B-Ball Shoes Lead Sales Rebound - athletic shoes sales - Brief Article - Statistical Data Included

Brandweek, June 4, 2001 by Hilary Cassidy

With manufacturers effectively emphasizing fashion and innovation, athletic footwear got back on track in 2000. According to Sporting Goods Intelligence, total sales for the category numbered $7.8 billion in 2000, up 4.3% from 1999 sales of $7.5 billion and close to the previous peak of almost $8 billion in 1997.

Both brown shoes (like trail running shoes) and traditional athletic shoes drove sales, with the market seeing demand for both. "Footwear is a distinct fashion item and is in hot demand," said John Shanley, an svp at Wells Fargo Van Kasper, noting a significant increase in lifestyle product from companies like Skechers, Puma and Reebok.

The formula for success pairs solid product with smart lifestyle marketing. Lee Applebaum, vp-marketing, Footaction USA, pointed to Adidas' ads in support of its Kobe Bryant shoe showing the AllStar speaking Italian and Nike's dribbling ads as examples of campaigns that are less product-focused but rather aim to create energy around a category. "A lot of those ads are not about performance basketball," he said."lt's about the energy of the street and the passion behind basketball, with links to rap, hip-hop, urban culture."

A measure of the strategy's success is that basketball has emerged from dormancy to become an exploding category Applebaum said his basketball shoe business is "on fire" and And 1,the specialty company that focuses exclusively on basketball, saw its sales jump last year to $75 million, an 88% increase from 1999. Conversely running, which had been a consistent top performer over the last several years, is slowing, according to retailers.

With exclusives still a major part of the business, retailers are looking to partner with manufacturers to get a leg up on their competitors. Footaction, for example, ran a program with Reebok, supported with national print ads, called Iverson OTC (Off the Clock), featuring a footwear collection of running shoes, crosstrainers and slipons that NBA MVP Allen Iverson utilizes when he's not on court. "It is compelling, fashion-forward product with a great personality behind it, and exclusive, so we can create energy," said Applebaum.

Big brands get mixed reviews for recent performance. Nike had a good launch of its $150 Shox shoe, which gets high marks for both function and style, but is grappling with fashion problems in the mid-price range. Shanley said Nike's market share declined from 40% to 38% last year,but he predicts a recovery with fall product debuts.

Reebok, although now without Angel Martinez, its well-respected, recently departed CMO of 20 years, continues to show strength amid a diffuse marketing strategy featuring endorsers Iverson and Venus Williams, Survivor tie-ins, the "Defy Convention" campaign and a new NFL licensing deal. Analysts expect Adidas, which last year struggled with fashion, to improve this fall while New Balance remains a threat to join the top three. Also of note: venerable old-timer Converse, whose U.S. wholesale sales fell from $285 million in '97 to $145 million in 2000, declared bankruptcy last February.

Interestingly emerging power brokers in the category are big retailers. After weathering a fallout in '99 and '00 that saw square footage drop by more than 11%, retailers have eliminated non-productive stores, started to reduce SKUs and are adopting some packaged goods marketing techniques.

"There is a pendulum swing where the athletic retailers are becoming a far more important factor in the overall market than the athletic manufacturers' said Shanley

Another hot topic is the growth of slotting fees, where retailers charge suppliers to stock their brands. Shanley pointed to Venator, which has a 19% share of the U.S. market and owns the Foot Locker and Champs Sports chains, as a leader in the movement.

On the other hand, Footstar, owner of Footaction and Just For Feet as well as discount footwear company Meldisco, is exploring a "pipeline strategy," trying to take possession of goods in Asia to help speed product to market.

                         FOOTWEAR/ATHELETIC
Brand           Company Name, Location
1. Nike         Nike, Beaverton, OR
2. Reebok       Reebok, Canton, MA
3. Adidas       Adidas America, Beaverton, OR
4. New Balance  New Balance, Boston
5. Vans         Vans, Santa Fe Springs, CA
6. K-Swiss      K-Swiss, Westlake Village, CA
7. Keds         Keds, Lexington, MA
8. Asics        Asics Tiger, Irvine, CA
Brand           Lead Agency, Location            Total Sales
                                                 (millions)
1. Nike         Wieden Kennedy, Portland, OR       $3,327
2. Reebok       Bertin Cameron, New York              926
3. Adidas       Leagas Delaney, San Francisco         840
4. New Balance  Messner Vetere, New York              750
5. Vans         McElory, FCB, Irvine, CA              216
6. K-Swiss      Rubin Postaer, Santa Monica, CA       197
7. Keds         Toth Brand Imaging, Concord, MA       191
8. Asics        VitroRoberston, San Diego             154
Brand           Media Spending  Quality  Salience  Equity
                  (millions)
1. Nike             $167.3       6.58       88      57.9
2. Reebok             38.9       6.43       84      54.0
3. Adidas             45.3       6.48       76      49.2
4. New Balance         8.9       6.72       51      34.3
5. Vans                3.6       6.13       35      21.5
6. K-Swiss            15.7       5.96       37      22.1
7. Keds                3.3       6.23       63      39.2
8. Asics               5.7       6.25       35      21.9
Source: Sporting Goods Intelligence (sales, figures
are wholesale for U.S. Only); Competitive Media Reporting
(media), Total Research. QxS=E