The Running Shoes Industry
The world of sports footwear could be seen as something simple: brands that were born around sports, trying to make the best possible sneakers and who hire famous athletes so that people will buy their products. However, the business of these companies is much more complicated, interesting and intimately related to product design and new lifestyles.
390%. That’s the growth of Nike since 2009, achieving 86.000 million dollars in 2015. Impressive sales figures to squash their rivals, especially Adidas, which in the same period grew only 17%. In 2004 they were more or less equals, but now Nike is worth 5 times more than Adidas.
But what happen during those 5 years so that the distance between the two companies has increased so much? Nike has been able to move faster than its rivals, backed by its vast global distribution network, an enormous advertising budget (more than 8.000 millions in sponsorships alone since 2002), and strong presence in the basketball market, and above all, an innovative mindset in terms of technology and design (in 2014 Nike was chosen as the most innovative company in the world by Bluefin Solutions). These benefits coincided with the promotion of Mark Parker as CEO in 2006. Mark is a man of the house, working in Nike since 1979. His origins as sneaker designer and member of Nike Innovation Center allowed him to understand that to count on R&D and design as a basis for success is always a good idea.
Meanwhile, Adidas was not quite as successful with their sponsorships, got it wrong with designs, arrived late or poorly to certain technologies (Primeknit vs Flyknit) and lost its visibility in the U.S. market, being relegated to third in sales behind Under Armour, a newbie in the sector. However, in the last 4 years Adidas decided to change its direction based on: design as differentiating factor; a sponsorship policy more focused on the U.S. market; a greater presence in popular culture and social networks sponsorships; along with innovative and flashy technology. Let’s see those changes.
In 2013 Adidas presented the shoe sole technology Boost, one of the best materials available in the market at the time, and using it for a huge marketing campaign. In late 2013, they surprised the world announcing the signing of the musician Kanye West (who until then had ties to Nike). Together they turned the sneaker world upside down with the Nike Air Yeezy models. In 2014, they signed Pharrell Williams, on the cutting edge for his song “Happy”. Both have great influence in North America not only as musicians, but also as trendsetters with presence in the fashion industry. That year, they bet on modern designs with their Y-3 and ZX Flux product lines, as well as from classics designs with their Stan Smith and Superstar ranges, triumphing in both areas.
In early 2015, Adidas signed up three Nike leading designers, with the polemic complaint from Nike to the designers for alleged theft of confidential information. After all this, the results were not long in coming: Adidas increased their sales by the end of 2015 and had good prospects for 2016.Â As indicated in this analysis of design management (which includes Nike as a good example), investing in design and innovation yields great benefits to companies. The approach to the new consumer, especially the Millennials, is the key for sports companies as this group increasingly spends more on sneakers. Communication with them cannot be solely through traditional media, but must also focus on social networks and pop culture.
The result is, for years now, brands have not just been betting on athletes for their success, but also on people from the “popular” sphere that have a strong influence on young people. In addition to the aforementioned Pharrell and Kanye West association with Adidas, Nike and its brand Jordan sponsored Drake, one of the most successful musicians in the U.S…their special edition line of products sold out in minutes and created a great deal of noise on social networks.
Puma has joined this trend, signing up Rihanna in 2014 (who launched a collection that sold instantly) and recently Kylie Jenner from the Kardashians (creating a conflict on the Internet with Kanye West) who has more than 50 million followers on Instagram and another 15 million on Twitter. Still, the success of these collaborations must be sustained by a quality and innovative products. If not, they risk being merely a fad.
As we mentioned at the beginning of this article, the world of running shoes, sneakers, trainers, etc. has become more complex than it may have seemed at first. The result of new design strategies, branding and communication has been the creation of a unique bond with consumers, reflecting their lifestyles, purchasing power and social positions. Companies are no longer only brands, they have had to become aspirational ones.
If you want to know more Contact us