Nike and Reebok want every person in the world to wear their shoes
Running into big money The London Marathon is another big step in the race to be the top sports manufacturer. Richard Rivlin assesses where Adidas, Reebok, Nike and Asics stand: 'Nike and Reebok want every person in the world to wear their shoes'
When Superman, Mr Blobby and sundry laughing policemen line up with the 28,000 other runners confronting the 26.2 miles of the Flora London Marathon today, the latest salvo in the trainer wars will be fired.
Everyone who completes the gruelling race may be a hero but in the eyes of Nike, Reebok, Adidas and Asics there is no glory in merely finishing. First is first: second is nowhere.
The battle to be the leading sports shoe company is every bit as intense as the race on London's streets. According to Sporting Goods Intelligence, the independent research house, the global athletics footwear market was worth $12.3bn in 1993 and $14.3bn in 1995. It could top $16bn in 1997.
Nike remains the global leader bestriding the market with 37 per cent market share, but the likes of Adidas, Reebok and Fila are clamouring to reclaim their part of the pie. But today could mark a crossroads in their struggle.
Five years ago, Nike shoes dominated the London Marathon. Almost half of the runners who finished wore Nike shoes. Since then, however, Asics, a relatively little-known Japanese brand, has been chipping away at Nike's position. Today it is set to take the lead.
Allan Cope, managing director of Asics UK, says: "Hopefully we will beat Nike today but if we do, it has come from focusing on the runner. We talk to them at race events and concentrate on being a technical brand. Asics is not interested in being fashion led. We have strengthened our links with the independent retailers and built brand loyalty."
The numbers echo his thoughts. In 1990 Asics' sales were worth less than £3m in the UK. Asics, market leader in the Land of the Rising Sun, estimates that 1997 sales will hit £15m.
Steve Seaton, marathon runner and editor of Runners World, says: "Asics' success comes from the running public understanding the technical features of the Asics Gel. The public sees Gel as jelly which protects and offers cushioning. Compare that with the inconsistency of Adidas and Reebok's variety of systems."
Reebok launched its latest breakthrough, the DMX Air Float system, at the London Marathon exhibition at Kensington Olympia.
Strolling through the hordes of keen runners yesterday, more than one was overheard to say, "DMX, isn't that a bike?"
However, there are more marathons than London and the battle for trainer supremacy is not localised but a worldwide one. And in the global sporting village Nike remains the baron. In 1990, group sales at Nike were $2.2bn, only a short stride ahead of Reebok's $2.15bn.
But the world of athletics footwear is a marathon made up of sprints. Throughout the 1990s Nike has streaked ahead, leading some analysts to predict its sales will breach the $7bn mark in 1997 - twice as much as second placed Reebok and light years ahead of Asics.
Paul Fox, the footwear buyer for JD Sports which floated last year, says: "Nike's commitment to research and development is far superior to anyone else's. The quality of their technology is helping to drive the footwear market forward and is one of the major reasons why so many people only wear training shoes now."
Brett Barakett, a New York analyst with Salomon Brothers, says: "Nike brings out new products every two weeks. Four years ago it was twice a year. Better products are coming to the market faster, pushing up the demand which shows little sign of exhaustion."
It is no wonder Nike has been the true champion in sport when one begins to break down the costs and profits on each shoe. One leading sports retailer said: "If we pay upwards of £40 to Nike for a shoe, it will probably retail at about £70. It probably cost Nike no more than £18 to design, manufacture and distribute the shoe so it doesn't take a genius to see the benefits."
Nike is the pacesetter and unlike today's frontrunner in the marathon has no intentions of leaving halfway. It is up to the others to take the initiative.
Bill Bettencourt, marketing director for Reebok International, says: "Nike has done a great job and we have been stagnant but that is set to change. We are now about solving tomorrow's problems today and are on the verge of a strong period of growth. Our new 3D-Ultralite will change the way athletics footwear is made by reducing the weight of the shoe."
The jury remains out but it should make for an interesting battle. Whoever is in the ascendancy needs to make vast profits just to cover the monies invested in marketing the brands. Nike spent $495m on pushing its brand in 1995, Reebok trailed with $400m.
Fast forward to today and analysts have estimated that Nike will spend $941m pushing its brand in 1997 compared with $426m from Reebok and $400m from Adidas.
Financial World magazine has estimated that the Nike brand is now worth £7bn.
Simon Bentley, chairman of Black's Leisure, says: "The key point is that if the sports companies produced poor shoes no amount of money and marketing would persuadepeople to wear them. As they make excellent products and then support them with quality marketing it makes our job much easier."
Sports marketing has become an art. Nike's advertisements for tennis involving Andre Agassi and Pete Sampras will probably live in the memory for longer than some of their performances. Likewise Michael Johnson's astonishing golden shoes at the Atlanta Olympics.
The commercial breaks have become an extension of the live action and are often more exciting.
The huge growth in sports coverage is another driver pushing up the demand. Britain has always enjoyed its sporting endeavours but fans are faced with an avalanche of choice. Live football on Sky, extensive athletics on terrestial television, a cascade of new magazines and supplements devoted to sport coupled with rising attendances should not make the huge growth in the sportswear market surprising.
As well as the technical innovations in the products, the vast marketing spends and growth in sports coverage, the boom in healthier lifestyles has also provided a further building block in the success of footwear manufacturers. Half the world may be underfed but the other half who constantly look to lose weight are the ones who can afford £50 plus for a pair of trainers.
Every New Year's resolution to get fit often begins with a walk to the sports shop to buy a new pair of shoes. Dave Whelan, the former Blackburn Rovers player and now chairman of JJB Sports which will announce impressive results on Wednesday, says: "The retail market is good, the sports market is great. More and more people are taking exercise. People appreciate the need to keep fit and we have positioned ourselves as active sports retailers rather than fashion based ones."
Fox at JD Sports echoes these views. He said: "People's lifestyles are changing. People feel much more comfortable wearing sports shoes. I have not worn formal shoes for 15 years. Trainers are so much more comfortable, durable and the brands cross the threshold of fashion and leisure and are often cheaper than the shoes you would find in a British Shoe Corporation store." Every person wearing a pair of trainers is someone else not wearing more formal shoes.
No doubt the growth in the athletics footwear market will be used as one explanation for British Shoe Corporation's poor performance when it announces its results on April 29.
The final driver pushing the growth of the market is its evolution into the fashion world. Reebok Classics are more likely to be found on the catwalk than on the sports field.
Doubting Thomases fearing for the market's future should not forget its inspired brilliance in reinventing itself as fashionwear. Bentley at Blacks Leisure says: "The boundary between fashionwear and sportswear is being stretched all the time. Sports manufacturers now produce classic casual suede shoes alongside the normal performance footwear."
Today's teenagers are not queueing to buy multiple pairs of Asics running shoes but they do buy more than one pair of Reebok Classics in different colours. It has even reached the stage where sports manufacturers such as Fila and Ellesse are more reknowned for their fashion footwear than they ever were for their performance shoes.
This encroachment by sports manufacturers applies to apparel just as much as to footwear and the ambitions of the leading players remain limitless. As one independent sports retailer put it: "In the US many people own two or three pairs of trainers. If Nike and Reebok replicated that in Britain they would still not be satisfied. They want every person in the world to wear their shoes. This game is nowhere near over and shows no sign of flagging."
* Richard Rivlin is running in today's Flora London Marathon.
