{"id":36076,"date":"2018-11-13T19:40:24","date_gmt":"2018-11-14T00:40:24","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/dear-adidas-youve-mastered-limited-releaseswhats-next\/"},"modified":"2018-11-14T20:36:09","modified_gmt":"2018-11-15T01:36:09","slug":"dear-adidas-youve-mastered-limited-releaseswhats-next","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/dear-adidas-youve-mastered-limited-releaseswhats-next\/","title":{"rendered":"Dear Adidas, you\u2019ve mastered limited releases\u2026what\u2019s next?"},"content":{"rendered":"

Footwear continues to be the dominant growth driver for brands Nike and Adidas. According to Bloomberg, the industry has grown to $65 billion, owing largely to the robust and enduring demand for limited-edition sneakers.1<\/sup> While Nike has partnered with Michael Jordan to release his iconic \u2018J\u2019s\u2019, Adidas has created a cult like following with its Kanye West-Yeezy partnership. The mass appeal of sneakers has even resulted in enormous valuations in the secondary market with Silicon Valley re-sale start-ups raising upwards of $300 million.2<\/sup> Taking advantage of the mass appeal, both retailers have committed enormous investments in technology to make access to these limited releases faster and more efficient. Adidas\u2019 answer to Nike\u2019s SNKRS app \u2013 which offers consumers the opportunity to enter a drawing for limited release sneakers \u2013 was its Confirmed app which allowed consumers in select markets to purchase limited release sneakers ahead of their launch.3<\/sup> The popularity of the limited release market begs the question: What is the next frontier? Thus far, both Nike and Adidas seem to have locked in on customization \u2013 Nike with its Nike Maker\u2019s Experience, which allows consumers to customize shoe uppers in store, and Adidas with its ability to customize shoes based on the terrain of a runner\u2019s city.4,5<\/sup> As both retailers jockey for market share, commercialization of customization seems a likely frontrunner for their product development strategies.<\/p>\n

CNN is already calling the movement a \u2018race to commercialization\u2019.6<\/sup> Adidas has taken the approach of first creating demand for 3D products, building efficiency through scaling and ultimately bringing the customization experience in store. To date Adidas has partnered with Carbon \u2013 a startup that aims to revolutionize 3D printing using CLIP (Continuous Liquid Interface Production) \u2013 a photochemical process that eliminates the shortcomings of conventional 3D printing by harnessing light and oxygen to rapidly produce objects from a pool of resin.7<\/sup> The partnership has already yielded the successful launch of the Futurecraft 4D \u2013 a shoe with different lattice structures in the heel and forefoot that provide superior cushioning.8<\/sup> James Carnes, VP of Strategy at Adidas, has foreshadowed plans to scale aggressively and has also mentioned plans for Adidas to become the world\u2019s biggest producer of 3D-printed products.9<\/sup> With mass production in play the longer term game is in store printing. According to Allen Kim, Adidas sees a future where motion capture tech, data analysis software, and 3D printing come together in the store to create a pair of shoes tailored to your exact needs.10<\/sup> Currently in its German Speedfactory, guests have had their feet scanned for length and width while cameras recorded their stride, speed, and gait as they ran on a treadmill.11<\/sup> The hope is that one day Adidas will use this info to create your perfect shoe in no time.<\/p>\n

In the near term management should focus its efforts on understanding its target market \u2013 first by unpacking the success of the Futurecraft 4D launch and second by understanding the potential consumer base. The Futurecraft 4D launch entailed a limited run of the shoes to the public in early 2017, at a price point of $300 a pair, and it sold out instantly.12<\/sup> An additional release of 100,000 shoes is estimated to do equally as well.13<\/sup> In fact, Adidas has already likened the success to the launch of the Adidas Boost, with its initial 100,000 pair release growing to 50 million shoes of production each year since 2013.14<\/sup> Given the potential for huge gains I would want to unpack what contributed to Futurecraft 4D\u2019s success: 1) Was it the limited release nature of the shoe? 2) Was it the shear use of 3D printing that made it popular? Or 3) Were consumers flocking because of the improved functionality of the shoe? Also, because the Futurecraft 4D is visually very similar to Adidas’ already very popular Boost line, what, if any, impact did this have on the popularity of the shoe? More broadly, in the short to medium term there are several things to solve for from a consumer, channel, and innovation perspective. From a consumer perspective, market research should explore who the target customer is, e.g. avid runners or does this also include consumers that seek customization beyond the functionality improvements offered by Carbon. From a channel perspective, Adidas\u2019 biggest hurdle will be driving in store traffic within a population that has had the convenience to order online. Lastly, from an innovation perspective, the retailer will need to determine how to harness the learning acquired through 3D printing for future product development.<\/p>\n

All in all, given the early excitement around 3D printed footwear, are you convinced that Adidas customization via in store printing is the new frontier or has Adidas merely latched on to a marketing scheme around a one-time, awe inspiring in-store experience?<\/p>\n

(795 words)<\/p>\n

1, 2 <\/sup>Soper, Spencer, \u201cSilicon Valley Has Developed a $300 Million Foot Fetish,\u201d Bloomberg<\/em>, February 8, 2018 [https:\/\/www.bloomberg.com\/news\/articles\/2018-02-08\/silicon-valley-has-developed-a-300-million-foot-fetish<\/a>]<\/p>\n

3 <\/sup>Alvarez Edgar, \u201cNike and Adidas turn to tech to make sneaker shopping safer,\u201d Engadget<\/em>, October 16, 2015 [https:\/\/www.engadget.com\/2015\/10\/16\/nike-and-adidas-turn-to-tech-to-make-sneaker-shopping-safer\/<\/a>]<\/p>\n

4<\/sup> Nike, \u201cNew Live-Design Experience Promises Custom Shoes in Less Than 90 Minutes\u201d https:\/\/news.nike.com\/news\/nike-makers-studio<\/a><\/p>\n

5, 6, 10, 11, 12<\/sup> Kim, Allen, \u201cAdidas’ vision for the future: Personalization, fast,\u201d CNN<\/em>, July 11, 2018 [https:\/\/money.cnn.com\/2018\/07\/06\/technology\/adidas-speedfactory\/index.html<\/a>]<\/p>\n

7, 8<\/sup> Carbon, \u201cCarbon lattice innovation \u2014 the adidas story\u201d https:\/\/www.carbon3d.com\/stories\/carbon-lattice-innovation-the-adidas-story\/<\/a><\/p>\n

9, 13, 14<\/sup> Cheng, Andrea, \u201cHow Adidas Plans To Bring 3D Printing To The Masses,\u201d Forbes<\/em>, May 22, 2018 [https:\/\/www.forbes.com\/sites\/andriacheng\/2018\/05\/22\/with-adidas-3d-printing-may-finally-see-its-mass-retail-potential\/#4b9a41ef4a60<\/a>]<\/p>\n","protected":false},"excerpt":{"rendered":"

Is 3D printing the new frontier for Adidas? 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