Opportunities in time of economic slowdown

German sports apparel manufacturer Adidas continues to see opportunities despite the global economic slowdown.

According to Adidas Philippines general manager Joseph Edward Singian, Adidas Philippines managed to stay afloat despite the economic slowdown because the company’s products cater to a niche market (technical line sporting goods for all kinds of sports), which although a bit expensive remains a trusted brand among Filipinos.

 “People pay a high price for Adidas technical sporting wear because these are for competition and trainings. You do not want to get into the competition with  fake shoes or apparel that gets torn or destroyed during an event, leaving you feeling very embarrassed,” Singian said.

Singian is the overall chairman of the 17th National Retailers Conference and Stores Asia Expo (NRCE) 2008 and corporate secretary of the Philippine Retailers Association (PRA). He is also managing director and president of Adidas Philippines, a wholly-owned subsidiary of the Adidas Group.

The 17th NRCE will be held on August 14 and 15 at the Crowne Plaza Hotel. PRA accounts for 70 percent of total retail business and most of its members are located in mall outlets of SM, Robinsons and Ayala.

Adidas owns Reebok, Rocksport and Taylormade Golf Co. The technical lines of Adidas account for the bulk of its sales revenues while the casual (fashion wear) line is the one that competes with other equally strong global brands (or copies of these brands) in the local market.

According to Singian, the youth sector accounts for the bulk of Adidas patrons in the country or specially those whose parents are working abroad. “Those who are working in local call centers also have the disposable income to spare on an expensive pair of shoes or complete apparel line for either casual wear or technical requirements,“ he added.

According to Singian, Adidas is a preferred store locator in all malls of the country and sells its products in 300 boutiques and department stores of these malls.

But sales of Adidas Philippines account for just one percent of the total sales of Adidas in Asia – dominated by Japan, China, Australia, New Zealand, Thailand and Malaysia – whose combined income make up for the bulk of the global sales of Adidas  worth 8 billion euro in 2007, Singian said.

In Asia, Adidas has manufacturing plants in India, Vietnam and China while the Philippine subsidiary gets preferred rates (under AFTA) on its importation from Asian plants although its other global lines are imported from a global sourcing company assigned by Adidas worldwide, he said.

Just like most companies, Adidas has to reckon with problems like grey imports (from technical smuggling) and fakes (common in casual shoes and apparel) although the latter problem has been reduced radically with the constant raids in warehouses and shops selling fakes.