Adidas' new-concept store hopes to score with Beijing consumers

One might have assumed that the new Adidas store - a four-story building hosting all its brands - would be on New York City's Fifth Avenue.

But the first store to open as part of the new Adidas "Home Court" store concept sits in Beijing's Sanlitun area, an upscale retail center that is home to trendy fashion and high-tech brands.

"To stay at the heart of the fashion cluster indicates the brand's efforts to compete with rapidly growing fast-fashion brands and to enhance its access to fashion-loving consumers," said Hermann Ng, chief executive officer of Retail Nation, a consultancy in Shanghai.

The splashy renovation of the store, which reopened early last month, is designed to highlight Adidas' sports heritage, which dates back to 1930s Germany, when two brothers made sports shoes for athletes that included US Olympian Jesse Owens.

According to Ng, "The emphasis of sports and technology elements within the store and their products on display also suggests that they are expected to lift their brand value through the sports professional level."

Locating its largest store in the Chinese capital shows the significance the Chinese market holds for the sporting goods maker.

In 2012, China generated sales of 1.6 billion euros ($2.2 billion) and group sales reached 14.9 billion euros that year.

In the first nine months of 2013, sales in Greater China rose 7 percent year-on-year, with sales in the third quarter 2013 increasing 9 percent.

Under Adidas's Route 2015 strategy, the company will continue to open stores in lower-tier cities and Western China, while upgrading existing stores in bigger cities, said Gianni Conti, vice-president, retail for Adidas Group, Greater China Area.

Adidas operates more than 7,600 stores in the world's second-largest economy, of which many are in smaller markets. The company says it plans to be in 1,400 lower-tier cities by 2015.

One key area of the newly renovated store in Sanlitun is the Shoebase at Centerfield, which according to Conti, is the heart of the store.

"Footwear is a very important part of our business ... and we want to make sure it's at the center of our business," he said.

The company has had success with apparel in the past few years with rising market share but would like a bigger portion of its business to come from footwear, said Jens Meyer, vice-president of marketing, sport performance for Adidas China.

"We believe footwear is a less competitive segment than apparel. When you buy footwear that fits well, the likeliness of developing brand loyalty is much higher than with apparel," Meyer said.

According to research firm Euromonitor International, sports footwear in 2012 saw its value increase 4.6 percent compared with 2011.

Nike (China) Inc and Adidas Sports (China) Ltd led the sportswear market in China with market shares of 12 percent and 11 percent, respectively, in 2012, according to Euromonitor International.

Affected by the global economic downturn, the sportswear industry in China saw its overall market value decline from 9 percent in 2011 to 5 percent in 2012.

Domestic players Li Ning, Anta, Xtep and Peak - suffering from issues like high stock levels, a lack of technology and innovation, and rapid store expansion, - saw their market share drop.