Jerry Lorenzo: Adidas Takes Their Shot At Nike

Friends,

In a surprising pre-holiday move, Adidas has announced a long-term partnership with luxury streetwear brand Fear of God — led by owner, founder, and designer Jerry Lorenzo.

Lorenzo, who has been with Nike since 2018, was unable to agree to a long-term strategic partnership with the sportswear giant. Instead, Lorenzo will join rival Adidas as the brand looks to replicate the success they’ve had with Kanye West.

Here are the details:

• Jerry Lorenzo will “drive the creative and business strategy for Adidas basketball globally.”

• Lorenzo’s brand “Fear of God” will launch a third pillar called “Fear of God Athletics,” which will join the Fear Of God mainline and their growing ESSENTIALS label.

As for Jerry Lorenzo, here’s what he had to say:

While it seems like a no-brainer for Lorenzo, what does it mean for Nike, Adidas, and the overall industry?

Let’s run through it.

First, let’s start with some history.

Top athletic apparel and footwear manufacturers like Nike, Adidas, and Puma have consistently used performance footwear as an interlinking bridge of marketing, profits, and cultural influence.

An example?

Air Jordan, which started as a performance basketball shoe, but has transitioned into a cultural staple — benefiting Nike to the tune of more than $3.5 billion in annual revenue.

But there is just one problem…

With streetwear brands like Supreme selling for $2 billion, and many others like Kith, NOAH, and Stüssy, dominating today’s social media-driven landscape, the financial impact of performance basketball shoes has dropped off.

Here are a couple of interesting stats from Matt Powell, vice president and senior industry advisor for the NPD Group:

• After reaching a decade-high peak of $1.3 billion in 2015, sales of non-retro basketball shoes have been in a free fall, generating around $800 million in 2019 and only $640 million in 2020.

• In total, non-retro performance basketball shoes are expected to represent only 3% of U.S. sneaker market sales in 2020.

My point?

In a world with declining sports viewership among generation z, the cultural influence of celebrities within athletics continues to take over.

Recent examples include the partnership between Adidas & Kanye West, Puma naming Rihanna & Jay-Z as their Creative Director for women’s apparel and basketball respectively, and many more.

Adidas picking Jerry Lorenzo to run their basketball division is just one more example.

In the future, we’ll continue to see legacy brands partner up with celebrity designers to collaborate on sports collections.

The forward-thinking brands of today understand not only the cultural impact these celebrities have — think Puma’s turnaround with Jay-Z — but the economics (lower CAC & higher LTV) are also enticing.

Over time, this trend will only get stronger.

PS — As I assume most won’t be checking their email, I won’t be sending an email on Thursday or Friday.

Enjoy the holiday and we’ll pick it back up on Monday :)

Extra Credit

ICYMI — I posted a detailed thread last night breaking down the numbers behind Peloton’s ambitious goal of 100 million subscribers.

While I won’t spoil the underlying data, their (aggressive) goal certainly seems attainable — at least to me.

Enjoy.

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