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Adidas Is Fragile and this Stock Surge Can’t Sustain

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Josh Luber of StockX did an incredible analysis of the adidas Resell market history: https://stockx.com/outsole/the-history-of-adidas-resell/

The history isn’t really a history it’s a shoe sprinkled here and there over the course of 8 years. Adidas has only become a force in resale since Kanye’s arrival and as much as many people don’t want to credit Kanye for the revival of the brand, and you can’t quantify what he is worth to the Three Stripes, it isn’t unreasonable to say that the correlation is visible if you take one moment to look at the work Josh used to build this analysis. adidas’ resale value started when Kanye signed with the brand. While resale is a small portion of the industry, the interest in adidas shifted at the same time.

When I look at my own numbers I know that over the seven years via Amazon I’ve been capable of reselling Adidas at above retail since Derrick Rose signed with the brand. At least I could up until he was hurt around the time the 3 released and the 3.5. I haven’t had much access to the shoes in the last few years. My numbers on the Dame Lillard are also above retail. Adidas did carry resale value on certain shoes. The Superstar 80s My Adidas Run DMC (JMJ-Jam Master Jay) 25th Anniversary resold at a fairly high price. These things were taking place before Kanye and Pharrell, but they were very isolated. I primarily sold the Rose and Crazy Light about 20-40 dollars above retail which isn’t a crazy resale price, but I was in a very different place in my business 5 years ago.

Today, I can look at the market, without considering the resale market as an influence, and say without reservation that adidas currently controls the trend. I recently was forced to redesign my online store. I had to quit Amazon cold turkey after an Amazon Algorithm shift forced all items over 35 dollars to require free shipping. I talked about this here:

adidas, Nike and Under Armour Should Be Worried | The Sportswear Disruption No One Is Discussing 

In the article above I discuss that all of the footwear brands are at the mercy of Amazon if Amazon continues its private label push into athleisure and sportswear. This doesn’t exactly explain my reason for saying that this recent jump from 55/share to 90/share for adidas is not stable and won’t sustain. In a recent post I explained why the jump happened. I also made the statement that adidas could sustain this momentum if they did several things well:

Adidas Stock Jumps 9% | A Detailed Discussion on Why?

The problem is this increase of 55 to 95 creates a bubble and bubbles burst especially in retail when the market can shift in a heartbeat or with a viral video.

If I state that adidas can sustain then why would I write that adidas is Fragile?

  1. Performance basketball is very shaky for adidas. While performance running for adidas grew this past year, basketball was dead. If there is at any point this year a move that reignites the interest in basketball footwear, is adidas poised to capitalize? With Lillard, Rose and Harden as the flagship guys, and Wiggins bringing up the rear, basketball is not a very strong segment for adidas. I did write the post about why basketball sales are doomed, but hypothetically if basketball finds a way to market beyond the NBA, adidas is not really primed to fight that battle.
  2. The lightweight, knit casual shoe and modernized retro casual footwear trend is going to be encroached upon by other brands. adidas right now is capitalizing on BOOST/NMD/UB. New Balance however has created a very solid performer in their NB247. That shoe is capable of growing and performing well as the spring summer hits. The ASICS Gel Kayano Knit is also a disruptive shoe for the running shoe and casual market for adidas. Surprisingly K-Swiss has a player in the game as well that could garner some serious attention with the correct marketing campaign. adidas is definitely in control, but that domination is fragile. It’s not that Nike is going to come back in full force… I think Nike has failed to pay attention. It’s the other brands who could make their own adidas style resurgence on a small scale. Under Armour has also figured out a few things with their Slingflex Threadborne runner.
  3. Eventually every brand will hear me yelling, “Content Creation Can Save You!!!!!!” I mean if I could just sit in a board room with these execs I could tell each individual company what needs to be done to recapture some percentage of the market. adidas kicked Nike’s door open and in doing so they have opened a door and they can’t close it behind them. They are leaving evidence of what to do everywhere and if any of the brands in the wings will pay attention they can copy off of the test. They won’t do any real damage to adidas’ dominance, but they can distract enough that Nike may figure things out and do something creative and fresh beyond ZoomX and Vapor which aren’t as good as they are hoping.

Since I’ve redesigned my shop my sales are 93.33% adidas. If adidas is fragile it isn’t evident in my own data, so why would I say they are?  It’s because in the last ten years I’ve witnessed the Air Foamposite from Nike be one of the hottest shoes to now being a shoe that doesn’t garner a resale value anymore. I’ve seen the Nike Dunk reach mythical heights only to end up in Nike Clearance stores in a half box for 29.99. I’ve seen the LeBron 8 Pre Heat  go for 700 dollars a pair and the LeBron 13 retail price 200 sell for 79.99. I’ve witnessed the Curry 1 sell out everywhere and the Curry 3 sit on shelves. The market always shifts.