Nuance: a subtle difference in or shade of meaning, expression, or sound.
Right now, sneaker culture is up in arms and screaming “I told you so” about adidas‘ recent announcement that unsold Yeezy sneakers will weigh on the brand’s 2023 revenue. The inventory will be an ongoing problem for adidas but does not carry over to other quarters if the brand finds a solution in either writing down the inventory and destroying it, or deciding to sell the inventory as is. New CEO, and former Puma leader, Bjørn Gulden, stated in a CNN article that adidas isn’t an efficiently operated company, “The numbers speak for themselves. We are currently not performing the way we should.” Sneaker culture is only focused on Yeezy inventory and reports that Ivy Park is underperforming. The inventory issues with the YZY product and low sell through on Ivy Park leads to statements that “Ye made adidas and Yonce ain’t Ye though.” Sneaker culture has the tools to discuss these issues with nuance and the culture could also hold a solution to adidas’ problems. When I wrote this article:
The goal was to deliver vital information on adidas’ growth and revenues to show that the brand would encounter short-term issues due to the loss of Yeezy. 1-2 billion dollars is a huge hit, but adidas’ biggest growth was prior to Ye, and that spike was almost 9 billion in growth. The post also established that adidas North America relied too heavily on Ye. North America is the issue as losing 1-2 billion when the market is 4-5 billion in this region with YZY generating the most revenue is as serious as it gets. In the U.S. since 2016 and the rise of Yeezy, adidas stopped innovating and releasing new, inspirational products focused on the athlete. I labeled this “silhouette fatigue,” but this isn’t exactly true. Lifestyle saw silhouete fatigue, but in performance Adizero has been a revelation for the brand, but because North America focused so heavily on YZY, shoes like the Boston, Takami and Adios running shoes have been overshadowed. This contributes to a lack of adidas talking about development and engaging a different consumer. It’s important to note that the focus of this post is on North America which is a problematic region because of the mishandling of Basketball and a focus solely on fashion vs function. North America, as I mentioned, for adidas is a 4-5 billion a year business, which places adidas North America in a place where they are comparable to New Balance and Under Armour and threatened by the growth of Brooks, Hoka and On. All of this information is needed to give background on why the Yeezy hit is so problematic for adidas. Sneaker culture discussions haven’t introduced the reality of inventory issues and the destructive and horrible aspect of brands remaindering and destroying inventory. A quick story on my sneaker brand arch.
ARCH Women’s CG097II (Power Pink/Storm Grey-Wht-Blk) Lightweight Running for Charity
In 2013 I created the colorway above. When the shoes arrived, I found that the factory had left visible design and pattern lines on the upper. I couldn’t sell the shoes. I was going to try to sell them and make donations to charity, but instead I donated all 36 pair to a women’s shelter in San Diego and took the write off. Thankfully I didn’t have deep pockets, or my losses would have been much greater. In footwear and apparel, even in luxury businesses, brands often destroy product. To add more nuance to this discussion, I’m including a link to, Burberry, H&M, and Nike destroy unsold merch. An expert explains why. – Vox My situation was a bit different than what is exposed in the Vox article. The destroying of products for giant corporations goes unnoticed in most instances, but when it’s discovered it’s rightfully frowned upon. I donated sneakers to charity; the brands in the Vox story don’t do this. Brands destroy product in most instances to maintain brand cache primarily. The product that isn’t burned ends up in landfills. The company Sneaker Impact was started to help with this issue in the sneaker industry. Which allows me to pivot this discussion because sneaker culture has the perfect opportunity to create a request for adidas. adidas can’t destroy this product because this will negatively impact the brand. Shareholders may not be vocal about this, but destroying the YZY product would be an issue raised by the board and in the C-Suite. The optics in destroying the product would be horrible for the Three Stripes. adidas could work with a company like Sneaker Impact to keep the sneakers out of a landfill, but an alternate solution exists within sneaker culture.
Sneakerheads could come together and actually ask adidas to release the product at a lower price and donate partial proceeds to non-profits supporting focused on race relations and education, instead of destroying the sneakers or allowing them to end up in landfills. Instead of offering solutions, sneaker culture is expanding their “adidas can’t work with anyone but Kanye” discussion creating misinformation which could negatively impact adidas. Sneakerheads are also conflating Ivy Park’s problems. Ivy Park is emblematic of adidas’ lack of research on the women’s marketplace. I explained for years that the women’s market requires data, research and insight on that demographic. I’ll get to the solution sitting right in the lap of sneaker culture, but Ivy Park requires a bit of analysis. YZY masked issues with Ivy Park. YZY masked a lot of issues for adidas North America, but the crutch is removed, and North America is learning to walk again which is a good thing for adidas because it expands opportunities. Ivy Park however is a similar story as it revolves around fashion and entertainers. CNN Business explained Ivy Park’s losses:
The Wall Street Journal reported this week that sales of the once-trendy streetwear brand fell 50% last year to about $40 million — way below its internal projections of $250 million. The partnership is “strong and successful,” Adidas told the Journal in response.
https://arch-usa.com/insider-ties-athleisure-beyonce-and-outlier-5-charts-digiday/
Buried in a series of posts I’ve been writing since 2016 is insight into the women’s market for sneakers. When Beyonce attempted a revamp of Ivy Park before adidas signed her (above), I was working on a series labeled “In-Store Visits.” I did interviews with store managers at Foot Locker to ask about women’s sportswear. The gist of that discussion was simple, Foot Locker has more store locations than any other sneaker retailer in the world. Foot Locker had yet to announce the reduction in Nike inventory, but the chain had closed Lady Foot Locker stores. Cutting to the chase, when compared to Finish Line (who built a dedicated women’s department inside of their larger stores) Foot Locker removed Lady Foot Locker stores and never created an in-store option to serve women at their traditional doors. How does this relate to Ivy Park and how sneaker culture can help? When looking at the reduction of Nike product today, the absence of improvement of the women’s demographic is one of the reasons Foot Locker fell out of favor with Nike.
Foot Locker is correcting this error with their Power Store development, but how Foot Locker failed women when Puma, Nike and adidas ramped up product development for women has been completely ignored. According to Statista there are 14 Lady Foot Locker stores. There are 800 Foot Locker stores in North America. Foot Locker is introducing new store formats, but they haven’t changed the visual merchandising and layout of their current stores. Imagine if Foot Locker had redesigned and delivered a women’s section which included apparel and adidas could have utilized research, streaming data and other insights for Beyonce to deliver collections from Ivy Park to Foot Locker doors? Now imagine if sneaker culture, blogs, influencers, who often share speaking points across social media and websites, all discussed the problematic nature of destroying the Yeezy product. If sneaker culture is vocal enough about adidas releasing the product to avoid it going into a landfill, maybe just maybe adidas can unload the product at a break-even point and begin to roll out their new strategies without the weight of Yeezy on their fiscal year.
Nuance… is needed in discussing both Ivy Park and Yeezy. Below are articles on women in sneaker culture to add layers to the analysis of Ivy Park and above are posts discussing Yeezy. Let’s hope adidas is reading and that sneaker heads will add more data and research to their dialogue instead of soundbites and clickbait threads.
In-Store Visit Series: Foot Locker Was Ahead of Its Time and Should Go Retro
Jordan Women’s ‘Apparel Collection’, Ivy Park and I Thought Teeyana Taylor Was With Reebok…
adidas x IVY PARK | A Discussion in the DMs and a Resale Analysis