Adidas Accepts Reebok To Compete With Nike

The United States can be said to be the vane of the world's sports shoes market, and it is leading the world trend.

From the mid 80s of last century, three sports shoes companies of Adidas, Nike and Reebok formed a "three feet stand" trend in the world sports shoes market. By 2005, Adidas announced the merger and acquisition of Reebok, and the world sports shoes market began to enter the stage of "competition between Chu Han".

In 2005, the global brand sports shoes market reached 24 billion 200 million dollars, Nike accounted for 36.6%, Adidas accounted for 22.2%, while other manufacturers did not exceed 5%.

Adidas has no longer seen Nike and Reebok as rising stars. It has been reported that Adidas had dominated the world's sports shoes market before and after the appearance of Nike in the 70s of last century, and it occupied 70% of the market in the United States, but by 1990, it had slipped to 2%.

Nike and Reebok became a rising star in 70s and 80s.

1979 is the golden age of Nike.

According to the company's information, Nike launched its first pair of air cushion sneakers "Tailwind" and began to manufacture and sell sportswear that year, so that its annual sales revenue reached nearly half of the sporting goods market in the United States, and it is far ahead in the sports shoes market.

In 1980, Nike issued 2 million shares and was publicly listed on the New York stock exchange, with sales revenue of US $269 million.

But Nike sports shoes emphasize functionality, and the main customers are men.

In 1984, the United States "jogging hot" ebb, the rise of women's aerobic exercise, Reebok founder and CEO Paul Felman lived in this opportunity, so that Reebok realized sales revenue of more than 300 million US dollars in 1985, of which 60% comes from aerobic sports shoes and fitness shoes.

Reebok became the representative of fitness and fashion sports brand and completed the listing in that year.

In 1986, Reebok sold more than Nike in the US.

Nike announced 10% layoffs in December 1986, fired about five hundred employees, and David Chang, Bob Woodell, Rob Strasser and other entrepreneurial team members resigned at this time.

Although Nike's gross profit margin remained at around 38%, its net interest rate was only 5%.

In 1987, Nike's sales revenue decreased from $1 billion 70 million to $877 million, down 21% from the same period last year, and net profit also decreased by 38.98%. Reebok's sales revenue increased by 23% over the same period last year, accounting for two times the share of the US sports shoes market.

Nike made a series of adjustments from 1987 to 1988: the establishment of a matrix organizational structure; the appointment of a new management; the focus of product design shifted from "what is the most advanced sneaker technology" to "how to design shoes that can attract customers to buy".

It is worth noting that in order to expand the sales market and product range, Nike acquired high-end fashion shoe company ColeHaan in 1988 and entered the field of casual shoes.

Since the beginning of 1988, the market of aerobic sports shoes in the United States has been saturated, and the growth of Reebok's superior products is weak.

Nike replicated Reebok's practice in 1990. Nike's sales revenue was equal to that of Reebok, and its net profit had already exceeded that of Reebok.

In the 1990 annual report, Nike's goal is to become the largest and most profitable company in the market, trying to continue to compete for the market from its competitors.

While Reebok is more concerned about brand building, the goal is to become the world's first brand of sports and fitness.

From 1992 to 1994, the market for sports shoes and sportswear in the United States was on the decline. According to the sports commodities Association of America, the growth rate of total market sales was -0.46%, -5.53% and 0.32% respectively.

As Nike and Reebok grew stagnant, both sides began to attack each other's territory.

In 1992, Nike launched aerobic fitness shoes against Reebok's advantages in the fitness market. However, due to the sluggish market, it did not achieve the intended growth target.

In 1994, the sales volume and the average selling price of Nike sports shoes both dropped by 2%, and net profit dropped again.

From the perspective of geographical composition, Nike not only lost 5% of its sales revenue in the US market, but also dropped 3.2% of its sales in the international market.

However, Nike remained committed to the international market. Sales and administrative expenses increased by 5.6% over the same period last year, and the share of sales revenue increased from 23.5% to 25.7%.

In order to open the male market and focus on basketball shoes, Reebok constantly introduced new technologies to enhance the functional characteristics of Reebok basketball shoes.

In 1991, after launching Pump technology, Reebok launched the Blacktop series basketball shoes products. In 1992, when it launched Instapump and Graph Lite technology, it also launched The Above The Rim basketball shoes series.

Reebok also copied the way Nike created Jordan, the product spokesperson, who did the "hero worship" style advertising, pushed NBA star O'neal, copied Nike's naming of new sneakers with Jordan and other signboard players, and launched a sports shoes called "Shaq Attack".

However, Reebok's marketing strategy did not work, and its market share dropped to about 20% from 23% in 1989-1992 years.

At the same time, sales and administrative expenses continued to rise, the proportion of sales revenue rose from 24.4% in 1991 to 28.7% in 1995.

In 1993, the French Louis Dreyfuss became Adidas CEO. He reappointed the management, hired a number of Nike executives to carry out marketing, changed the position of Adidas products from functional to fashion oriented, and emulated the strategy of "light asset operation", which increased the sales and administrative expenses from 6% to 12.5% in.

Dreyfuss once said, "what I have done is learned from Nike and Reebok."

In 1993, after substantially reducing its losses, Adidas's sales revenue increased by 25.6% in 1994, while sales in the United States increased by 56.7%, and realized profits.

Many industry analysts believe that this is mainly due to the emergence of a "retro" trend in the United States around 1994. The old sports products such as Adidas and Puma (Puma) have benefited greatly.

In 1996, Adidas's sales revenue reached $3 billion 130 million, very close to Reebok, and its net profit exceeded Reebok's $202 million.

However, the top ten retailers account for 40% of Adidas's sales in the US, indicating that the main way to occupy the US market is relying on large independent retailers such as fuller and other customers. Although occupying the market is fast, the risk of customer churn is also greater.

Adidas has a lot in common with Nike and Reebok.

They all start with sports shoes and build strong brands in the sports shoes market before they extend to clothing, equipment and other fields. They all have almost all kinds of sports shoes, and the products are relatively balanced.

Adidas's sports shoes cover more than 30 sports, basketball shoes, running shoes, soccer, tennis and training shoes have an important share.

Facts show that companies that succeed only in a certain market tend to lose market share or be merged.

On the other hand, Adidas has a great difference in product mix with Nike and Reebok. Clothing has always accounted for a large proportion of its revenue. In 1992, its sportswear accounted for 39.3% of the total revenue. During the period from 1993 to 1996, clothing grew faster than sports shoes. In 1996, it accounted for 55.5% of total revenue. It played an important role in promoting the revival of Adidas, which showed the characteristics of differential competition.

However, the gross profit margin of clothing is lower than that of sports shoes, which is one of the reasons why Adidas's gross margin level is lower than Nike and Reebok.

In addition, Adidas and Nike's marketing methods are very different. Adidas has always attached more importance to the Olympic Games and the world cup sponsorship than Nike, and Nike often adopts ambush marketing in these competitions.

This may be related to the products of both sides: the traditional strength of Adidas is soccer shoes, which can not be popularized as casual shoes or fashionable shoes like basketball shoes. Moreover, sportswear accounts for a significant proportion of Adidas's income, of which 60% is a training suit suitable for a wide range of sports events.

Reebok was bought by Adidas and ended with Nike competition. In the middle of 1995, Nike set forth a new strategic goal in the report: becoming a global company, not an American company doing international business.

And formulated a series of specific measures to expand sales revenue: expand the European team; deeply participate in the football game; become a real clothing company, develop the fastest growing ice hockey market in North America; expand the positioning of products to women's sports and fitness fields.

In 1995 and 1996, Nike's international market revenue increased by 26.52% and 13.58% compared to the same period last year. In 1996, it accounted for 32.1% of the global sports shoes market, while Reebok dropped from 20% in 1992 to 14.7% in 1996.

By 1997, Nike's sales of sports shoes in the international market increased by 42%, while sportswear sales increased by 67%. The international market revenue reached 3 billion 480 million dollars, accounting for 38% of Nike's total revenue.

Nike also made a major breakthrough in the field of clothing. In 1996, clothing sales in the United States increased by 98.75% over the same period last year.

Nike said in Nike's annual report that Nike's clothing and shoes are not a simple combination, they are designed together and put into the market to form a complete brand, "this is the key to Nike's difference from other companies".

Nike has also begun to use licensed manufacturing methods to mark its sales on watches, glasses and other accessories, which will help increase sales.

In addition, Nike acquired Bauer, the industry's leading Canadian ice hockey equipment maker in 1996, and formally entered the sports equipment market.

The sports equipment market is relatively large, the US market in 1996 was about 37 billion dollars, while the sports shoes and sportswear market was only about 12 billion 800 million and 11 billion 100 million US dollars. Nike obviously wanted to turn the market into "third engines".

However, in the early days of the acquisition, although Bauer increased Nike's sales revenue, it had little effect on improving profits.

Through the extension of the market and the extension of products, Nike's sales revenue has increased rapidly, which provides a larger space for sales and management expenses.

According to the earnings report, Nike has always maintained about 10% of its revenue for advertising and promotion, although Reebok has a higher proportion of 11.5%, but after 1995, it was unable to compete with Nike because of the difference between the base of revenue and Nike.

In addition, Nike allocated $50 million a year for research and development expenses, and insisted on launching new products 4 times a year.

Although this increased Nike's own cost and inventory pressure, it had a greater impact on Reebok, such as Reebok launched its ultra light sneakers using DMX technology in 1997, but because of the new products launched by Nike, the sneakers were soon drowned.

Since 1995, Reebok has announced that its product positioning is movement and performance, no longer fashion and fitness. This discontinuous advertising and brand image has been widely criticized by the market.

Reebok's advertising words are also changing. Compared with Nike's long-standing "Just Do it", brand positioning is very vague, for example, 1988 is "Reeboks Let U.B.U.", 1989 is "Physics Behind the Psychique", 1992 is "I Believe"; 1996, Reebok also launched a new advertising word, "the" 11 "to 17 years old core customer base, located in 18 to 30 years old urban youth.

Reebok often changes its management and organizational structure, which also makes retailers lose confidence, such as Reebok's sales to fuller, the largest footwear retailer in the United States, dropped from more than 300 million US dollars in 1991 to about 175 million US dollars in 1995.

In addition, compared with the slower integration speed after Nike's acquisition, Reebok's acquisition was even more unsuccessful.

In addition to Rock and Potter, which was bought in 1986, other acquisitions such as the 1987 Boston, the 1988 acquisition of Alice, and the acquisition of the Boston Whaler in 1989 did not bring any profits and value to Reebok, which was eventually sold at a discount.

By 1997, the competition between Nike and Reebok was basically over. Reebok kept about $3 billion for six consecutive years, while Nike's sales revenue had exceeded 9 billion dollars.

Since then, Reebok was bought by Adidas in August 2005 for 3 billion 100 million euros.

The sports shoes market will enter the "Chu Han hegemony". Adidas's acquisition of Reebok will expand its share in the casual shoes or fashion shoes market, making it more powerful to compete with Nike.

However, as early as 1998, Adidas started a real turn to compete with Nike. Nike sales revenue increased this year.