Reebok Backs Off In Sports Sponsorship Battle

Paul Fireman, chief executive, said Reebok would back away from costly athletic endorsements to concentrate on developing high-performance sports shoes. Reebok spent $400m on sponsorship and other marketing last year, compared with Nikes $1bn. While Reebok has some impressive sports heroes on its roster of endorsements, they have been overshadowed by Nike stars such as golfer Tiger Woods and basketball player Michael Jordan.

We dont want to compete head-on with Nike any more. Theyll do their thing and well do ours, said Mr Fireman. Getting stars to endorse products has been a priority for the past three years, and it hasnt given us much of a pay-back.

 

It may take some time for Reebok to reduce the number of athletes it pays for endorsements, since most contracts are for a three-year period.

Mr Fireman said Reebok planned to offer customised shoes in 1999. n

Specially designed computer equipment will be used to analyse the foots pressure points and tailor footwear to the requirements of individual customers.

The company will concentrate on older consumers, whom it deems less susceptible to fashion and star endorsements, and will back away from the highly profitable market for basketball and cross-training shoes to focus on its traditional strengths in running and walking.

Reebok has been under pressure to devise a new strategy following the announcement last month that its sales for 1997 would be weaker than expected.

At the time, Mr Fireman blamed overall weakness in the industry. Certainly the sector has become highly competitive, as highlighted by the Chapter 11 bankruptcy filing by LA Gear on Tuesday.

Mr Fireman wants to re-write the rules of the industry to give more power to the manufacturer and less to sports stars and retailers. Reeboks shift in focus is surprising, since many analysts had blamed the groups failure to dominate the sponsorship arena for its loss of market share to Nike.

Victoria Griffith in Boston

The rivalry between Reebok and Nike is legendary. After rising from nowhere to take the lead position in the lucrative sports shoe business in the 1980s, Reebok began to shed market share rapidly in the 1990s.

Today, Nike has 32 per cent of the world market, compared with Reeboks 15 per cent. The high-profile battle created a great deal of bad blood between Phil Knight, Nikes dynamic chief executive, and Mr Fireman, who started Reebok n the 1980s.

Mr Fireman said the groups new strategy would probably not result in higher profits for a few years. Were the tortoise, not the hare, he said.