It's Not You, It's Ree
In 2005, Reebok launched its global “I Am What I Am” marketing campaign on TV screens and billboards around the world. Their mantra targeted consumers in Los Angeles, New York, Chicago, Tokyo, London and Paris, encouraging them to embrace their individuality; music icons, Jay-Z and 50 Cent, were signed on for endorsement deals to further spread their message. In a statement about the campaign, Reebok’s global chief marketing officer Dennis Baldwin described the brand’s goal to “encourage young people to find their own voice by celebrating contemporary icons who have accomplished their dreams by being true to themselves and following their own unique path to greatness.” One year later, German-sportswear company Adidas purchased Reebok for $3.8 billion in an acquisition intended to pave a similar “unique path to greatness” for the second-largest company in the sportswear industry.
After 15 years of ownership, Adidas has confirmed its plans to divest from the struggling Reebok brand. According to Reuters, Reebok is currently worth an estimated $1.2 billion, a value that is threefold lower than the sum Adidas paid for the company in 2006. Prior to the acquisition, Reebok’s performance was stellar; several of their iconic shoe styles were heavily promoted in pop culture and the athletic world, while business remained steady.
Reebok’s success reached its peak when it eclipsed Nike as the leading fitness brand in the late 1980s, a decade ubiquitous with big hair, aerobic exercises and neon workout gear. In recognition of the athletic trends shaping the market, Reebok debuted the first-ever aerobics shoe, their Freestyle, in 1982. The following year, the company’s sales were at $13 million, half of which can be attributed to the Freestyle. With the understanding that aerobics and aerobics programs such as “Sweatin’ to the Oldies” by Richard Simmons were weight-loss fads, Reebok expanded into the apparel and children’s footwear markets. In 1986, the brand started producing fitness attire and accessories, along with a line of children’s athletic shoes, called “Weeboks.” That same year, Reebok implemented strategic product placement as an additional way to bolster sales. In the 1986 film “Aliens,” Sigourney Weaver popularized Reebok’s “Alien Stomper,” a clunky, futuristic high-top sneaker. Two years later, sales were at $1.8 billion, and Reebok dominated the market as the largest athletic brand in the United States with a 26.7% share to Nike’s 23.3%. The brand’s blazing success was rapid but short-lived; with multiple iconic products distorting their identity, it remained unclear as to whether the chameleonic Reebok brand was fitness or fashion. When earnings fell 20% in 1988, American sportswear brand Nike seized the opportunity to become the largest manufacturer in the U.S., claiming one-quarter of the market share by the following year.
Reebok’s signature shoe, the Reebok Pump was released in 1989, and the innovative design made them a “cultural phenomenon.” At the 1991 NBA Dunk Contest, an annual competition in which players showcase their most creative dunks, champion Dee Brown of the Boston Celtics wore his Reebok Pumps on broadcast television during his winning no-look slam dunk. Over the next decade, Reebok became much more relevant in the world of professional sports. In 1992, up-and-coming Los Angeles Lakers player Shaquille O’Neal signed an endorsement deal with Reebok worth $15 million. Four years later, Allen Iverson of the Philadelphia 76ers did the same in a unique deal estimated at $800,000 a year, and an additional $32 million in a trust fund. Reebok relied on endorsement deals to increase its appeal among sports enthusiasts, but this was still not enough to secure a much-needed edge.
In 2000, Reebok signed a ten-year deal with the NFL to manufacture and sell licensed apparel and shoes for all 32 teams. The following year, Reebok negotiated another ten-year contract to become the exclusive outfitter for the NBA teams and the manufacturer of NBA merchandise. This agreement would have been lucrative for Reebok, and analysts predicted it would generate annual sales of $120 million. The question remains, if Reebok secured these coveted partnerships, why did Adidas sell the subsidiary over a decade later?
Following the acquisition, Adidas stated that the two brands would maintain “separate identities, marketing campaigns, distribution and sales forces.” Less than one year later, in an attempt to increase their presence in the U.S., Adidas renegotiated the NBA deal to replace Reebok as the official supplier. The newly brokered arrangement was an eleven-year partnership with increased opportunities for the brand, including exclusive manufacturing for the WNBA, and the right to include the Adidas stripes on warm-ups and practice gear. In their efforts to promote the Adidas brand, the company competed against their own subsidiary, Reebok, while the world’s largest sportswear manufacturer, Nike, thrived.
Where Adidas acquired a brand that was their competition, the synergy of Nike’s diversification strategy led to the purchase of the dress shoe company Cole Haan in 1988. This allowed Nike to enter a new industry without losing its identity as an athletic brand. In 2003, Nike acquired Converse for $315 million. Under Nike’s leadership, the casual sneaker brand went from bankruptcy to nearly $2 billion in sales, which was possible in part by Nike’s recognition that the lifestyle aesthetic and canvas-and-rubber material were Converse’s specialty. Reebok attempted to master both the fashion and performance-driven sides of the shoe market, therefore the brand was ultimately forced to surrender to Adidas’ takeover.
After Reebok’s sacrifice to strengthen the Adidas brand, by transferring their NBA contracts, the once competitive company was no match for Nike. Adidas established popularity for their own brand through celebrity endorsements. In 2014, Pulitzer Prize-winning hip-hop artist Kendrick Lamar signed on as an endorser, and Kanye West was enlisted to design his Yeezy sneakers two years later; the former was recruited to Nike in 2017.
In a half-hearted attempt at nostalgia and with the intent to revive sales, Reebok relaunched a limited version of their famed “Alien Stomper” sneaker in 2016, but the release backfired. Although the 426 (a nod to LV-426, the “Alien” franchise’s planet) available pairs sold out within an hour, the sneaker was only available for purchase in men’s sizing, alienating female consumers who had watched the character of Ellen Ripley wear them in the film. Reebok clarified that the shoe was miscategorized in men’s sizing and actually a unisex style, but the Twitterstorm was unappeased. Recently, Reebok ventured into the hip-hop world by releasing a collection with rapper Cardi B. However, her influence is incomparable to Lebron James of the Lakers, who signed a $1 billion deal with Nike. In June of 2019, NBA hall-of-famer O’Neal, who has an established history with Reebok, expressed his interest in purchasing the company, commenting that Adidas “diluted [the brand] so much to where it’s almost gone.” Not only did Adidas lose $2.6 billion in their failed acquisition of Reebok, but the resulting damage inflicted to both brands propelled Nike to the front of the sneaker war, and Reebok’s potential for comeback remains uncertain.
Photo Credit: Pixabay
Photo Caption: Reebok Shoes