Sport BRANDS
07 / 05 / 20
Adidas has its roots in Germany but we
are a truly global company. Around the world we employ over 59,000 people. Employees from about 100 nations are working at our global HQ in Herzogenaurach, Germany – the ‘World of Sports’. In 2019 we produced over 1.1 billion sports and sports lifestyle products with independent manufacturing partners worldwide and generated sales of € 23.640 billion. These numbers alone can easily suggest that adidas is quite a large and also multifaceted organization. True. But we keep things simple, lean and fast. And we will use this approach now to give an over-
Willi Holdorf was the first German to win Olympic Gold in decathlon (1964). He later joined adidas as a sales rep.
What was the most remarkable characteristic of Adi Dassler from your point of view? I always say he was an athlete himself; he did a bit of everything, tennis, high jump – I only ever saw him when he was doing something. It always fascinated me how he would work on things in such detail and would stick at it, working out some new idea. Sometimes it got on our nerves a bit, it was always the same with him – we would say right, that’s good now, it’s fine, but he would keep at it and we would always end up saying, ok, it’s a good job he tested it as long as he did.
view of what our company is all about.
Willi Holdorf, before you joined adidas, when you were a young athlete – did you wear adidas spikes or did they not yet exist then? I had spikes but they didn’t have a brand name. When I was 19 and ran very fast at an indoor meeting against the European bronze medallist, Peter Radford, a pair of spikes and a tracksuit turned up at my house. And that was my first contact with adidas. It was really something very special at that time for a young athlete to get a gift like that. It boosted your self-confidence. You said, look, somebody’s taken notice of me. I think even for today’s athletes it’s still a big motivation to get a contract with adidas. In those days spikes were spikes, they didn’t vary very much; you wore the same ones for everything, from long jump to 5.000 metres. That was ok by you? It had to be! There wasn’t anything else. Then came high jump spikes with the soles a bit thicker, then I got more and more into the decathlon and I needed spikes for throwing the javelin. But I did all the running events with the same spikes. But then that changed, too. I had big problems in the decathlon 1,500 metres because I always ran on my heels; I wasn’t a good long-distance runner. So, I had a word with Adi Dassler and he made shoes for me with the heels built up a bit so I was always running a bit more on my toes. I think that won me a few seconds, maybe even five. Later he made a shoe from that, called Interval, that sold
To bring his understanding for athletes to perfection, Adi Dassler traveled a lot - to meet athletes in their familiar environment and to gather their feedback. With his passion for sports, he would surely have loved to be a top sportsman himself. Yes, I certainly think so. Somebody as versatile as that, somebody who could do absolutely anything, that was a huge advantage for a sporting goods company – but this versatility didn’t help him to be successful in any one sport, whether it was football or tennis or track and field, whatever. But I think it’s what gave him the drive to be the best, at least in his business. I think if he had been a successful sportsman, he would not have been such a meticulous and hard-working inventor. When running tracks changed from cinder to tartan, the shoes had to change, too. The boss put a lot of energy into it, as he always did. He came up with spikes that didn’t prick up the surface of the tartan track and were not so sharp but just bit into it. It was a little tricky if the track was slippery after it had rained, but the sprinters knew they could run faster with them. He did a fantastic job, but I think it annoyed him that he had to work on it longer than usual. Part of his success was certainly his
You can shop at: https://www.adidas.com/us
What made you think the product was everything? Our success. In the early days, anybody with a glue pot and a pair of scissors could get into the shoe business, so the way to stay ahead was through product innovation. We happened to be great at it. Bill Bowerman, my former track coach at the University of Oregon and cofounder of the company that became Nike, had always customized off-the-shelf shoes for his runners. Over the years, he and some other employees came up with lots of great ideas that we incorporated. One of Bowerman’s more legendary innovations is the Waffle outsole, which he discovered by pouring rubber into a waffle iron. The Waffle Trainer later became the best-selling training shoe in the United States. Didn’t you do any marketing?
How Was Nike Founded?
Nike begins with the story of Blue Ribbon Sports back in 1964. Around that time, Phil Knight had just gone
through University of Oregon followed by a stint at Stanford for his MBA, leaving him with two crucial experiences that set the trajectory of his future. At University of Oregon, he ran for the school’s track and field team, putting him into contact with their coach, Bill Bowerman. Aside from an intensely competitive ethos, Bowerman displayed a fascination with optimizing his runners’ shoes, constantly tinkering with different models after learning from a local cobbler. According to Nike, Knight was the first student to try one of Bowerman’s shoes. Seeing him as a safely-unimportant runner to test his shoes on, Bowerman offered to take one of his shoes and fix them up with his custom design. Knight accepted the offer, and, supposedly, the shoes worked so well that his teammate Otis Davis took them and ended up using them to win gold in the 400-meter dash in the 1960 Olympics. Otis Davis insists to this day that Bowerman made the shoes for him. After the University of Oregon, Knight went through Stanford’s MBA program, during which he wrote a paper theorizing that the production of running shoes should move from its current center in Germany to Japan, where labor was cheaper.
Knight got the chance to put this theory to the test with a trip to Japan shortly after his 1962 graduation. He struck a deal with a group of Japanese businessmen to export the country’s popular Tiger shoes into the U.S. Coach Bowerman, who long believed that German shoes, though the best on the market, weren’t anything too special to be replicated or even improved on, supported Knight’s venture, entering into a 50-50 business deal for ownership of their new company, Blue Ribbon Sports, established in Eugene, Oregon, on Jan. 25, 1964. HBR: Nike transformed the athletic shoe industry with technological innovations, but today many people know the company by its flashy ads and sports celebrities. Is Nike a technology company or a marketing company? Phil Knight: I’d answer that question very differently today than I would have ten years ago. For years, we thought of ourselves as a production-oriented company, meaning we put all our emphasis on designing and manufacturing the product. But now we understand that the most important thing we do is market the product. We’ve come around to saying that Nike is a marketing-oriented company, and the product is our most important marketing tool. What I mean is that marketing knits the whole organization together. The design elements and functional characteristics of the product itself are just part of the overall marketing process.
Not formally. We just tried to get our shoes on the feet of runners. And we were able to get a lot of great ones under contract—people like Steve Prefontaine and Alberto Salazar—because we spent a lot of time at track events and had relationships with the runners, but mostly because we were doing interesting things with our shoes. Naturally, we thought the world stopped and started in the lab and everything revolved around the product. When did your thinking change? When the formulas that got Nike up to $1 billion in sales—being good at innovation and production and being able to sign great athletes—stopped working and we faced a series of problems. For one thing, Reebok came out of nowhere to dominate the aerobics market, which we completely miscalculated. We made an aerobics shoe that was functionally superior to Reebok’s, but we missed the styling. Reebok’s shoe was sleek and attractive, while ours was sturdy and clunky. We also decided against using garment leather, as Reebok had done, because it wasn’t durable. By the time we developed a leather that was both strong and soft, Reebok had established a brand, won a huge chunk of sales, and gained the momentum to go right by us. We were also having management problems at that time because we really hadn’t adjusted to being a big company. And on top of that, we made a disastrous move into casual shoes. What was the problem with casual shoes? Practically the same as what happened in aerobics, and at about the same time. We went into casual shoes in the early 1980s when we saw that the running shoe business, which was about one-third of our revenues at the time, was slowing down. We knew that a lot of people were buying our shoes and wearing them to the grocery store and for walking to and from work. Since we happened to be good at shoes, we thought we could be successful with casual shoes. But we got our brains beat out. We came out with a functional shoe we thought the world needed, but it was funny looking and the How did you know that marketing would solve the problems? We reasoned it out. The problems forced us to take a hard look at what we were doing, what was going wrong, what we were good at, and where we wanted to go. When we did that, we came to see that focusing solely on the product was a great way for a brand to start, but it just wasn’t enough. We had to fill in the blanks. We had to learn to do well all the things involved in getting to the consumer, starting with understanding who the consumer is and what the brand represents.
Can shop at: https://www.nike.com
Reebok International Ltd., headquartered in Canton, MA, USA, is a leading worldwide designer, marketer
and distributor of fitness and lifestyle footwear, apparel and equipment. An American-inspired global brand, Reebok is a pioneer in the sporting goods industry with a rich and storied fitness heritage. Reebok develops products, technologies and programming which enable movement and is committed to accompanying people on their journey to fulfill their potential. Reebok connects with the fitness consumer wherever they are and however they choose to stay fit – whether it’s training, running, walking, dance, yoga or aerobics. Reebok Classics leverages the brand’s fitness heritage and represents the roots of the brand in the sports lifestyle market. A subsidiary of the adidas Group, Reebok operates under the multiple divisions of the Reebok brand, Reebok-CCM Hockey and the Sports Licensed Division. Reebok is the exclusive outfitter of CrossFit and the CrossFit Games, the official title sponsor of the Reebok Spartan Race; the exclusive authentic global outfitter of UFC, and exclusive apparel provider for Les Mills. After discussing everything from Joe’s recent knee operation (which went well), to how the surrounding area has changed over the last 50 years, I hamfistedly steer the conversation onto Reebok... Sam: Alright, I suppose we better talk about Reebok. Joe: What is it you want to know? Sam: Everything really. Joe: That could take forever. It’s taken me 60 years Sam: Well, we’ll try. Your grandfather started an athletic shoe company called J.W. Foster & Sons. How did that come about?
Joe: My grandfather was born in 1881 and died in 1933. I was born on his birthday in 1935, so that’s why I’m also given his name Joe W. Foster. The whole family were J.W. My grandfather was Joseph William, his eldest son was John William, or Billy, and my father was James William. I had an older brother called Jeffrey William and a younger brother called John William. Sam: It all sounds a bit confusing. Julie: It does get very confusing. There’s too many J.W.s. Joe: We always found it difficult. This is my second wife, Julie, and my first wife was Jean. And then my older brother Jeff, also married a Jean. We all lived on the premises where we first started Reebok, and when a letter came we didn’t know whose it was. Anyway, my grandfather was accredited with inventing the spiked running shoe. But most of these things evolve rather than being invented. 1895 is the year my grandfather made his first pair of spikes. This gave him an advantage ‘cos no one else had them, so in order to avoid a thumping from his mates, he had to make them all a pair of shoes as well. Making shoes for his buddies became a business, as he started making shoes for all the local clubs. I’m not saying it’s easy to become an international brand, but Joe’s reputation grew quickly — even back in 1904 there were world records being run in Fosters shoes.
Sam: How was it for him being based up here in Bolton? Was that a disadvantage? Joe: Back then athletics was mainly a gentleman’s sport. You needed money in order to compete. Football was okay, but athletics was a bit snobby and a bit snooty. He was at a disadvantage so he had to advertise — he used to advertise all over the place, in race programmes and newspapers. Some were quite risky adverts, saying things like, “Fosters are the best shoes ever. If you can prove otherwise, we’ll give you £100”. Can you imagine £100 at the turn of the century? That’s like giving someone £10,000 now. That helped Fosters become a name. When my grandfather died, my father and my uncle took on the business. They were both involved in athletics, but by then there were two sides to the business. My father had started to make machine sewn shoes, whereas Bill concentrated on the original handsewn shoes. The business was separating, but what kept them together was Grandma — she was a bit of a firebrand. When the war came there was no demand for running shoes so Fosters turned to repairing army boots. Jeff joined the Fosters business in 1948, but it was 1952 before I went into the business, when I was 17. I was only there for 12 months, before being called to do national service. My brother did his national service in Germany, which is where he saw people like adidas and Puma. When we came back to Fosters, the business was still in the 1930’s — still doing the same thing. And then when Grandma died, my father and uncle just stopped speaking to each other, it was like adidas with Adi and Rudolf Dassler — they were fighting. But instead of one getting out and doing his own thing, we got out instead. It’s one of those things you look back on and think, “My god, how did we do that?” But when you’re young you’re totally indestructible. Sam: What year was this? Joe: This was 1958. I was 23 and Jeff was 25. In late ’58 we set up as Mercury Sports Footwear.
Julie: In Bury. Joe: We started out making cycling shoes, because we didn’t want to compete with Fosters on running shoes. It was a small business but we were doing okay.
Sam: Reebok went from being a small company making cycle shoes in Bury, to one of the biggest sports companies in the world. I suppose this is probably a hard question to answer, but what do you put this down to? Joe: It took 20 years of mixed fortunes and 15 years of travelling to the USA to make the breakthrough and luckily we were there when running took off and also when aerobics arrived. When you go from 3 million to 900 million dollars in four years, you’ve got to talk about luck. The luck was that Nike were taking a dive and there was a manufacturing company in Korea about to have a very bad year. With a lot of companies that make it fast, it’s luck. Luck has to be there, and it was there, and Reebok came through because the product was there.
Can shop at: https://www.reebok.com/us
About Lindsay Vick
FILA is a sportswear manufacturing company founded in Italy by the Fila brothers, originally making clothing for people in the Italian Alps. The company’s primary product was underwear, before moving into sportswear with tennis and endorsements by tennis player Bjorn Bing, which made the brand more popular. The original Italian ownership shop, Holding di Partecipazioni, sold FILA to US-based hedge fund Cerberus Capital Management after the company had over-committed itself to expensive endorsements, at a time when margins were under pressure. Cerberus owned FILA through holding company, Sports Brands International, which owned all the Fila businesses except FILA Korea, which was a separate company operating under the license. Later all the global FILA brands and subsidiaries were acquired by Fila Korea, resulting in the company becoming South Korea’s largest sportswear company. ANTA Sports acquired the rights to use the brand in China, and then in 2011 FILA Korea acquired global golf equipment maker, Acushnet Company and becoming the owner of leading golf brands such as Titleist. With 2018’s hottest shoe and one of fashion’s most-powerful logos, what’s next? On December 4th, to cap off a great year, Fila’s Disruptor 2 sneaker was named the 2018 Shoe of the Year at the Footwear News Achievement Awards. Behind the Disruptor 2’s success was its affordable price point (at $70, you can find the shoe at both high-end department stores like Barneys New York and Urban Outfitters), 90’s look that is currently on-trend, and a series of collaborations on this model. According to FILA North America President John Epstein, the Disruptor 2 is “quintessential Fila.” While the Disruptor 2 sneaker benefitted from being able to carry itself on its own, this was not the only significant piece of news for Fila at the close of 2018. Fila’s logo was named the third-most-powerful in the fashion industry behind streetwear brand Supreme and Champion in a Lyst data report putting it ahead of Prada, Fendi, Gucci, and Louis Vuitton (among others). Fila still employs traditional advertising, including billboards. To what extent does it provide value to your customers, and what new formats that are gaining prominence in retail are you including into your strategies? As a wholesale brand we still employ many industry-facing, B2B media buys to make sure that not only are we top of mind for our direct customers but also buyers at retailers. They are one of our most important audiences to stay relevant with to grow business. In the last couple of years, our out of home strategy has shifted to a more consumer-facing strategy. We nearly always have a very specific, geo-targeted, out of home media buy in all of our 360° campaigns. You see this trend with a lot of direct-to-consumer e-commerce brands branching out into traditional media to balance out their social media ad spend as well. Social media advertising is no longer the wild, wild west regarding being drastically cheaper than other outlets. What other challenges have there been as you’ve been digitizing your brand? The biggest challenge we face is probably our global business model. We’re a licensing brand, which means that each territory is free to create the product and marketing that are relevant in its respective market. That can often create confusion with multiple FILA channels and e-commerce sites.
Lindsay Vick is currently the Director of Marketing for Fila North America. She holds a bachelor’s degree in Political Science from St. Edward’s University in Austin, Texas as well as a master’s degree in International Relations from the Universidad Pablo de Olavide in Sevilla. Vick has had a professional career in Marketing and Communications in both Spain and the United States. Before joining Fila North America in January of 2017, Vick worked at Abengoa first as the Marketing and Communications Manager for the Water Division and then transitioned into the Chief Marketing Officer position in 2014. Other corporations on her resume are Barceló Hotels and Resorts, Skoll Global Threats Fund, and the Leukemia and Lymphoma Society. Here’s what Lindsay had to say about how Fila has gotten there and the brand’s plans to move forward in the ever-dynamic retail and fashion landscape.
How are you tackling the challenge of building a 360° customer experience across e-commerce, social media, and brick-and-mortar retail? As a wholesale brand in North America, we have an even more challenging task to build customer experiences without a dedicated brick-andmortar presence. Over the last couple of years, we’ve started investing in several experiential pop-up moments to create in-real-life experiences for customers that love the brand or are discovering it for the first time. As we invest more and more into paid social media and shift from brand awareness objectives to more sales-driven objectives, we are mindful of making sure we’re constantly aligning the details in our campaigns with what’s on the ground on our e-commerce site. Consumers are so savvy and well-educated now that it’s become a complete no-no to have live ads that feature a product that is out of stock or product that isn’t available on your e-commerce site. Details like that will deter customers from returning to your e-commerce site. A recent article in The New Yorker highlighted how Fila’s experiencing a renaissance as a brand. How are the recent collaborations with top brands, including SoulCycle and Fendi, playing a role in boosting brand equity? Our collaboration strategy has been key to rebuilding a brand with a 100+-yearold heritage, but that means very different things to different audiences. To create a sense of discovery for new audiences and new generations, we’ve partnered with a wide range of collaborators to tell (or re-tell) those brand stories.
Can shop at: https://www.fila.com/
That was a real coup for their shoe business, but it must have been a controversial decision at the time to pursue an African-American who was competing against the Germans for the gold. Adi just had this obsession with sports at the complete exclusion of anything else. He just picked Jesse Owens out because he was a fabulous athlete. But in the end the entire environment of the war and politics really tore the brothers apart, and the involvement of their wives [who did not get along] brought it to a boiling point. When each decided to form his own company, the original names were created by using the first two letters of the first names: Adidas and Ruda. How did they become Adidas and Puma? Adidas and Puma may be among the most recognized brands in the world, but neither might exist if not for a bitter rivalry between two brothers from a little-known village in Germany. In the 1920s, Adolf (Adi) Dassler, a soft-spoken sports fanatic who spent hours working on shoe designs in his workshop, and Rudolf Dassler, a gregarious salesman, started a small shoemaking business in the Bavarian enclave of Herzogenaurach, focusing primarily on hand-sewn athletic footwear. But as their business took off, the two brothers grew increasingly frustrated with each other. They disagreed on everything from politics, the future of the company and one another’s choice in wives. Finally, in the mid-1940s Rudolf left in a huff and set up a rival shop across the river, while Adi remained in the initial plant. His company was renamed Adidas, and in 1948 Rudolf registered his new company, Puma. NEWSWEEK’s Jennifer Barrett spoke with Barbara Smit, author of the new book “Sneaker Wars” (Ecco; $26.95), about how a family feud spawned two of the biggest brands in global sports. Most people wearing Pumas or Adidas today likely have no idea that two estranged German brothers founded the companies. How did you become interested in their story?
There was actually a children’s shoe brand with the name Addas, so Adi added an i. In Rudolf’s case, his marketing flair and his assistants probably told him that Ruda wasn’t very inspiring. So he changed it. Adidas quickly became a much larger company than its rival. Where did Puma go wrong? One of the critical failures for Puma was that Rudolf had an argument with the coach of the German soccer team, and that allowed Adidas an opening before the 1954 World Cup, where, completely against all odds, West Germany won against Hungary … Adi Dassler was in all the [newspaper] pictures; he was everywhere. And the Adidas black boots with the stripes were on all the players. From that moment on they received letters from around the world from people wanting to sell Adidas in other countries. As good as the Puma boots were, it would take many years to build up its international business. How are Puma’s prospects now? The French conglomerate PPR, which owns Gucci, has now acquired it. A few years ago it was being sold in bazaars and people had declared it dead, and it is now being named in the same breath as Gucci … That repositioning will probably be taught to MBA students for several years.
I didn’t know it either, actually. I’d been wearing Adidas all my life and had no idea. But I was sent to Herzogenaurach, Germany [where both companies are based] by a French magazine to write a feature ahead of the 2000 Olympics in Sydney. I began to find out more about this story of the two brothers, [and it had] all the elements of what makes a good story: family drama, the intimate rivalry between the two brothers in a very closed setting, two international brands, and all of it set in the world of sports.
As a business case, what are the most important lessons we can draw from the history of Puma and Adidas? What has made them such enduring brands?
What was the extent of the brothers’ involvement in the Nazi Party, and how much of a role do you think that had to do with their split?
At the beginning of the story, there’s always a great product. Puma has survived its worst years because it had a great soccer boot. It’s the same story for Adidas; it just makes great products. Another interesting lesson is that you need great enemies. I don’t think either company would be where it is today if it hadn’t been stimulated by the rivalry with the other.
It was very difficult for any German company during those times to continue to operate without having some kind of links with the party, especially if it involved sports, which was very much at the heart of the Nazi propaganda machine. The Dasslers had ties with the sports hierarchy … It certainly helped in gaining access to the Olympic grounds in 1936 when they had this superb linkup with Jesse Owens.
Can shop at: https://us.puma.com
In February you acquired RunKeeper, do you have further plans to move into the fitness tracking space?
Yoshimori Fukui, a curator of the shoe archives at Asics corporate headquarters in Kobe, Japan, goes about his work with a combined air of efficiency and reverence, at times seeming like a highly competent, multitasking reference librarian, and at others like the keeper of a sacred shrine. “Every shoe in our collection, in a way great or small, reflects the spirit of Mr. Onitsuka,” Fukui says, referring to the late Kihachiro Onitsuka, the company founder and a father of the modern global running movement. “I feel honored by this job.” A stocky, stolid, 30- plus-year-veteran of the company, Fukui, through a translator, listens carefully to my request. The archives are normally visited by tours of recently hired Asics employees or designers researching for a new shoe. This interest from any Western media—the world beyond Japan discovering Mr. Onitsuka’s story—forms new territory.
We recently announced that the whole digital world will come out of Boston, so Jason Jacobs, who was the founder of RunKeeper, has been tasked with leading that. Our whole digital footprint will come from there.
What’s the biggest challenge of working in the competitive fitness market? Is it about finding your niche, such as people who ‘want it more’, as this year’s campaign suggests? What competition does, is keep you on your toes and we’ve launched a lot of new innovations. We launched the MetaRun, which is the most highly technical shoe in the industry and has nine new patents and a revolutionary new cushion system. That system is now in What’s in store for ASICS over the coming new products and it’s 50% lighter than anyone else’s months? and that’s increased sales.
Tell us about your latest partnership with The Why The Running Charity over other organisaRunning Charity. What do you think both sides tions? can gain from the new deal? A group of our managers were doing team building and The Running Charity is a relatively young charity involved some people from the charity so it was a maso our partnership will help to raise its profile and tter of the right time and right place. They also fit very enable them to get further sponsors and recruit more well for us as a brand and we fully endorse the philoemployees, meaning they can help more people. The- sophy that sport can have a positive impact on the lives re’s also a tangible benefit in that we’re employing of many. the workers in terms of fundraising and managing the young people allowing 100% of runner dona- How important is a CSR programme to big organitions to go to frontline work.– so that’s a real posi- sations? tive. For ASICS, it just fits our ethos, ‘sound mind, sound body’ and it goes back to our roots so there’s It’s extremely important and we’ve all got a responsia vehicle for us as we grow to link them in with our bility. We were in the Netherlands last week and took retail stores, our training programmes, our running 1,200 disadvantaged children, who had not been expoprogrammes and who knows where we can take it sed to sport, to the Olympic Stadium. It was a really and I believe we can take it a long way. good experience for our office staff who volunteered and most importantly for the children. We also do a lot with tag rugby and in the townships in South Africa to make the Springboks relevant in the emerging communities and that’s good for our business. We’ve got to a responsibility to do that.
We went into tennis with Speed Tennis and doubled the tennis market and became the number one tennis footwear in brand in Europe. You wouldn’t expect that because we don’t sponsor the big tennis icons; we’ve got Johanna Konta and Gael Monfils which is great, but we are the number one tennis shoe because innovation in footwear and clothing has made us number one. Product is still king in our world and that’s what people respect us for with over 100 scientists in Kobe, Japan persisting away at technologies and compounds in white coats.
We’ve got lots of new product launches coming up, so we hope to reach even more runners on that front. We are also really targeting what we call the ‘fitness explorer’, which is more the urban runner, maybe 5k to 10k and we need to grow in that market. So all our marketing will be focused more in social communities and digital to connect with cities where running clubs and urban running are becoming increasingly popular.
Do you ever compare your progress to others in the market? What you have to be aware of is what’s going on, so you’re always aware of who’s up, who’s down, who’s in and who’s out, and what part we’ve got to play in that. It’s very much about elevating our brand presentation at retail and in a sense that’s what the flagship store in Oxford Street is about. It’s about the technology, the lab, the science and expertise behind it. That’s
what we have in comparison to low-tech brands that are involved in the market. Can shop at: https://www.asics.com
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