Recently, Adidas announced the closure of its flagship store in South China. The move of this sports brand giant that once had high hopes has attracted widespread attention. The flagship store cost half a billion, but chose to close within just a few years. What was the reason?
According to multiple media reports, the Adidas South China flagship store is located in Futian CBD, Shenzhen. It is the first global flagship store in South China that Adidas spent half a billion to build. It spans three floors and displays the full range of Adidas products. The flagship store opened in It opened on December 18, 2021, but has been quietly closed less than two years after opening.
According to relevant sources, this decision is closely related to the unsatisfactory operating performance of the flagship store. Problems such as sluggish sales and high operating costs have become the main reasons for store closures. In addition, consumption upgrades have led to a decline in market demand for high-end sports brands, which has also affected the operating conditions of flagship stores to a certain extent. The closure of the
flagship store also reflects the new trend of the sports industry. On the one hand, consumers' demand for sports brands has gradually shifted from traditional physical retail stores to online platforms. The rise of e-commerce channels has made it more convenient for consumers to obtain the goods they need. On the other hand, the rise of fast fashion brands is also challenging the market position of traditional sports brands. These brands not only pay more attention to fashion design, but also attract young consumers at more affordable prices.
Although the closure of the Adidas South China flagship store has caused some concerns, Adidas's current development in the Chinese market is picking up.
According to the third quarter financial report data released by Adidas in 2023, in the third quarter of this year, Adidas achieved global revenue of 6 billion euros (approximately 46.565 billion yuan), a slight increase of 1% year-on-year; the gross profit margin increased by 0.2 percentage points to 49.3 %, operating profit was 409 million euros.
As one of Adidas' three major strategic key markets in the world, Greater China achieved revenue of 870 million euros (approximately 6.752 billion yuan) in the third quarter of this year, a year-on-year increase of 6%. This is also the second consecutive quarter of Adidas Greater China maintaining "quality growth" after returning to the growth track in the second quarter of this year. In the first three quarters of this year, Greater China achieved revenue of 2.52 billion euros, a year-on-year increase of 2.5%.
Talking about the performance of Adidas Greater China, Xiao Jiale, managing director of Adidas Greater China, said that excluding Yeezy business, Adidas Greater China’s revenue in the third quarter achieved a year-on-year growth of 10%.
With the development of society and changes in consumption concepts, sports brands have the opportunity to meet new challenges through continuous innovation, deepening interaction with consumers, and expanding online and offline integration. At the same time, sports brands need to maintain sensitivity, always pay attention to market trends, and make timely strategic adjustments to remain invincible in the fierce competition.
From the perspective of NIKE, another major sports giant, fiscal year 2023 data shows that Greater China, as the third largest regional market of Nike Group, is the region with the lowest growth rate for Nike. The revenue for the year was only US$7.248 billion, down year-on-year. 4%.
In fact, looking at NIKE’s performance in the past three years, its revenue growth in China has slowed down year by year. According to statistics, from fiscal year 2021 to fiscal year 2023, Nike's revenue in Greater China gradually fell from US$8.29 billion to US$7.25 billion. The consumer market has recovered this year, and NIKE Greater China has begun to recover. Revenue in Greater China in Q4 of fiscal year 2023 increased by 16% year-on-year.
Although Adidas and NIKE, the two major sports giants, have encountered setbacks in their development in China, both brands said that Greater China is still a strategic location for the brand and are actively seeking growth points.
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