Reebok begins to regain lost ground

During the Eighties, Reebok was the brand that aerobics fans wanted to be seen in. The British brand became so popular that it briefly overtook Nike as the world’s biggest sportswear brand. But then it fell out of step with a market that has become increasingly driven by fashion trends and product innovation.

Since the late Nineties, it has been forced to eat Nike’s dust. As fashion trends have come and gone – the latest being retro sports apparel and shoes – Reebok has not weathered well. While its rivals Adidas and Puma have found buried treasure in their style archives and Nike has bought up hipper brands, Reebok’s brand and marketing strategy has been confused. It has failed to develop either a personality that consumers can identify with or develop new sports technology that will turn consumers’ heads.

Reebok’s plan to address this imbalance appears to have resulted in the departure of UK sales and marketing director David Neale, who left Reebok last week after six years with the company (MW last week). One industry insider claims the company’s development of a centralised marketing strategy had resulted in Neale feeling that his role lacked autonomy.

The insider also says the “belly” campaign, created by UK advertising agency Lowe Lintas & Partners in 2001, was the brand’s last attempt to create a distinct strategy for the UK market. “The campaign aimed to make Reebok a brand for the people rather than elite athletes,” he explains, “and it did have some resonance here. But US consumers had misgivings about it because it did not make them feel proud or dynamic as it was based around real consumers and not heroes.”

Reebok has since developed its marketing strategy around three separate product areas: performance sportswear, its Classics range and the new street-inspired Rbk range it launched last year. Reebok UK managing director David Singleton believes that this strategy aims to use its heritage as an “authentic sports brand”, but also attract the crucial younger consumer. Reebok will also continue to sponsor a number of athletes including leading tennis player Venus Williams.

Reebok vice-president of worldwide marketing Jo Harlow says that criticism of the brand’s marketing strategy as it moved from a fitness positioning to a broader fashion-led one has been fair. But its new strategy, she claims, has introduced consistency.

It’s a strategy that seems to be working. The company’s annual sales, which also include the Rockport, Greg Norman Collection and Ralph Lauren footwear brands, passed $3bn (&£1.8bn) in 2002 for the first time since 1998. Global sales of Reebok-branded products experienced a 16 per cent rise in the second quarter of this year.

In terms of the global sportswear market, Reebok is in third place behind Nike and Adidas. Nike is the biggest player in the market with sales worth $9.8bn (&£6bn) last year. It is also the world’s number one footwear brand. German-based Adidas is firmly in second place reporting sales of $6.8bn (&£4.2bn) last year. However in the US, Reebok occupies second place, with Adidas trailing in fourth behind New Balance.

In the UK, football has become crucial to the success of sports brands. Adidas and Nike dominate the sport in the UK through sponsorships, endorsements and boot deals. Although Reebok has shirt deals with Liverpool, Manchester City and West Ham football clubs, it simply does not have the resources to match Adidas and Nike.

The UK sports footwear market is worth &£1.6bn according to TNS FashionTrak. It is still growing, but over the 52 weeks to June 29, the growth was just six per cent compared with 21 per cent for the same period last year. Observers say growth is coming from innovation in performance technology as well as from the development of the lifestyle sportswear category. However, growth in this market has slowed as women have returned to wearing heels in the winter and flip-flops in the summer, and men have begun experimenting with products such as bowling shoes.

Nevertheless, the importance of the sports fashion category has been confirmed by Nike’s recent acquisition of the retro trainer brand Converse. But Nike is not the first brand to recognise that developing a fashion range under a sub-brand is a way to boost sales while protecting the core brand. Earlier this year New Balance relaunched the American retro brand PF Flyer after buying up the company, and it is likely to develop a PF Flyer clothing range next year (MW January 16).

New Balance European marketing director Tobias Richter believes this is a trend that will continue. “This will be the path for growth because sub-brands can move sports brands into the lifestyle segment, enabling sportswear brands to compete in both the sports and the fashion sectors.”

Consolidation of the market is already predicted and some industry observers say there is a chance that Reebok could be swallowed up. However, it is believed that if Reebok can maintain a consistent brand strategy and stay focused, it can become a strong brand franchise again.

Reebok is already building on its success in the fitness market with a range of gym equipment and a chain of branded gyms, two of which have already opened in the UK. This is clearly a category that the brand believes it can dominate. However an agency insider says that Reebok has only made a half-hearted attempt at product innovation – the key force behind growth and brand success in the sportswear market and an area that is expected to become even more important in the future.

Nevertheless, given its previous success, there is reluctance to write Reebok off. Some observers point to the recent reinvigoration of Puma, which has made a significant impact on the lifestyle category over the past couple of years, and to Sketchers, which has built its success from scratch over the past decade by cashing in on the rise of the lifestyle sector.

As one senior industry figure points out, just because a brand has fallen out of favour does not mean it will disappear from the shelves. But he adds: “It can be a difficult and slow process to turn that great big tanker around.”