Adidas Factory Outlet

Retail Management
Assignment
Field Visit Report
1.Analysis of the Retail Format and Store Layout

Adidas Retail Outlet is a factory outlet situated in the Neeladari Road, Electronic City. It deals with sports
accessories, fittings, bags, socks, etc for different category of genders like Male and Female. Under which
16 product categories are sold in the Adidas Retail Outlet including the Men’s, Women’s, Teenagers,
Children’s Fitness, Sports and Running Apparels like jerseys, wind shitters, socks, shorts, t-shirts, jackets
and Shoes. The Depth is categorized under different sub-categories like:

Men’s:

1.Shoes :

• Outdoor Shoes
• Running Shoes
• Sports Shoes
• Training Shoes

2.T-Shirts :

• Training T-Shirts
• Training Jerseys
• Casual T-Shirts
• Running T-shirts

3.Socks

4.Bags
Women’s :

1.Shoes :

• Running Shoes
• Training Shoes
• Outdoor Shoes
• Sports Shoes

2.T-Shirts :

• Training T-Shirts
• Training Jerseys
• Casual T-Shirts
• Training T-Shirts

3. Socks

4. Bags

Children :

• T-Shirts
• Bags
• Socks
• Windshitters.

Teenagers :

1.Shoes :

• Running Shoes
• Training Shoes
• Outdoor Shoes

2.T-Shirts :

• Training T-Shirts
 • Training Jerseys
• Casual T-Shirts
• Training T-Shirts

3. Socks

4. Bags

Like most of the sporting retail outlets prominent of them being Nike, Adidas too follows a factory retail
outlet. According to the format. The area is rented by the store owner and has given the franchisee from
the Parent Company Adidas to the Neeladari Store Outlet for opening up an Adidas Outlet at the viscinity
of the Electronic City. Over the years, this outlet has transformed into a shopping center, grouping more
retailers in one location

Traditionally, these outlets used to be a brick and mortar store besides the factory or warehouse but now
along with the previous mode of operation, outlet centers are present in outlet malls and as online stores.
The reason of heavily discounted price at factory outlet centers is attributed to elimination of distributor
costs and retailer costs, the minor defects which may be present in the product, to clear up the surplus
stock etc. Also, heavy discounts are given to clear the outdated stock to make place for the new stock.

What is the need for the Factory Outlet Centers ?

Not all products manufactured by a company are of the benchmark quality and thus, they cannot be sold in
retail stores. Also, some products are manufactured which have a minor defect or not perfect are still
usable. Further, with such a dynamic market, a product which is in trend today may get outdated
tomorrow and again it becomes undesirable keeping in consideration the limited space at retail stores.

All the above mentioned categories which do not find itself a place at retail stores find itself a very good
place at factory outlet centers. Instead of discarding all the products belonging to such categories, factory
outlet centers sell them at heavily discounted prices which buyers are willing to pay and accept the little
problems that these categories have. With the booming industry of outlet centers, manufacturers have
started manufacturing products which are specifically for the purpose of such centers such that they do
not compete with their retail stores.
 Source : https://www.mbaskool.com/business-concepts/marketing-and-strategy-terms/1873-factory-outlet.html

Advantages of Factory Outlet Centers

1. They benefit customers as they get branded goods at affordable prices.

2. It helps companies get incremental revenue from goods which are out of fashion or slightly defective.

3. Factor outlet centers help companies save warehouse space as displaying at outlets leads to sale.

Disadvantages of Factory Outlet Centers

1. There are considerable chances that the products bought from factory outlet centers may get torn off or
become unusable in a very short duration which in turn upset the customer and he might not turn up to
this company or brand next time ever thus reducing the customer life time value.

2. Buyers turn up to have huge discounts and thus, to save money which many times do not turn up so in
reality. They end up buying a good amount for a product which was supposed to last for years but may end
up lasting just a few weeks which in fact costs the buyer even more.

3. One factor that distinguishes a regular company from a brand is the brand equity or the brand value.
Selling a lower quality product through factory outlets lowers the brand value of the company.
The Adidas Store Layout

The Adidas Store follows a Grid Layout since their main objective was to control costs over their inventory
and make the brands of accessories easily available to the customers. After entering a customer has access
to both men and women training and running categories of product ranging from shoes, jerseys,socks and
t-shirts arranges under a different grids of shelves.
They have also segregated the sports, running and training segment for the youth and teens covering the
younger segment. The store manager also categorized the product categories into training, other sports,
gym, cross-fit, running and football.

There is a bill desk just after the entrance making the Check in Points convenient and easy to avail after any
purchase, this shows that the retail store is effiecient and quick in making the POS easily available for the
customers. A Sales Representative Desk is the point of contact for the customers, he accompanies the
customer and shows them the relevant product categories that is well suited to them to fulfil their needs.
To buid their ambience, they also kept a mannequin of a man and women wearing a adidas jersey, since
fitness enthusiasts can easily be able to relate it with their routines.

2. Factors to be considered before they select a location and why ?

(i)Location - The Adidas Retail Store considered location to be one of the main factors since the location of
the store decides the amount of footfalls a store is going to generate. For eg : if the store is situated in a
populated area then the retail store has a high chance of getting higher footfalls for its business like cities,
railways stations and metros.

(ii) Size of the Trade Area - Retail Store like Adidas needs a small trade area to make the stores run but it
may lead to lower product assortment and categories for a particular brand. The Retail Outlet has chosen
Neeladari Road area, which is considered as a prominent shopping area for the locals since it saw an
opportunity to expand its existing customer segments.

(iii) Population : Neeladari Road is considered as a busy market area where there is retail stores markets at
each and every junction of the city because customers are seen to be more involved in shopping than any
other activity, which makes the particular population and the target segment a potential one for the
location and thus the store manager would like to set up a retail store in areas where shopping is done
extensively in huge numbers.

(iv) Location Costs : Along with the base rent of the factory outlet, they also consider all location-based
costs when choosing a retail store location. They ascertain the location costs on the basis of :

• Who pays for store security and maintenance ?

• Who pays for the upkeep and repair of the heating/air units in the factory outlet ?
• Will you need to do any painting or remodeling to have the location fit your needs ?
• Will the retailer be responsible for any amount of property tax of leasing the site for the factory outlet?
The location you can afford now and what you can afford in the future may vary. It is difficult to create
sales projections for a retail outlet until and unless the location costs are ascertained properly by the store
managers.

(v) Additional Staff and Customer Facilities (Physical Evidence) : The store manager can make the decision
to decide a store location based on these requirements of both the parties :

• Will the store require distinct lighting, fixtures, or other hardware installed ?
• Are restrooms for staff and customers available ?
• Is there adequate fire and police protection for the area ?
• Is there a sanitation service available for the staff members and the customers ?

3. Pros and Cons of the site location

The retail outlet is located on the busy streets of Neeladari Road and there are residential cities, shops,
food stalls, hypermarkets, etc. gives the Adidas outlet a huge opportunity to gain traction and increase it’s
footfalls in terms of sales.

Pros :

1.Ability to reach more customers.

2.Increased Sales and generated revenues.

3.Convenient and Economical for the local public to access the retail outlet.

4.Provides great opportunity for the retailers to expand it’s existing customer base.

Cons :

1. Higher Maintenance Costs.

2. There is less scope for market expansion as compared to the bigger outlets.

3. Competition from the other Sports Departmental Retail Outlets like Decathlon, Nike, etc.
4. Needs strong regulations and permissions from the state and area officer to be able to run a factory
outlet at the Neeladari Centre.

5. Difficult to ascertain the inventory turnover ratios and net profit margins of the factory outlet until the
location costs are not calculated by the format.

4. Competitive Advantage gained by the Outlet through location and format.

The format has helped the retailers to provide better service to the customers by understanding the type
of sports they play, their health history, should they try this outfit or not and would suggest them the
appropriate size for the fit. The sales representative have a high involvement in pursuing the customers to
try out their outfits. For them “customers come first and then comes the profit”

The person also provides customized solution after listening and understanding the needs of the various
customers. Since they are the only sports factory outlet in the electronic city area, it provides them a great
opportunity to expand its reach and visibility to the existing fitness and sports enthusiast segment which
only few retail structures like them manage to provide.

They are purely customer driven and have a effective technique of stock clearance as they provide the
customers at a cheaper rate than the competitiors and providing hefty discounts even if there is no
occasion for the retailers at the present. The salesman also goes one step further to assist the customer in
helping to make a purchase from the outlet by explaining him the procedures in a polished manner and
also arranging for the stock that is not available in the outlet, thus delivering the order on the spot. For eg :
The sales representative would make a special arrangement for the stock which is not available at present
in the outlet when the customer had previously asked for it.

5. Innovative Practice by the Outlet.

• The store follows a unique inventory replenishment procedure where a stock is replenished after every
7 days thus giving the outlet less storage costs.

• Customized Solutions by addressing customer pain points.

• Has Separate sub sections for each and every target segment of the product category.

• Gives promotional benefits to the customers by charging hefty discounts on the MRP irrespective of
the sales season.

• Advanced Technology is being used by the outlet to improve the POS Systems of the Retail Outlet.