Adidas needs world-class designers, brand experts and technical whizzkids to improve its image against US rival Nike, but persuading them to move to its headquarters in rural Germany is difficult.
Adidas has been losing market share to the world’s biggest sportswear brand Nike, which is seen as far cooler in consumer surveys and is based near the hip US city of Portland, Oregon.
Adidas acknowledges it is hard to recruit at its headquarters near the Bavarian town of Herzogenaurach, particularly for design, marketing and digital roles, and admits it missed trends in the US market, where Under Armour has just overtaken it as No 2 behind Nike. Nike’s better than expected earnings on Sept. 25 underscored its ascendancy.
Adidas is responding by locating some key design roles in the United States at the same time as investing heavily in new facilities at its home base near the historic Bavarian town where Adidas was founded by shoe maker Adi Dassler in 1949.
“We need a lot of that top talent that is cutting edge. Ideally, they are working in the tech industry, in marketing organizations or are coming from top competitors. We need an environment that appeals to them,” said Steve Fogarty, who is responsible for employer branding and digital recruiting
“Designers tend to gravitate to very large, international cities like Berlin, Amsterdam, London and it is a bit harder to convince them to move to the center of Germany.”
Eric Liedtke, the American who took over as Adidas head of global brands in March, has promoted Paul Gaudio to the role of global creative director and moved him from Herzo to the firm’s US base in Portland in a bid to turn around its fortunes in the world’s biggest market for sporting goods. Close to 1,000 Adidas staff are based in Portland, compared with Nike’s 8,500-strong workforce in the area.
Gaudio announced on Wednesday that Adidas will open a small creative studio in New York’s Brooklyn district in 2015 to be led by three young footwear designers he has poached from Nike with a mission to explore design direction for the brand.
That will complement existing creative centers in Shanghai, Tokyo and Rio, but the vast majority of the company’s hundreds of designers for football, outdoor, Originals fashion, training and running products remain based in Herzo.
Adidas shares are down more than a third this year, most recently suffering from a third profit warning in a year in July that the firm blamed in part on a disappointing performance in North America, particularly from its golf business.
Adidas trades at 17 times expected earnings, at a discount to Nike’s 22.5 times and fast-growing Under Armour’s 58 times.
Despite the new designers in the United States, long-serving Adidas Chief Executive Herbert Hainer, himself a native of Bavaria, remains committed to the company’s base in a region proud of its strong economy and companies including BMW, Siemens, Audi, Munich Re and Allianz.
About 3,900 of the total Adidas staff of 52,500 work in and around Herzo, about a third of them from outside Germany, and Hainer said last month the company planned to add 100-150 new staff at its headquarters every year.
Global footwear hub
While Bavaria has a reputation for beer festivals, lederhosen and conservative politics, Nike’s home town of Portland is a city of 600,000 that prides itself on its liberal values and environmental awareness, as well as a proliferation of trendy eateries and microbreweries.
Based on a campus in Beaverton, seven miles (11 km) outside Portland, Nike’s location in the American northwest also raised questions in its early days in the 1960s, with founder and Oregon native Phil Knight saying everybody originally thought it should be located in New England or the South.
But Portland has since become a magnet for the global footwear industry, helped by the relatively short hop to Asian production hubs and a youthful talent pool, prompting Adidas to move its North America headquarters there from New Jersey in 1993, and drawing US brands like Columbia Sportwear and Keen.
Herzo, by contrast, is a town of just 24,000 people set in rolling fields, though many Adidas staff commute from the nearby university town of Erlangen or the city of Nuremberg, known for its walled old town, gingerbread and sausages but not for the most vibrant nightlife or fashion scene.
Nuremberg has an airport with direct flights to many cities in Europe but not further afield and there is no train link to Herzo from Nuremberg or Erlangen, meaning most staff have to commute by car.
Herzo’s biggest employer is family-owned Schaeffler, which has 9,000 staff in the town, mostly in technical roles producing precision products for the auto and aerospace industry. It is also home to rival sportswear firm Puma.
Conscious that it was not the best location for a big global consumer brand, Adidas considered leaving Herzo in the 1990s when the company was trying to rebuild its fortunes after flirting with bankruptcy following the death of founder Dassler in 1978 and then his son Horst in 1987.
