog leashes etc. Whatever it may be that you make, if you don't actually have an audience of people who will give you money for your product, then your product will not survive. The question then becomes: how do you make a product (with a small to non-existent audience) survive? It's not terribly complicated. A low volume - high margin strategy will give a low demand product life. If you sell a low amount of your product you still win because the margins are in your favor.

Kanye West is really popular artist, but his popularity does not translate to an ability to sell millions of products in an entirely different industry that will bring in tens and hundreds of millions of dollars. That's the actual reality. Once you can understand and accept this, you can then understand and accept how business is done with a lot of celebrities.

Now, I'm not an economics professor, but basic supply/demand tells us that they are either making too few of these shoes or selling them for too low of a price.

If you estimate that you could move that same 50k/annually at $650 a pop, or move an additional 50k at the same price if you just bothered to make more (and manufacturing sneakers is not a problem, as you manufacturer dozens of other styles that languish on shelves), you are factually leaving money on the table for a marketing gimmick.

The opposite of the "Halo effect" is the "Sour grapes" effect where once-interested consumers are put off by how difficult it is to get their hands on your reasonably priced item and just say fuck it.

 

[Ether_Snake]

This article is incredibly stupid. It specifically says that 2015 has been a "turn around" year, where things have been steadily improving. And it's EXACTLY when Yeezy started, and on top of that anyone who is paying attention to the sector knows Adidas has been on a steady rise since last year. If anything there's more interest from non-sneakerheads than ever for Adidas shoes over Nike.

The nicest Adidas shoes are the Y3 ones though, way nicer than the Yeezys. Tubulars are hot too.

Yeah I notice Under Armor has really exploded but I'm curious as to why? Apart from it being just a good product, but that's usually not enough to cause so much growth.

Why have they gotten so big lately?

Mainly marketing. There's been a big rise in athletic wear in general cause everyone and their grandma has a gym or yoga subscription or whatever. Under Armor is just a name that people associate with gym-specific clothing, while Nike and Adidas were more associated to sports and athletic wear. But now they're starting to sign up big names so they're creeping further.

I tried some UA shirts and they were the worst quality I've ever seen, horrible fit and fabric that clearly was going to get stretched permanently easily. Their shoes are real ugly.

 

[Camp1nCarl]

Adidas needs their college unis to not look like ass, that will have a good halo effect

So glad my school is dropping Adidas and going to be the first Jordan school.

But on-topic Adidas needs to make Yeezys more available, a lot of non-sneakerheads would get a pair of they weren't so damn hard to get.

 

[burnside13]

What a dumb article. I have a more accurate headline for them:

Adidas sales are down since Kanye West deal but Kanye West not to blame, nothing to do with Kanye at all really. Click this because Kanye West name