Nike has 8% of all its production based in the US. These production facilities predominantly produce apparel and some equipment, but no footwear is produced in the US whatsoever.
Chinese manufacturers supply 23% of all Nike’s production. The types of products these factories make is more evenly split between the three product categories, with a slight weighting given to apparel.
Factories in Vietnam contribute 16% of Nike’s total production, predominantly creating apparel and footwear with a small amount of equipment.
What countries are Adidas suppliers in?
Adidas has over 800 factories based in 55 countries supplying it with all three product types.
Vietnam produces 44% of all Adidas footwear, followed by Indonesia at 25% and China at 19%. The largest single factory producing footwear accounts for about 10% of all footwear produced.
China is responsible for 23% of apparel made each year, followed by Cambodia at 22% and Vietnam at 18%. The largest single factory producing apparel accounts for about 10% of all apparel output.
China is also the largest producer of Adidas equipment, responsible for about 40% of the company’s total, followed by Pakistan at 18% and Turkey at 15%. The largest single factory producing equipment makes about 15% of the German company’s total.
How have Nike and Adidas performed over the last ten years?
Both Adidas and Nike have delivered consistent revenue growth over recent years, and net income for both firms reached record highs in the 2017 financial year. Adidas reached a milestone last year by pushing its gross margin over the 50% threshold, but Nike has had a tougher time dealing with tighter margins of late.
Sports sponsorship: Adidas edges ahead of Nike in 2018 World Cup
Sports sponsorship has been at a core activity for both companies throughout their lifetimes, and the pair are active in numerous sporting markets. This year the hot sporting event is the 2018 football World Cup (to be hosted by Russia between 14 June and 15 July.
According to Soccer365, Adidas will not only sponsor slightly more, they will also sponser what are seen as better contenders, compared to its rival Nike. More teams will wear the Adidas brand than any other this year, with 12 teams in total, with Nike in second place, with ten teams signed up. There are 32 teams competing in total.
Adidas boasts the current World Cup holders (Germany) on its list, alongside Argentina, Spain, Belgium, Colombia, Egypt, Iran, Japan, Mexico, Morocco, Russia, and Sweden. That represents a rise from the nine teams Adidas sponsored in the 2014 World Cup in Brazil. The company sponsored 12 teams in 2010, and just six squads in 2006.
Adidas has been a major sponsor of the FIFA World Cup since 1970, supplying match balls, referee uniforms, and official gear for the tournament.
The ten squads to be sponsored by Nike this year comprise of the always favourite Brazil, as well as France, Portugal, England, Australia, Croatia, Nigeria, Poland, Saudi Arabia, and South Korea. Soccer365 notes that three teams that Nike has long supported (the US, Chile, and the Netherlands) did not qualify this year. This means Nike is sponsoring the same amount of teams it did at the last two World Cups but up from the eight teams sponsored in 2006.
However, Nike also has Umbro under its umbrella, which is sponsoring two teams this year – Peru and Serbia.
The other sponsors to feature in the World Cup are New Balance, errea, Uhlsport and Thornico-owned Hummel. Puma, founded by the brother of Adidas founder Dassler, is only sponsoring two teams this year in what will be a disappointment for owners Kering, that also owns the Gucci brand.
What do Nike and Adidas have planned for the future?
Both companies are in strategic plans that run until 2020. Nike and Adidas are both looking to grow revenue and earnings over the coming years, with Nike geared more toward high-growth China, while Adidas is looking to bolster market share in North America.
As the two companies each look to digitally transform their businesses, Nike is focusing on new materials for its products, while Adidas seems more attentive to design by opening up its brand to consumers and other designers.
What strategy does Nike have going forward?
'As the world’s leader in sport, we know there’s never been a more exciting time to be in our business. We’re catalysing our next wave of long-term growth, while being clear-eyed about today’s dynamic environment,' – Nike.
The business is currently working toward goals under a plan that is due to finish in 2020 called ‘The Consumer Direct Offense’, that hopes to transform three core areas of the business: innovation, the supply chain, and the marketplace.
Nike is aiming to double its innovation in performance and sportswear, having recently added new materials such as the VaporFly 4% carbon fiber plate and ZoomX foam. This will also involve ‘doubling down on digital knitting’.
The business is also looking to tighten relations with consumers by forming more direct connections through digital, membership, personalisation and brand experiences. However, it is also continuing to form retail partnerships to maximise its brand. While China (where Nike boasts a market-leading position) is prime for more stores to be opened, the company has also continued to roll out its online store to more countries, available in over 45 at present.
For the supply chain, Nike is aiming to trim the design-to-delivery time by exploring better sourcing, automation, new methods of make, and closer-to-market manufacturing.
Financially, Nike is focused on bringing down costs and improving its gross margin. The company hopes to optimise efficiency to bring selling and administrative costs down, spend its capital more effectively and grow its margin by focusing on more premium-priced products, digitalising the supply chain and reducing product costs.
Nike is aiming to deliver high-single to low-double digit revenue growth each year out to 2020, with earnings to grow at a faster rate. The company is also looking to grow free cash flow faster than net income and improve its return on invested capital.
What strategy does Adidas have going forward?
'Everything we do is rooted in sport. With sport playing an increasingly important role in more and more people’s lives, on and off the field of play, we operate in a highly attractive industry. Through our authentic sports brands, we push the boundaries of products, experiences and services to drive brand desire and capitalise on the growth opportunities in sport as well as in sports-inspired casual and activewear,' - Adidas.
Adidas is currently working toward a strategic plan named ‘Creating the New’ that runs until 2020, the primary purpose of the plan being to make its brand more desirable. The plan was updated in March 2017 to accelerate its growth targets.
The three pillars that will drive brand desirability are speed, cities, and open source.
Speed refers to fashion trends and stock availability. Adidas aims to ensure it is never out of stock and is ready to respond effectively to changing trends, including adding new designs during seasons to keep up, rather than pre-designing all items before each season.
Cities refers to where the majority of its consumers live and the impact they have on designs. Adidas is building individual designs for its major cities like Tokyo, New York, and London. Six cities are at the heart of the plan. This also involves upgrading its stores to produce a more premium shopping experience.
Open source is arguably the most interesting part of the Adidas plan. This is centred on opening up the brand to consumers and outside designers to provide a fresh and more engaging design process. This will also see Adidas continue to release products designed in partnership with athletes and high-profile designers.
Adidas, like almost all companies and sectors, is also transitioning to a more digitally focused operation, with the aim of generating 4 billion euros in e-commerce sales by 2020.
Ignoring the impact of currency movements, Adidas is expecting revenue to grow 10% to 12% per year until 2020 compared to 2015 levels, ensuring the business is outperforming the sporting goods industry to grab market share. Following the notable improvement in margins, Adidas is also aiming to keep growing its gross margin during this time.
Although a huge brand in the region, Adidas believes North America offers the most growth potential moving forward, which will turn up the heat on the competition with Nike.