Nearly 20% of production for Nike Inc. (NYSE:NKE) and Adidas AG shoes will move to more automated factories by 2023 due to a “buy now/wear now” shopping environment forced by the shift to e-commerce, Morgan Stanley forecasted.
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Many of these plants will likely be proprietary, cutting out the need to rely on outside manufacturing, and potentially giving the companies a leg up. A faster supply chain will help the athletic segment keep up with what the industry also calls “fast-fashion” demand from shoppers.
By 2020, Adidas forecasts that it will generate half of its sales from products made with help from technology that increases manufacturing speed, allowing stores to rotate inventory more quickly to keep up with demand trends. It already opened a “Speedfactory” in Germany in December 2015 that uses “intelligent robotic technology” to manufacture shoes. And in April, the company announced that it will make 5,000 of its Futurecraft 4D shoes with a 3D-printed midsole available by fall/winter 2017.
“This means existing suppliers using traditional manufacturing probably retain 90% of total industry production five years from now,” Morgan Stanley analysts wrote in a note. “However, beyond five years, the trend should continue when the big brands and rivals likely begin catching up.”