AGENDA: Tesco failed to earn its stripes - Was Tesco right to sell Adidas goods at huge discounts? Not according to Adidas, it wasn’t Robin Money, head of corporate affairs, puts the case for the prosecution.

Unless you’ve been on holiday or in an isolation tank for the past week or so, you cannot have failed to have seen the media circus created by Tesco, which purchased pounds 2m worth of Adidas merchandise from the US and put it on sale at a 25% to 50% discount. The fact that this was old stock and, for example, not all sizes of shoe were included, seems to have been largely overlooked.

Unless you’ve been on holiday or in an isolation tank for the past

week or so, you cannot have failed to have seen the media circus created

by Tesco, which purchased pounds 2m worth of Adidas merchandise from the

US and put it on sale at a 25% to 50% discount. The fact that this was

old stock and, for example, not all sizes of shoe were included, seems

to have been largely overlooked.



From a manufacturer’s point of view, this raises a warning flag over the

implications of retailers taking the so-called ’moral high ground’.



In this instance, in particular, there is a marked difference between

what consumers appear to have been promised by Tesco and what has been

delivered.



Credibility gap



Let me explain what I mean. The stock purchased by Tesco was mostly

clearance, not our current range. Yet there is nothing new in this, with

over 7000 sports stores selling limited levels of clearance stock at

prices below previously marked levels. As I have already indicated, not

all sizes of footwear were included.



Also, once the stock is sold out there is no more available to Tesco,

unless it finds another overseas source.



What would your reaction be as a consumer if you went to Tesco to buy

your bargain Adidas trainers, only to discover they didn’t have your

size?



I think you’d feel cheated. Or if you did find your size and wanted to

ask about the correct fitting or the shoes’ suitability for a specific

sport, are you going to feel confident asking someone stacking the

shelves or at the checkout? I’m not criticising these people, but they

are hardly qualified sports-equipment retail staff, and we are a leading

sports brand.



This has created much amusement in the minds of critics who think

’you’re really a fashion brand, aren’t you?’.



Yes, many of our customers do buy Adidas clothing and footwear for

purposes other than sport. It’s cool to be seen wearing Adidas. However,

that image has not been created through fashion hype but by the millions

of pounds that have been invested in creating and refining sports

apparel for professional athletes and using this technology to make

better apparel for the amateur athlete.



Supporting sport



We also plough significant resources back into sport globally. Amid all

the fuss, where is the mention of our sponsorship of the British Lions

or the British Olympic team made possible by the strength of our

brand?



Or the 250-plus grass-roots tennis clinics and soccer clinics we

fund?



The argument over selective distribution also falls flat when you

consider that Adidas equipment and clothing are sold in every high

street in the country.



Adidas is, first and foremost, a genuine sports brand and it is this

authenticity that is at the heart of our continued popularity.



We must be able to exercise some control over how and where this

authenticity is delivered to the consumer. The same goes for all branded

goods manufacturers, otherwise the future is one of decline in brand

equity, a more volatile market and a longer term loss for the consumer

over their apparent short-term gain.



Tesco’s Tale



Tesco has reignited the battle over whether brands should have the right

to supply retailers by turning to the grey market to buy up Adidas

merchandise, after the sports company refused to supply it.



It is not the first time. Earlier this year the retailer also bought

large numbers of Levi’s jeans on the grey market.



Tesco argues that it was breaking ’a supply blockade’ imposed by

Adidas.



John Gilversleeve, the store’s commercial director, said: ’Brand

manufacturers have argued against supplying Tesco because we do not fit

certain image requirements. In reality, this allows brands to preserve

high profit margins and results in consumers paying more than their US

counterparts.’



Tesco said the savings could amount to pounds 20 on trainers and pounds

10 on Adidas’s clothing range.



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