Adidas and Nike supply tactics are an abuse of market dominance, British retail giant says

CNBC Finance 1 month ago

The sales and supply strategies of big sports brands such as Adidas and Nike should face government investigations, U.K. retail giant Sports Direct claimed.

In a statement on Monday, the British firm accused global sports apparel brands of abusing their dominance in the market by constantly chopping and changing the availability of their products to retailers.

"These 'must have' brands hold an extremely strong bargaining position vis-a-vis the retailers within their supply networks and use their market power to implement market wide practices aimed at controlling the supply and, ultimately, the pricing of their products," the company claimed.

Sports Direct said Adidas and other big brands regularly employed an array of unfair trade practices, such as "segmentation policies" that restricted the range of products available to retailers, the withdrawal of the supply of products, and in most cases, "an outright refusal to supply."

The retailer added that brands had regularly withdrawn its supply of key products, such as soccer merchandise, or refused to supply key products with no justification.

"Sports Direct believes that the industry as a whole would benefit from a wide market review by the appropriate authorities in both the U.K. and Europe," the statement said.

Adidas and Nike response

"Nike continually evaluates the marketplace and competitive landscape to understand how we can best serve consumers," said a Nike spokesperson in an emailed statement to CNBC. "As part of this, from time to time we do make adjustments to our sales channels, in order to optimize distribution."

Meanwhile, a spokesperson for Adidas told CNBC via email on Tuesday that " a strong partnership with retail partners" was key to serving buyers in the best way but added that "in an increasingly digital world, the consumer decides where to go for information and where to purchase."

Sports Direct's statement came in response to an article in The Sunday Times, which claimed Nike had unexpectedly terminated supply agreements with dozens of the U.K.'s independent retailers.

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