The brand game is heating up and more players are on the
Each year millions of consumers, amateur athletes, sports fans, and workout buffs, search for just the right apparel--everything from T-shirts, sweats, and jerseys to caps, jackets, and sneakers--to help them run faster, leap higher, or look cooler than the average person. With athletic footwear alone generating more than $13 billion in sales in 1999, the leading sporting goods manufacturers are competing for a big prize. Yet, over the past three years (1997-1999), the pace of sales has slowed. The industry leaders, Nike and Reebok, have watched sales drop off as much as 5% to 10% annually during the period.
In this arena the competition is fierce--multibillion-dollar entities like Nike and Reebok, and megamillion-dollar companies like Adidas, Champion, Converse, Puma, and Wilson--have also staked their claim in the sports apparel business, and the list of clothing manufacturers is continually growing. Moreover, product lines are expanding to provide streetwear and off-court wear and accessories, including eyewear and watches, with athletic appeal. And there has been a rise in the popularity and visibility of athletes across a number of sports--golf, soccer, tennis, and boxing--with huge endorsement contracts going to the champs. With the competition heating up, how can any one company stay competitive and establish itself as a leader?
From the consumer's point of view, it is difficult to learn where each company's specialty lies. Some are known for apparel, others for footwear. And, with the growth of endorsement deals, it would appear that these companies might be taking on much more than they can handle.
"That may be true of smaller companies," says Mark Hampton, president of Nike Team Sports, "but definitely not of what we think are the major brand players. Most of us [apparel companies] have specific divisions or groups that are assigned to tackle these market segments. So, from our perspective, I can honestly say we don't believe we are overextending ourselves." Hampton stresses that Nike did more than $9 billion in sales last year.
Reebok, which had almost $3 billion in sales last year, is far from that mark, says Muktesh Pant, senior vice president of marketing services for the corporation. Explaining that the company has never had a product line that didn't sell, Pant says, "I think there's room to grow even further. The opportunities in apparel are enormous." Reebok does almost $600 million each year in textile apparel alone, which makes up only 20% of its business. Seventy-five percent of Reebok's sales come from footwear purchases (the company is No. 2 behind Nike in footwear sales) with the remaining 5% consisting of exercise equipment and accessories.
Pant says that much of Reebok's business is built on "technical superiority." As an example he cites Hydro Move, a new technology Reebok developed four years ago. A company trademark, Hydro Move is a moisture management technology/treatment given to the fabric that helps the wearer regulate his temperature. The product is popular among pro and amateur athletes, and runners.
While Reebok is running the technology race, Nike is betting on the pros. Hampton credits athletes with helping Nike determine the types of products it should make available to the marketplace. "We've always been committed to the athletes in delivering the best possible product and catering to the athletes first," he says. "I think that if you start with the athlete in understanding what a particular garment needs to do, you will best serve all constituencies in terms of that product's use."
For a novice shopper, entering a sporting goods store can be overwhelming. Even before encountering the countless name-brand products that line the shelves, the novice has been barraged by advertisements coaxing him to buy a product so that he can be like Michael Jordan or Tiger Woods, making it difficult for him to decide which brand to choose. …