CHICAGO (AdAge.com) -- Reebok, once a broad force in the U.S. footwear market, is trying to start over by returning to its niche roots.
The brand, which has seen its sales and profile evaporate since being sold to Adidas for $3.8 billion in 2005, is hoping a series of major initiatives in women's fitness -- the category that brought it prominence in the U.S. in the 1980s -- can help it spark a comeback. Those initiatives include a workout regiment co-branded with Cirque du Soleil, dubbed Jukari, which it hopes will catch on with the same fervor as its step-aerobics platform did in 1989. The company also plans significant marketing investments behind two new women's fitness shoe lines.
As he shared quarterly results with Wall Street analysts last week, Adidas CEO Herbert Hainer said the first step on Reebok's road to recovery was to "own women's fitness based on the brand's long-standing credibility with female consumers." The company's other priorities, he said, were to "challenge in men's sport with a particular focus on leveraging the brand's clear understanding of athletes' training needs. And third, to revive classics, exploiting Reebok's iconic sports heritage and energizing this with a modern look and feel."
That may be easier said than done, given the astonishing speed at which Reebok's U.S. business continues to erode.
Bleeding hasn't stopped
How bad is it? When Mr. Hainer struck his $3.8 billion deal for Reebok in 2005, the company sported a nearly 9% share of the U.S. market; it finished 2008 with a 2.5% share, according to SportsOneSource. And the bleeding hasn't stopped: Monthly U.S. sales fell more than 40% in both January and February, and they have fallen at least 30% for 15 consecutive months, according to a recent Citigroup analysis.
Making matters worse, most of those losses appear to have directly benefited Nike, the larger competitor the Adidas-Reebok combination was supposed to outflank. (Today, the two brands' combined share is less even than that of Nike's Jordan Brand imprint.)
Analysts put some of the blame on Reebok's marketing, which hasn't managed to create a clear positioning for the brand, something the company attempted with its 2007 "Run easy" campaign for its running shoes, from agency McGarryBowen, which is also handling the new initiatives. That effort tried to court casual runners by tweaking rival brands, which often portray sports as grueling. "There's no point in doing it if you don't enjoy it" read a typical ad, in an obvious reference to Nike's "Just do it" slogan.
Reebok didn't sell many running shoes -- it saw that category dip 19% last year -- but executives say the campaign created an opportunity to make Reebok a fun brand, as opposed to its more serious and performance-oriented rivals. That strategy is complicated by legacy relationships with hyper-intense athletes such as basketball star Allen Iverson and a high-profile merchandising deal with the deadly serious National Football League.
"There's been a lack of consistency," said Susquehanna International Group analyst Christopher Svezia. "The different pieces have all been going in different directions."
Less media support
Those mixed messages have been receiving less media support, too. Measured spending was $12 million in 2007, vs. $22 million in 2006 and $50 million in 2005, according to TNS Media Intelligence. Those types of cuts are likely costing the brand precious shelf space with retailers. Executives declined to discuss what the spending would be on the new push.
"If you look at Nike, they've spent a lot to maintain the strength of their brands," said Sara Hasan, a footwear analyst at Seattle-based McAdams Wright Ragen. "If you're a worried retailer, that type of investment makes you more willing to take on a product. If it's not there, the risk is greater."
The push behind Jukari -- which will offer high-flying aerobics classes featuring ceiling-mounted, bungeed trapeze swings -- and the new women's fitness shoes may assuage some of those concerns. But analysts wonder whether the brand has simply lost relevance with its core female consumers, who have been courted aggressively by Nike, Under Armour and others.
"They're trying to put a stake back in the ground," Mr. Svezia said. "But they're doing it by tapping into something they had in the 1980s, so ... you have to wonder if that consumer has moved on."