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London, UK Posted 2 years, 7 months ago

Reebok Was Meant to be a 'Nike Killer.' How the Brand Lost its No.1 Spot

In the '80s, Reebok was the top sports brand for a time. Now it's dwarfed by Nike and Adidas. We take a look at the history of the brand, through the lens of the people who were there.

Chapter One

When Joe Foster founded Reebok with his brother Jeff in 1958, it was a small running shoe company with moderately sized ambitions: tackle the athletics market and break into the U.S.

By the time Foster retired from Reebok in 1989, the brand had scaled to dizzying heights. Mick Jagger had worn Reebok Freestyles in his Dancing in the Street music video with David Bowie, Jane Fonda had adopted them for aerobics, Cybill Shepherd had donned a bright orange pair at the Emmys, and Foster was rubbing elbows with the likes of Sean Connery and Frank Sinatra in Monte Carlo.

Reebok had overtaken Nike as the number one athletics brand in the mid-’80s, and in 1989 was still making more than the sportswear giant annually, with $1.82 billion in sales compared to Nike’s $1.71 billion. It was a wild success story that saw Reebok’s sales spike from $12.8 million in 1983 to $310 million in 1985, and well over one billion in 1987 and thereafter.

“How did we do that? It was amazing. I think we must have been either stupid or just something to keep going and keep pushing and not worrying about it,” Foster said of the brand’s meteoric rise. “That’s probably why I decided to get off the treadmill and retire and sit back: I’d done so much and for so long. There comes a time that you’re useful for a company and after that, other people — more corporate people, people more used to these sorts of volumes — they can move in.”

It was an electric time to be at the company. There was a palpable energy from how fast it was growing and, of course, the thrill of taking down the top dog in the space. Paul Litchfield, the former vice president of Reebok’s Advanced Concepts Group (and the developer of Reebok’s famous Pump basketball shoe), remembers it as “full of energy, full of potential, full of stress.”

“It was kind of a positive thing, you know? It was always possible. Everything was possible,” Litchfield, currently head of product at GoRuck, said in an interview.

If you didn’t grow up in the ’80s, Reebok’s one-time domination of Nike might come as a surprise. Nike in its fiscal 2020 (which ended in May last year) made over $37 billion, while Reebok made just $1.6 billion (it hasn’t made that little since 1987). Granted, 2020 also brought a pandemic, but even in the years leading up to that, Reebok was making about $2 billion. Now the brand is poised to be sold off by Adidas after a history of underperformance. A far cry from those years in the ’80s when the small British company had unseated the king of all sportswear brands.

Nike and Adidas have surged past Reebok since the ’80s

“Reebok kind of has the unfortunate case of: They’re always being viewed through the lens of their competitors,” Nicholas Smith, author of “Kicks: The Great American Story of Sneakers,” said in an interview. In the ’80s and ’90s, that meant the battle between Reebok and Nike. In the 2000s, it meant Reebok was seen as a subsidiary of Adidas. “There were very few chances where they really got to stand and show what they are as a brand on their own.”

It’s not just a story of Reebok’s plateauing growth and eventual decline. It’s also a story of Nike’s incredible rise. By 1997, less than ten years after Nike and Reebok were neck and neck, Nike had grown to $9.2 billion in net sales, while Reebok was stuck at a slower pace, raking in $3.64 billion. It wasn’t an insignificant amount of money: In fact, Reebok made only slightly less than Adidas that same year. But Nike had already begun to pull ahead, and it hasn’t given up its lead since.

Reebok becoming number one “kind of caught Nike completely off guard. Afterwards, Nike regrouped, they found a very well-known, at the time, basketball player named Michael Jordan. And we all know the rest of that story — how they were able just to capitalize on Jordan stardom and leap way past Reebok, leaving them behind practically forever,” Smith said. “But, you know, if you grew up in the ’80s like I did, you kind of remember just what a thing those Reebok shoes were. And how they were just seen on equal footing, no pun intended, as everyone else that was out there, which is not the case today.”

Reebok’s scrappy journey to number one took everyone by surprise, Nike especially. Its decline has been much slower, as falling sales and an owner that didn’t invest in its growth took their toll. Over the years, Reebok was reduced to a fraction of what it once was. The brand holds just 1.1% market share in the sports footwear space (a rank of 16th), according to Euromonitor International. Apparel is even worse: Reebok holds just 0.3% share, a 12th place ranking.

“I think they started looking over their shoulder a bit. And I think that then they started getting worried about things like: ‘Are these guys going to catch up?’” Litchfield said of Reebok. “And as soon as you start worrying about other things, or if you start believing the press clippings, good or bad, you tend to begin to doubt yourself. As an organization, that can be somewhat contagious — and it’s insidious. It’s not like a car accident where you drive and all of a sudden you crash. It’s like me going bald: one hair at a time.”

Why didn’t Reebok make it? They were beating Nike: How is the brand this small and inconsequential now?

It’s not a straightforward story. It’s a story about innovation, about missed opportunities and perhaps most of all, about what might have been.

Litchfield can’t talk about almost anything in his early years at Reebok without smiling. It’s as if the energy of the company culture has lived on in him over the years, buried in some corner of his heart. And it comes out in full force when he tells the brand’s stories.

Foster, too, talks about Reebok with an enthusiasm usually reserved for children on Christmas morning. Even at 86, he’s genuine in his love for the brand he founded so many years ago, which grew so much further than his initial expectations.

There are really no lukewarm feelings about Reebok. Except maybe from today’s consumer.

‘Charging in’

Long before Reebok grabbed number one market share, before Foster even began thinking about Reebok, his grandfather founded a shoe company, J.W. Foster & Sons. Founded in 1895 by the Joe Foster he gets his own name from, it became known for spiked running shoes, which were worn by British runners Harold Abrahams and Eric Liddell when they won gold at the Olympics in 1924. (Also immortalized in the film “Chariots of Fire.”)

Those origins would eventually give Reebok its basis in running, when Foster and his brother Jeff founded the company decades later, drawing on their experience with the family business.

During his 18-month stint of national service with the U.K.’s armed forces, Jeff Foster was stationed in Germany and gathered inspiration from Adidas and Puma to bring back to J.W. Foster. The brothers became convinced that the family business needed to change — that it was failing — but the rest of the family wouldn’t listen.

“We couldn’t persuade my father and uncle, who were then running the business, to even talk to each other. They didn’t talk to each other,” Foster said. “They were just doing what they’d done for so long, and we couldn’t get them to change the company.”

The result was the formation of Reebok (for a while, known as Mercury Sports Footwear). Foster and his brother knew Adidas and Puma were taking on the soccer market, so they focused on athletics, with the aim of moving into the U.S. market.

As Foster and his brother were breaking off from the family business, everything still came back to a pair of J.W. Foster shoes.

Years earlier, Foster had won a childhood race during World War II in a pair of the family shoes and was gifted a Webster’s dictionary. As an adult, he’d comb through it looking for a name for his shoe company.

“We put down a lot of names: Cougar, Falcon, anything that sounded very sporty, whether it be a bird or whether it be an animal. But I thought: ‘I’ll have a look through my dictionary’ because I like the letter R — love the letter R,” Foster said. “And I opened my Webster’s dictionary to the letter R, and it doesn’t take long thumbing through the pages to get to R-E. But it was R-E-E-B-O-K: Reebok, a small South African gazelle. Fantastic! That must be for us. And I put Reebok at the top of the list.”

Then came the hard work: breaking into the American market. Foster first went to Chicago looking to sell shoes in 1968, but once potential distributors realized he operated out of the U.K., they backed away. It wasn’t until 1979 that he found Paul Fireman, and with him, a reliable U.S.-based distributor.

Paul Fireman is a key figure in the history of Reebok. The long-time CEO, and former owner, is widely credited with growing Reebok beyond its running shoe roots. He’s also the one that sold the company to Adidas.

But in 1979, he was just a guy running another sports and fishing tackle business who saw Reebok at a Chicago sporting goods show and thought it looked interesting.

“I kind of say, ‘Can I get involved with it?’ And they at first didn’t want to do that because they didn’t really know me, obviously,” Fireman said in an interview. “I knew that. So I just continued, and we talked, and before you know it, I had an opportunity to be a distributor in the United States with their product. To my naivety, I didn’t realize that they didn’t make much product. It was a very handmade running shoe.”

Reebok needed a new factory setup to meaningfully sell in the U.S. The facility they had at the time made just 300 or 400 shoes a week, according to Fireman — not enough to support any kind of popularity. Eventually they landed in a South Korean factory, which gave them enough top-quality product.

It was during the early months, as Fireman learned more about Reebok, that he knew he wanted in for the long-haul. In 1979, Fireman took a 95% stake in Reebok’s U.S. business, and in 1984, he bought the international company from Foster alongside investor Stephen Rubin.

“I was going to go for Reebok,” Fireman recalls. “It was within my financial budget, which was not much, and I just went charging in. I never really looked back once I started. I just went 100%.”

A five-star Runner’s World rating was the final key to unlocking the U.S. market.

Foster had his eyes firmly set on getting a five-star running shoe from the publication because he’d seen what it did for brands like Nike. Already in 1970, Ron Hill had won the Boston Marathon wearing a Reebok running shoe, but for popularity with the everyday runner, a Runner’s World five-star rating was a must.

In 1979, Reebok got three five-star shoes at once for the Inca, the Midas and the Aztec. It was the beginning of Reebok’s success in the U.S.

“That was the critical thing — because from there we could build,” Fireman said. “We just had to get enough product behind it so that we could get their attention before they fell asleep.”

Chapter Two

The rise of Reebok

Reebok’s explosion hadn’t happened yet, but it was coming, thanks to very soft leather and the aerobics trend.

The Freestyle came about thanks to Angel Martinez, initially a salesman at Reebok, who discovered one of those very large white spaces executives look for when he attended one of his wife’s exercise classes. Broadly, the opportunity was in making athletic shoes for women, who were largely being ignored by other brands. Specifically, it was in the burgeoning aerobics market.

“What does he see? He sees the instructor in running shoes, half the class in running shoes, the rest — no shoes,” Foster said of how Martinez found the inspiration for The Freestyle. “That was his lightbulb moment. ‘Why don’t we make these girls a special shoe with glove leather uppers and a very cushioned sole?’”

By Foster’s account, Fireman was at first uncertain about launching an aerobics shoe, since the company was doing so well in running. But once The Freestyle launched, Fireman put marketing power behind it and the shoes quickly got picked up by aerobics instructors, and the entire class followed suit.

Next, celebrities started donning the shoe. In 1985, the same year Reebok IPO’d, Cybill Shepherd wore a pair of Freestyles to the Emmys (relatively unheard of at the time, according to Smith) and Mick Jagger wore them in a music video.

“You kind of see the brand doing everything right across the whole area. They’re doing well in sports, they’re doing well in culture, in music, so they really have their brand out there,” Smith said of the time period. “I think it’s important to remember that it used to be an ‘it’ brand. It used to be really, really big that the biggest stars were wearing it — and then now, not so much.”

The goal was never to have celebrities wearing its shoes. The goal wasn’t to build a company that was an ‘it’ brand. Not for Foster or Fireman.

“I didn’t have any giant ambitions. I just had the ambition to find a business that I could get into and make it something of my own and be entrepreneurial,” Fireman said. “If I could build it up, I would build it up to a place where I could make a good living, take a vacation once in a while. That was all my ambition was at the time.”

Once The Freestyle got Reebok going, though, the company started thinking about what other sports it could get into.

“At that time, there were two significant players: There was Nike and there was Adidas — worldwide,” Fireman said. “And I thought there was plenty of room for a third.”

Four years later, after bringing down Nike as the number one athletics brand, Reebok’s next big shoe was born: The Pump.

The Pump was a basketball shoe, and according to the man who helped make it, it was terrible. Of course, it didn’t end up that way — it ended up being one of Reebok’s most famous shoes. But at first, it was terrible. Inspiration for the shoe came from an Italian tennis brand called Ellesse, which had combined the fit mechanism of a Raichle ski boot with a tennis shoe to put an inflatable system on the inside of the shoe. Reebok thought, why not use a similar idea to make a better basketball shoe?

Litchfield had been a firefighter and worked as an EMT, so he was familiar with air splints and thought something like that might work as a bladder for the shoe. He prototyped it and showed it at the Atlanta Super Show in 1989.

“These things: They work, but they were awful. I mean, they were just awful,” Litchfield said. “But the momentum had started and Nike had their own shoe called the Air Pressure and their Air Pressure was made by this guy Bruce Kilgore, and they looked really, really good. And ours didn’t. So I was sweating it out pretty good.”

Ultimately, Reebok ended up completely changing the design. When the shoe launched, there were less than 10,000 pairs committed to be sold, according to Litchfield — and that was done as a favor from Foot Locker. The power of some strong marketing campaigns changed the trajectory, and the shoe took off.

“It started becoming its own entity,” Litchfield said. “That’s what I mean by Reebok luck. I mean, a lot of people put a lot of work into it — I put an insane amount of work into trying to help lead the team to get this done — but it would have just been an item if it weren’t for the other really important critical components plugging in and making it this big story.”

(It didn’t hurt that Boston Celtics’ player Dee Brown made a point of pumping up his pair of the shoes before every dunk in the 1991 Slam Dunk Contest, which he won. According to Smith’s book, Jordan told Brown that night that he’d started the “shoe wars.”)

Around the same time, Foster retired, an experience he likens to the Eagles’ Hotel California: “You can check out, but you can never leave.” He would meet with anyone who wanted to talk at Reebok (and still does), but the company had reached a turning point in its growth. It was time to leave.

Foster knew what Reebok had accomplished in reaching number one, but in the moment, there was hardly any time to savor it.

“The growth of the company was so fast that we were trying to keep up. We were running. We were doing everything. We were almost overtaken by the success,” Foster said. “You get there, and you really don’t know how you got there, and the feeling is, ‘Wow.’ There’s a time where you think, ‘Number one: Great.’ But everybody had been running so hard and working so fast and keeping up with the business that you didn’t really feel the sensation of it. The whole thing was a sensation. The culture of the company was a winning culture.”

While the success of the ’80s came by in a flash almost too fast to track, Foster wishes his brother could have seen it. Jeff Foster was in charge of production at Reebok, but he died of stomach cancer just as Reebok hit its stride in the U.S.

“We went through the pain — we went through a lot of pain getting to this point — but he never saw all the success. And that was a shame,” Foster said. “But it doesn’t take away from the fact that we achieved such a lot. And to become number one: I think he would have been absolutely thrilled that we’d become number one.”

Staying at the top

The path after reaching number one was more fraught. Reebok tried to break into basketball and other sports. Fireman signed up Reebok to make uniforms for the Russian Olympic team in the ’90s, knowing they were projected to win several gold medals. And there was the Dream Team debacle of 1992.

Reebok had won the contract to make the awards uniforms for the U.S. Olympic teams, which included the U.S. national basketball team and with it, basketball stars Michael Jordan, Magic Johnson and Charles Barkley. Michael Jordan was by then a Nike brand ambassador.

“[They were] rightly thinking, ‘OK, we’re going to finally have some photos of Michael Jordan in the Reebok logo,’” Smith said.

Except, the Dream Team refused to go to the awards ceremony in the Reebok uniforms. After lots of back and forth, they were told they had to wear the uniforms, but the players did it in such a way that Reebok’s logo was completely hidden. No Michael Jordan Reebok photos after all.

“This just demonstrates at the time that Nike did still see Reebok as a very dangerous and a very worthy competitor to go to such trouble to make sure that their players were always appearing in the brands that they were contracted to,” Smith added.

Fireman largely kept out of the controversy, letting the NBA and other organizations handle the issue. (Nike did not respond to requests for comment for this story). But what Smith saw as a big loss for Reebok, Fireman looks back on as an unexpected win.

“That became written up quite a bit — and it did me more good than anything because they brought all the attention to the fact that Nike was interfering with the award because it said Reebok,” Fireman said. “So that was good for us.”

Reebok wasn’t number one anymore by then. In fact, even when Reebok took the number one spot from Nike, Fireman knew it was temporary. Adidas and Nike both had a head start as global sports brands, they were more established in their respective spaces. And Nike’s organization was much larger.

“They had a machine that had been built promotionally and everything that was hard to catch,” Fireman said. They also had close relationships with a lot of teams and coaches, which made breaking in difficult, and they had more money to spend. “I caught them at the top … and we were doing well, making a ton of money, reinvesting. But they were bigger and better.”

As Reebok hit its peak and looked for growth outside the fitness segment, the company started picking up other brands as well. Reebok acquired Rockport in 1986, women-focused athletics brand Avia in 1987 and the Hockey Company in 2004. In the early 2000s, when Reebok was making somewhere in the range of $3 billion annually and Nike was making close to $9 billion or $10 billion, the company made another bid to be a team sports brand by signing licensing deals with the NFL, NBA, MLB and NHL.

The way Fireman tells it, it came about quite by accident. A former Reebok employee ended up at the NFL and wanted Fireman to take a meeting to talk about product licensing. Fireman wanted nothing to do with it, having come up with “nothing but losses” working with the NFL in the past.

“They had too many licenses. It was an uncontrolled brand. No two uniforms looked the same,” Fireman said of the NFL.

Eventually, Fireman took the meeting, but told the commissioner that he wouldn’t do the NFL’s licensing unless Reebok was the only brand in charge. They countered and offered to give one of the NFL’s leagues to Reebok and the other to Nike. Fireman told them to give it all to Nike, who was “more than capable of doing it” and would run a good league, but he ultimately ended up with a decade-long NFL license.

“I don’t know what happened, but they turned to me and said, ‘If that’s the case, we’re going to give it all to you,’” Fireman said. The NFL deal also opened the door to other leagues. “From that meeting, I was called, and I went in to see David Stern at the NBA and I ended up with basketball.”

By 2004, Fireman had deals with all four major sports leagues. Reebok was trying to carve a path to become the third major global sports brand. The company would change out 30% to 40% of its product every quarter in its bid to compete, according to Fireman, and was a thorn in Nike’s side.

“We were giving them a heck of a nightmare,” Fireman said.

2004 would also turn out to be the year Reebok’s rise ended. The company would never reach $3.79 billion in sales again, about $3 billion behind Adidas and about $9 billion behind Nike at the time. It was poised instead to be acquired by Adidas, and with the sale also went the dream of becoming that third global sports brand, spoken in the same breath as Nike and Adidas.

While it didn’t fulfill that dream, many observers credit Fireman with turning Reebok into any kind of meaningful competitor at all.

“Paul Fireman was the reason why we’re having this conversation today,” Litchfield said. “For real. Now, did he do it by himself? Absolutely not.”

According to Litchfield, Fireman was “impatient,” “unreasonable,” but also motivating, a challenger. He brought out the best from employees by pushing them to go further, do more.

“Everyone says, ‘Well, he wasn’t a track and field guy’ — doesn’t matter,” Litchfield said. “He knew good product when it came by, and he knew how to engage people in a way that would get their attention. And for a lot of us at Reebok, he got your attention in a way that was challenging. You really didn’t ever want to let him down. You just didn’t, you know?”

Certainly, he helped scale Reebok to its peak. But no one is flawless. Matt Powell, senior industry adviser for sports with the NPD Group, described him as an “idea guy.”

“One of [the ideas] would be good, and the other nine would be not so good, but they’d have to go through the exercise of working through it,” Powell said. “So in some ways, he was a distraction. I think later on, he was less about building the brand and more about just maintaining the sales. That’s when the brand became so transactional. But all in: a brilliant man.”

Litchfield noted that there were some days when his leadership may have been “too heavy,” but by and large Fireman led Reebok through the trenches to become the number one athletics brand. He built a company that once rivaled Nike — and some still wonder if it could be that strong contender now, under the right circumstances.

“Once Reebok was sold to Adidas, of course, that opportunity had gone. But prior to that, I’m pretty sure it could have happened,” Foster said of the chance Reebok had to be where Nike is today. “It is very difficult because you’ve got to wonder: Could they have met the right person?”

Herbert Hainer at Adidas, for example, pulled the company out of “a really bad period in the ’90s,” Foster said. If Reebok had found its own Herbert Hainer, could it have done the same?

Chapter three

‘Brother versus brother’

Incidentally, struggling to find a leader to replace himself is what led Fireman into negotiations with Adidas. Had he found someone suited to the task, the conversation around Reebok may be different today.

Reebok first heard from Adidas about five years into operations, when Foster received a letter saying Reebok’s use of two stripes and a T-bar was an infringement on the three stripes Adidas was known for. At the time, Foster was thrilled by the fact that Adidas knew they existed.

Now, Adidas is frequently cited as a reason for Reebok’s demise. (Adidas declined to comment for this story.)

The $3.8 billion acquisition was announced in 2005, but Fireman had been talking to Adidas CEO Herbert Hainer for three years about a potential acquisition. Nike was getting bigger, and bringing Adidas and Reebok together seemed to be a good way to combat that. Fireman had already tried finding a successor, to no avail. Finding an acquisition partner was another good option. According to Fireman, Adidas had about 5% market share in the U.S. at the time, compared to Reebok’s roughly 17% market share.

The two companies could complement each other: Adidas had strength in soccer and the European market, and Reebok was seeing success with its music products, women’s fitness and U.S. sports penetration. The leadership teams talked for seven months about how to make the merger work, Fireman said, but once the deal was done, those plans were largely forgotten. Over the years, Reebok lost its licenses with the major sports leagues: Adidas took over its deal with the NBA and the NFL was handed over to a host of other brands.

“We gave them three of the best gems in sports in America,” Fireman said of the sports licenses. “They wanted to reserve Adidas for sport, and they wanted to push Reebok into physical fitness, that type of stuff. I don’t know why: We agreed to two separate brands. But smart men and women make foolish decisions sometimes. That was the biggest one I’ve ever seen that was foolish. Paid almost $4 billion to destroy it.”

The importance of losing the sports licenses varies depending on who you ask. To Sam Poser, senior equity analyst at Williams Trading, they didn’t mean a whole lot to begin with. To Smith, what they really lost was brand visibility. To Litchfield and Fireman, though, it meant a lot — and it was symbolic of the larger movement of Reebok out of the sports market.

“I do not ever like to blame others for my own destiny. Reebok ended up where it ended up because of the way we ran the company, regardless of what external forces we had,” Litchfield said. “However, with that being said, Reebok was not allowed to maintain the USA sports side of things. One of the first things that Adidas did was they came in and pulled basketball — and the NBA was a big deal to us.”

The NFL and NHL followed. But the loss of sports licenses was the least of the issues in the acquisition. By far the largest was that Adidas and Reebok directly competed with each other.

“Initially, Adidas said that they wanted Reebok and Adidas to compete with each other: ‘Brother versus brother’ was a quote that Herbert Hainer said at the time,” Powell said. “And I think they quickly realized that that meant that they were essentially negotiating against themselves.”

Thus, Reebok got pushed into fitness and training, the latter of which has been on the decline for years, according to Powell. Powell believes Reebok has also been purposefully held back from opportunities in the retro space since Adidas has had success there.

“I think at the end of the day, the real reason for the demise of Reebok was that every decision was made in favor of Adidas and that prevented Reebok from growing,” Powell said. Marketing to the same consumer meant battling over the same market share. “You’re stealing share from each other, and share is always a zero-sum game. For someone to gain share, somebody else has to lose.”

Current Reebok President Matt O’Toole, who joined Reebok with its acquisition of The Hockey Company in 2004, acknowledges that Reebok’s return to the fitness market was in part out of a necessity to make the two less competitive. As with other things, the sale provides a chance to change that, and allow more dedicated attention to Reebok.

“Even Adidas is very clear to believe both brands will be better off separate, because when you get into the situation of having to prioritize resources or even people’s time, the big brother tends to take up a little bit more of the oxygen in the room,” O’Toole said. “And what Reebok really needs now is a separate organization that’s global and dedicated to the Reebok priorities.”

In Reebok’s complicated search for identity under Adidas, the company not only lost its sports positioning, but the logo was also changed multiple times, something that frustrated Foster as he watched from the sidelines. Ultimately, though, the founder of Reebok doesn’t begrudge Adidas its choices, and Reebok’s smaller standing in the world because of them.

“If you pay $4 billion for the company, that’s what you pay for — you pay for the advantages you can get out of that. So nobody can blame Adidas for doing that,” Foster said. “I think the thing that Adidas probably regrets is not being able to have the two companies grow. They determined to take those assets and build Adidas. That’s what they did, but I think they still feel pretty deeply that they would have liked to see Reebok grow as well.”

What is Reebok? The loss of an identity

Adidas can’t be absolved from responsibility in Reebok’s decline. The brand had other problems, though.

In the late ’90s and early 2000s, Reebok started to plateau. Sales fell in 1998, 1999 and 2000 before rallying back to 1997 levels by 2004. There are a host of reasons that Reebok’s success faltered. Questions around its core identity — what Reebok stood for — began to plague the company as it looked to build itself into more of a sports generalist, so much so that Litchfield left Reebok in 1997.

“You think of an Adidas shoe, instantly pops into your mind something like The Superstar where it’s an all white shoe with three distinctive black stripes on it,” Smith said. “But when you try to imagine in your mind what a typical Reebok shoe is, you might come up with The Freestyle or The Pump or a very simple white tennis shoe that were very popular in the ’80s that you sometimes see around here, but not so prevalent as the other ones.”

The lack of a strong brand identity was made worse by the company changing the style of shoes frequently, and trying to expand into multiple different categories at once.

“The biggest issue with Reebok before it got sold to Adidas was having moments of some decent stuff, but they never stuck with anything long enough to keep the momentum going,” Williams Trading’s Poser said.

Poser recalls being a buyer at a major sports retailer when Reebok put out a premium running shoe — it sold well, but then the company changed the last (a tool used to shape footwear) for the shoe the following year and returning customers no longer fit in it. “That sort of inconsistency happened over a long period of time,” Poser added.

In pursuit of the basketball market, Reebok signed Allen Iverson and Shaquille O’Neal in the ’90s. They were both huge stars of the day, and helped Reebok become associated with the basketball space. But unlike Nike’s bet on Michael Jordan, neither wound up being a massive cash and branding windfall for Reebok.

Iverson’s basketball career was “more of a bottle rocket” than Jordan’s was, according to Powell, and while Shaq continues to be an incredibly well-known athlete, his work with Reebok was plagued by his size and his position as a center, rather than, say, a guard.

“Big men typically just don’t sell shoes,” Powell said. “Your average 12-year-old in the driveway could dream of being Allen Iverson and shooting from outside and all the crossover dribble and all the things that Iverson did. Not in their wildest dreams would they ever think they could be Shaq because he’s just a giant. And giant men need really supportive footwear, which tends to make [the shoes] kind of ugly.”

In the early 2000s, Reebok made another bet by getting into the relatively untapped market for sneaker lines made with musicians. The brand partnered with Jay-Z to launch the S. Carter in 2003, and the same year debuted the G-Unit line with 50 Cent (though the larger G-Unit launch came in 2004)

Reebok was one of the first to think of creating products with major artists. A limited list of precursors includes Adidas partnering with Run DMC, who wore Adidas shoes as part of their unofficial uniform, and of course sang all about it in the hit, “My Adidas.” But by and large, no one else had really thought to capitalize on the fame of music stars to sell shoes.

“They had no clue. None of the competitors had any clue,” Fireman said of Reebok’s idea to start making shoes with top artists. “We launched this. We dreamed it up.”

The shoes did well for Reebok, but the company may have ultimately been too early to the music movement, according to Smith. Drops with celebrities today are helped along by social media and the internet, and Reebok launched into the space about a decade before the strategy became widespread.

“That S. Carter sneaker, though it was a hit in 2003, it didn’t quite set the world on fire like they were hoping,” Smith said.

Making shoes with artists wasn’t a bad idea, as evidenced by the popularity of collaborations like Kanye West’s Yeezy line with Adidas. Nor was Reebok wrong to partner with top basketball stars on sneaker lines. What was a problem, though, was Reebok’s missed memo on creating cult followings and mystique around its products.

Whereas Nike is dogmatic about keeping supply just behind demand, Reebok flooded the market when its shoes did well, causing once-coveted shoes to be widely available. Supply and demand problems plagued not only the Iverson shoes, but also the S. Carter and the G-Unit, according to multiple sources. With the S. Carter, Reebok dropped an initial 500 pairs, then 5,000 when those sold out, then 50,000, according to Powell.

“So the 50,000 pairs were sold out, and then they said ‘Whoa boy, that worked. Let’s make half a million pairs.’ And the shoe ended up at T.J. Maxx because there was just way more product than the consumer could digest,” Powell said. “You think about [the Jordan Brand], a $3.6 billion brand. But they built a $3.6 billion brand by selling out all the time, by never meeting demand. And it took them 35 years to do that.”

Reebok’s reliance on a “push” model rather than a “pull” model meant products ultimately ended up on sale, damaging the brand. The company started giving retail buyers deals on Reebok products, and rather than focusing on fixing the products that did poorly, they “resorted to being transactional,” Powell said.

Reebok tried to follow the trail of Nike and Adidas by extending the brand into more areas, but the company wasn’t as established as the other two, with the majority of its growth coming incredibly quickly. A less tangible advantage, Reebok also may not have had Nike’s commitment to being the absolute best.

In the ’80s, co-founder and Chairman Emeritus of Nike Phil Knight was “infuriated” when Reebok temporarily displaced Nike from its number one spot, and, as Litchfield recalls it, Knight called all of Nike’s employees together to essentially commit to a relentless pursuit of being the top sportswear brand. It worked.

“Nike executives never mention another brand by name. They say their ‘competitors,’” Litchfield said, noting that self-focus led to Nike’s continual rise. “They’ve never questioned who they are and that goes for everything from customer service to distribution, all that. As a competitor, I was always impressed with that. I never wanted to be Nike, I was good with Reebok being Reebok, and we had our own way. But when we focused on our stuff, particularly the product creation side, we had a small team, and we did a lot of stuff — and it was pretty impactful.”

In the early 2000s, Litchfield came back to Reebok at Fireman’s request, lured by the “promise of a renaissance” of the Reebok brand. A return to its core identity. According to Litchfield, it was working. The 2006 Adidas acquisition, however, would complicate Reebok’s loss of identity even further.

“They got fundamentally out of sports. Reebok was stripped of its sports credential and stripped of much of the music credential, and we ended up a smaller company, doing athletics, women’s athletics, exercise, things of that nature, for both men and women,” Fireman said. “So yes, they stripped away the guts of what it stood for. How good can you do from that?”

According to Smith, the idea of the acquisition was for Adidas to have “a Nike killer” on its side. The reality was that Reebok exited its deals with major sports leagues and pivoted to focus on a much smaller fitness market. A deal with CrossFit was signed in 2011, which brought back Reebok’s exercise focus, but the brand had moved so far beyond that scope it served more as a further loss of identity. And pinning Reebok into that small market killed the opportunity for meaningful growth.

O’Toole sees Reebok’s purpose today as a challenger brand focused on telling a bolder story than its competitors, a la its old innovations like The Pump. The company is focused on redefining itself once again as an “athletic lifestyle” brand, broadening its assortment of activities from fitness to include other sports. Basketball is a possibility once more, but perhaps not right away.

“There’s this opportunity over the next several years to spread our wings and participate in more sport categories, but the first agenda item on the sports side of the equation versus lifestyle is to really double down on the training category,” O’Toole said in an interview.

O’Toole also wants to keep Reebok’s focus on the female consumer, something he thinks it lost when it tried to expand too far in the ’90s. The fact that Reebok was leading the women’s fitness trend in the ’80s and is now overshadowed by Lululemon is another possible casualty of Reebok’s expansion.

“If I thought, ‘What does Reebok mean?’ It means women’s dance, it means aerobics. And if they had stayed with that, they might have out Lulu’d Lulu,” Barbara Kahn, professor of marketing at the Wharton School, said. “But Lulu came and took that away from them. And they don’t even sell shoes.”

Adidas’ sale of Reebok opens many doors the brand has long-since closed. But to Litchfield, the sale is a chance for Reebok to rediscover its identity.

“I think it’s an opportunity for Reebok to, not reinvent itself, but get back to the Reebok ‘why,’” Litchfield said. “Any brand out in the consumer space has a ‘why’ for existing, like: Why do you like Apple over Samsung? ... There’s a ‘why’ to those brands and if Reebok can get back to their ‘why,’ I think the sky’s the limit.”

Many think Reebok’s lost identity resulted from expanding too fast. Fireman regrets not expanding quickly enough in some segments. Reebok should have gone harder into the Asian market, according to Fireman, and the company should have pushed into the soccer space when Nike did.

When Fireman sold to Adidas, he thought he was selling Reebok to a competitor that would continue that growth and expansion. What he got wasn’t quite what he bargained for.

“Where I stood then? No, I thought it was the right thing to do,” Fireman said when asked if he regretted the sale. “I did it because I wanted Reebok and Adidas to carry on as two giant brands within that industry. Do I regret that the management of Adidas fundamentally destroyed it? It’s not destroyed, but the brand is nowhere near the size or the competitiveness — yeah, I feel bad for that. Would I not sell? No, I had my own issues and I couldn’t find leadership to carry on, so selling was a good option. And I took it.”

To Litchfield, fingers can only be pointed at Adidas for so long. While the acquisition came as a shock to Reebok employees, and is certainly responsible for some of its fate, the brand shouldn’t have needed Fireman at the helm in order to do well.


Read the full article at: retaildive

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