Online unable to offset revenue lost from store closures

According to data analytics and consulting company, GlobalData, the online channel is unable to offset revenue lost due to store closures amidst COVID-19 pandemic. Only recently, countries around the world have begun easing lockdown and movement restrictions and businesses have started reopening in phases.

“Adidas has suffered at the hands of COVID-19. The brand has reported a decline in net profits of 97% and a revenue decrease of 19% to €4.8 billion in the first three months of 2020. Economic uncertainty has squeezed the budgets of consumers and reduced discretionary spending. Adidas’ results reflect the scale of the impact,” said Luke Gowland, thematic analyst, GlobalData

“With 70% of its stores closed worldwide, Adidas is reliant on its e-commerce channels. Despite the company’s e-commerce revenues growing by 35% in the first quarter of the year, the channel has not been able to offset revenue lost due to store closures. With the pandemic likely to drag on for some time yet, the company is bracing itself for an expected 40% decline in second-quarter sales,” Gowland added.

While the uncertainty is beyond Adidas’ control, the company could try to reinforce its online channel by improving user experience and adding functionality to make shopping online more accessible and attractive, suggests GlobalData. Adidas should integrate visualisation technologies like augmented reality into its websites, making it possible for customers to virtually try on clothes and see what they will look like in a range of colours and styles, all from the comfort of their own homes.

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