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Sept 1, 2016; New York, NY, USA; Beyonce looks on from the box of Serena Williams of USA (not pictured) during her match against Vania King of USA (not pictured) on day four of the 2016 U.S. Open tennis tournament at USTA Billie Jean King National Tennis Center. Mandatory Credit: Robert Deutsch-USA TODAY Sports - 9512332
Robert Deutsch/USA TODAY Sports
Beyoncé to the rescue.
BEY MEANS BUSINESS

Adidas is counting on Beyoncé to close the gap between its sales to women and men

By Marc Bain

Reaching more female customers has been a top priority for Adidas since 2015, when it announced the company strategy that’s still guiding it today. Then, as now, sales to women were a disproportionately small slice of the total business—as they generally are at big sneaker brands, which historically haven’t designed for or marketed to women anywhere near as much as they have men. For brands that can win them over, women represent a lot of potential dollars.

That’s essentially why Adidas has teamed up with singer and global superstar Beyoncé, CEO Kasper Rorsted acknowledged on a company earnings call today. While the company’s women’s business has been growing strongly, it remains a “particularly strong opportunity for us because it is an underrepresented part of our business… we’re still by no means where we need to be,” he said. “There’s no doubt that Beyonce will help us in this area.” The first limited products from that collaboration will release toward the end of this year, he added.

The singer has a reach few in the world can match. On Instagram alone she has 127 million followers; just for the sake of comparison, mega-star Rihanna has about 70 million. After she and Adidas first announced their partnership, the shots she posted on the social network collectively drew tens of millions of likes and hundreds of thousands of comments. At a moment when pop stars seem to be more effective at selling sneakers than pro athletes, Beyoncé could have a noticeable effect on the company’s sales to women, especially since Adidas has found in the past that people such as influencers are a more effective way to reach women than athletes anyway.

That effect won’t be felt in the company’s bottom line for some time. Rorsted suggested they’ll be scaling up the line slowly, as they did in their partnership with rapper Kanye West. “In order to build that, we’re speaking about a three- to five- to seven-year range, and while we’ll bring the first products out by the end of this year, the Beyoncé product will not have a substantial impact [on revenue],” Rorsted said.

If Adidas follows the playbook it developed for its Yeezy line with West, the company is likely to do small releases of products to start, and then as it keeps releasing new items, start increasing the volume of those older items. The idea is to preserve the scarcity and demand that drives the hype around new products, while also being able to sell the stuff that’s past its prime in the hype cycle in large enough quantities to really add to the company’s profits. After scaling up distribution of an older Yeezy sneaker last year, for instance, Rorsted said they’re pulling back in 2019, and will be releasing a lot of new products in much smaller quantities.

The company, which said in the initial announcement of the Beyoncé partnership that they would launch footwear and clothing together, wouldn’t offer more details on the products or how they’ll be priced. It does believe that the Beyoncé deal will start to yield benefits before the line itself starts making real money. “From a brand standpoint,” Rorsted said, “it will strengthen our position with the female consumer.”