Star power puts sneakers on better footing; discounters step up licensed, private label lines

Discount Store News, Jan 15, 1996

NATIONWIDE DSN REPORT -- Sales of sneakers, like other segments of apparel, have not been posting gangbuster levels in recent seasons. On the other hand, their rugged cousins, the hiking/outdoor models, have seen real gains. With the basketball/crosstraining sneaker core holding its own, and outdoor sales growing, athletic footwear has gained two points of market share, rising to 39% of all footwear sales, according to Gregg Hartley, executive director of the Athletic Footwear Association, a manufacturers' trade group.

Year-by-year data compiled by the Sporting Goods Manufacturers Association and Footwear Market Insights shows a mature athletic footwear market near the $12 billion retail level. The outdoor component, however, has nearly tripled since 1992, to more than $500 million. The resulting pressure on sneakers--and on retail price points for sneakers--is clear. Discounters have gained in share of units sold since 1992, a reflection of this trend. The SGMA/FMI survey showed that consumers paid less than $34.50 for six out of every 10 pairs of athletic shoes bought in 1994. The average price paid at discount stores was just $16.72.

For discount stores, where top brands like Nike and Reebok are not directly available, the two basic strategies for maintaining better margins are private label and licensed lines. A comparison of departments from Kmart and Bradlees illustrates this. In private label, Kmart offers Kathy Ireland sneakers for women at a modest $17.99, with the Body Co. label priced from $11.99 to $14.99.

Generally, the entertainment licenses that are sizzling in other categories, from music and video to T-shirts and bedding, are good bets for children's sneakers. Smaller sizes account for one-sixth of the total market in dollar volume.

Among the character licenses now vying for space on retailers' shelves are Disney's Pocahontas, Toy Story and Winnie the Pooh; Warner Bros.' Batman; Saban's Power Rangers; Marvel Comics' Spider-Man; and Sega's Sonic the Hedgehog. These models are typically priced in the $12.99 to $16.99 range.

Additional spark is provided by Street Lights, still deemed worthy of an outpost fixture at Kmart, priced at $19.99 and marked down to $14.

Discounters spice up their women's sneaker lines with selections from fashion apparel labels including Chic, Bonjour and Sasson. These three brands are priced from $14.99 to $15.99 at Bradlees, along with Gitano Techna Lites topping the women's moderate mix at $17.99. Kmart carries a broader assortment of Chic models, ranging from $9.99 to $19.99.

On the men's side, lower-priced non-brand models include Athletix, $9.99; E-Z Strider, $15.99; and SafeTrax, $16.99 at Kmart. Tredguard and Olympian are offered at Bradlees for $14.99 each.

Bradlees' selection features mid-range sneakers from Riddell and Everlast at $19.99 to Rawlings at $24.99. Spalding is the premier brand in both men's and women's at Bradlees, priced at $24.99. The Spalding Hakeem Dream sneaker tops that at $34.99. The only other high-end exception is the women's Reebok, with the department's highest price tag at $39.99.

Kmart's selection ranges higher, with outposts of Fila and Puma at $39.99 in men's, and an endcap of Brooks for women at $34.99. Hakeem Dream is offered at $24.99, a promotional price.

Capitalizing on the two-time NBA most-valuable player status of the Houston Rockets' Hakeem Olajuwon, this Spalding effort was introduced to discounters last fall.

But the jury is out on the long-term viability of the Hakeem Dream. It achieved impressive sell-in at most regional and national discounters. Larry Green, vp marketing for manufacturer Mercury International, told DSN that Dream 2 shoes are shipping now, and a Dream 3 line extension, keyed to the 1996 Olympics Dream Team, is planned for Back-to-School.

However, at least one competitor questioned whether the line will achieve notable sell-through. Jim Kowal, senior vp at manufacturer Elan-Polo, which produces Bonjour, H.I.S. and Van Grack, said: "In response to the endorsement game, if it escalates, we'd be a player. We'd go after someone." But Elan-Polo won't vie for a soft-spoken type like Olajuwon. Kowal was convinced that the ticket to greater success "is all attitude," meaning a personality with an edge, a potential for controversy.

Hartley agreed, praising the Hakeem marketing program, but compared it to the X-Shoe program from several years ago, which featured NBA's Xavier Daniels. Priced at about $49.95, the line sold several hundred thousand pairs over several seasons and faded away.

The difference between a mass channel celebrity sneaker and an upstairs competitor like Nike's Michael Jordan line, Hartley suggested, is the billion-dollar level of marketing and promotional activity the megabrands exert. He added that sporting goods superstores like The Sports Authority and Oshman's are willing to invest in the charisma factor with their own resources. Discount department stores do not operate in the same marketing arena.

Nevertheless, Spalding will push the envelope. Green said that Mercury will bring out a Spalding Denise Austin sneaker for women for fall 1996, endorsed by the ESPN fitness superstar.