Falling stars: sneaker companies are trying to re-engineer their brands at a time when basketball stars are drawing less teen idolatry - includes related article on continuing expansion of athletic shoe market

Brandweek, Feb 2, 1998 by Terry Lefton

The formula worked for so long. Pioneered by so esteemed a player as Nike, it seemed to have as much endurance as E = [MC.sup.2]: stick some new or semi-new or pseudo-technology, in a pair of sneakers, sign an NBA player to lend his name and you had a money-making athletic shoe. But as the saying goes, if everything is outstanding, nothing is outstanding, and the big stars, even as they soar on court, may be falling to earth in terms of their selling power.

Stroll into a Foot Locker or Foot Action today and the mood is decidedly dark, as in brown shoes, the foot-soldiers of a five-year invasion of the sneaker wall by more rugged outdoor footwear.

In the basketball shoe category, the largest segment (28%) and so long the needle of the $8 billion (wholesale) domestic athletic shoe market, a glut of product and a uniformity of marketing strategy has a wave of sneakers washing up against an increasingly indifferent teenage demographic.

Nike, scary in its ability to sell to the masses while maintaining an edgy personality, has taken off in a new creative direction, even as it warned Wall Street that the glut of inventory will keep the market soft until late this year. Keeping in mind that Nike represents close to 47% of the market, it's understandable why any hiccup there is a disaster at retail.

"At a time last year, Nike was really the only thing selling big, so retailers just bought more then they ever had," said Adidas director of sports marketing Robert Erb. "Now, kids are looking for alternatives and there is a glut of [white shoe] product."

It seems the times are a changin', especially for the urban teens who set the sneaker agenda for the whole country. Basketball shoes have become a kind of body art, or foot armor, for kids 12-17 who, while not old enough to drive, have transposed the same kind of brand equity and in-ness to sneaker brands as their parents and older siblings have for Mercedes-Benz and BMW Teens today, say marketers and the legion of consultants specializing in the youth market, are looking more for footwear and apparel that expresses their individuality rather than the fact they are fans of Shaquille O'Neal or Scotty Pippen.

All of that spells trouble for the athletic shoe business that has become addicted to "star" marketing. After a funereal performance by the second round of Allen Iverson signature shoes last year, Reebok publicly stated that athlete endorsers aren't what they used to be and appears to be seeking relief from its Shaquille O'Neal contract, the biggest shoe endorsement deal ever when it was signed.

On the retail side, smaller stores like Foot Locker are experimenting with new larger formats, which will allow them to carry more product. When a store carries 3,500-5,000 SKUs, it isn't as vulnerable to whims of fashion. Meanwhile, brands that relied on fashion to carry them are suffering. Fila lost more than 13% of market share in 1997, dropping into fourth place behind Adidas. But they aren't the only ones searching for a new formula. An industry that got inured to slumps after growing by more than 30% since 1994 is now asking a lot of questions. Is demand over? Is the "brown" trend a fad or simply a resettlement of basic bootwear into the everydaywear landscape?

As the Super Show trade expo opens this week in Atlanta, the sneaker companies that spend more than $350 million in media alone, before sales promotion expenditures and sponsorships, are looking for the new formula; searching for the new Mr. Goodshoe.

"We've been imitated by almost everybody, so it's no wonder a lot of things look the same," said Nike's North American advertising director Chris Zimmerman. "After a while, consumers are going to tire of that."

Why kids have shifted from white to brown athletic and alternative footwear is a question that no one seems to have an answer to. "Teenagers change like the weather," said Harold Ruttenberg, chairman of the 73-store Just For Feet chain of sneaker superstores. "That's why we try to position ourselves as a place for every age customer to buy."

That, of course, is the opposite of stores like Foot Action and Foot Locker, which have tried hard to be a place where 16-year-olds want to "hang." But while it's impossible to predict fashion trends, one thing is easy to forecast: teens will run from a brand once it is perceived as mainstream. The remarkable glut of product during the fourth quarter seemed to alienate the very audience it was trying to attract.

There's been a proliferation of product, a proliferation of athletes and a proliferation of marketing that made consumers tired of it all," said Howe Burch, Fila's senior vice president of advertising and sports marketing. "It's like a chocolate buffet on a cruise ship: terrific at first and then after a half-hour, you want to get far away from it, because it's just too much."

Certainly there have been previous periods when brown was in and white was out. But both the unexpectedness of the switch and the size of the industry now make this kind of unanticipated shift more unsettling, especially since most companies employ so-called trendspotters who are supposed to protect them against sudden shifts in taste among youths.