China Consumer

Nomad returns

New NMD brand helps Adidas close in on Nike in China

The new NMD model is pictured at the flagship store in Berlin

They’re queuing for them in China

In 2014, Adidas relaunched the Stan Smith line. First introduced in the 1960s, the tennis shoes – named after the eponymous player – featured a plain white body accented by a green heel tab. Despite the minimalist design, the shoes quickly became the trendiest fashion item: everyone from designer Marc Jacobs to model Gigi Hadid has since been spotted sporting them.

After the success of the relaunch, the German sportswear giant reinvented another of its 1990s favourites – the Superstar. The design, which has a shell toe and three stripes on the side, was an instant hit too – thanks to endorsement from celebrities like singer-songwriter Pharrell Williams.

So the expectations were obviously going to be high when the company debuted the NMD (short for ‘nomad’). And in the case of the Chinese market the optimism was justified. When the brand was launched there in mid-March, thousands of people queued up outside Adidas’ flagship stores. The wait was so long that fights even broke out.

Although the shoes were also available for purchase online, the company website quickly crashed as Chinese consumers flocked to pre-order around midnight. Some resorted to purchasing from overseas resellers on Taobao. One vendor in the UK said virtually all the NMD trainers it had were snapped up by Chinese parallel importers. “The scene was hard to believe. The Chinese resellers bought virtually all the shoes in the store. The locals could only find colours Chinese consumers don’t want,” she told Beijing Business News.

Taking advantage of the frenzy, unscrupulous scalpers are already selling the shoes for three times the original retail price (Rmb1,499, or $230). The most popular colour – a black upper contrasted by blue and red blocks – could fetch as much as Rmb10,000.

Adidas carefully planned the release of NMD. For instance, ahead of the launch, the company handed out the footwear only to megastars to generate advance buzz. A-listers like Andy Lau, Fan Bingbing and Angelababy have all been wearing NMD since late last year.

Taking a page out of Apple’s playbook, Adidas sought to create positive publicity through scarcity. “Just like the property market, all the talk about scalpers pushing up prices has only helped generate buzz for the shoes,” says CBN. “On the one hand, Adidas says it does not support reselling of the shoes. But on the other hand, every time the company only releases a small batch of them. How difficult is it to make a pair of shoes?”

Meanwhile, the German sportswear giant is betting that the new range will strengthen its offering in the so-called athleisure category (items worn for both athletic and leisure pursuits). In China, consumers “want apparel they can do sports in, but also go to social occasions in,” Colin Currie, managing director of Adidas Group Greater China, told CNBC. “You know in lower-tier cities, it’s OK to go to a wedding or to work in Adidas. It’s actually acceptable.”

The trend could also give Adidas a leg-up against archrival Nike. While Nike continues to dominate in most countries – in the US, it controls 68% of the athletic footwear market compared with Adidas’ 6% – Adidas is quickly closing in on its rival in China. According to market researcher Euromonitor, from the beginning of 2011 to the end of 2014, Adidas’ market share went from 8.5% to 13.8%, compared with Nike’s rise from 11.2% to 14.3%.

To fuel its expansion in China, the German company has also announced plans to increase the number of Adidas stores from 9,000 to 12,000 by 2020, focusing mainly on the smaller cities. Another priority is football. While Nike focuses on basketball in China, Adidas is hoping that soccer will help drive its bottom line. Last year, it signed a three-year deal to create soccer programmes in 20,000 elementary and middle schools across China, training 50,000 teachers and running a national summer camp.

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