While members of this industry sell mostly athletic footwear, many in the industry have recently entered the sports apparel and accessories industries as well. NIKE, Reebok, Converse and Adidas can be seen splashed all across the front of athletic clothing. This represents a double benefit for the industry because people pay to be seen in the company’s apparel, and the industry gains free advertising. Historically, consumers have purchased their footwear at specialty and department stores. Most of these purchases were of the higher-priced designer brands. During the 1980 s, consumers doubled their purchases of athletic footwear with an average annual growth rate of 7.
3 percent. As the 1990 s opened, a recession caused many consumers to be more value conscious and sales of athletic footwear stalled. This also caused several consolidations and mergers in the industry. The mass merchandisers also contributed to the consolidations in the industry. Mass retailers such as Sears, K-Mart, and Wal-Mart began to offer the name brand shoes.
The companies then had to reduce the price of many models and had to create a two-tiered market, with cheaper models sold at the mass retailers and the higher-priced models sold at specialty and department stores. The latest industry statistics show total sales increased by 7 percent on a 6 percent unit sales figure from 1994 to 1995. (web) Domestic consumers bought 344 million pairs, while spending $13. 3 billion in 1995. For four straight years, the 12 and under female category has shown great increases. Also, in 1995, adult women accounted for 45 percent of total dollars, while adult men contributed 42 percent of total sales.
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This men’s figure was up 5 percent over 1994, another high growth area. The industry as a whole concentrates heavily on advertising. Some well-known sports figures endorsing NIKE include Michael Jordan, Bo Jackson, Deion Sanders, and most recently, golf phenom Tiger Woods. Reebok spokespeople include Shaquille O’Neal and Emmitt Smith.
The future of the Athletic Footwear industry looks bright. Out of 966 million pairs sold, athletic shoes account for 39 percent of total pairs of footwear in 1994 [See Appendix B], and $8. 05 billion in wholesale revenue. This indicates the demand for athletic shoes should remain high for years to come with plenty of room to grow.
Internationally, the industry has great potential. Only NIKE has been successful at penetrating the Asian market. In 1993, Asian sales represented $500 million of NIKE’s total of $4 billion. The words “NIKE” and sport shoes are almost synonymous in today’s society. However, this was not the case thirty-five years ago.
In fact, it took some time, but NIKE, Inc. is now the #1 athletic shoe seller in the United States and the world (Hoover’s 2).
The current CEO and Chairman of the Board for NIKE, Inc. , Phil Knight, and the current Senior Vice President, Bill Bowerman, formed their own athletic shoe company in 1964 in Eugene, Oregon. At the time of their first meeting, Knight was an undergraduate business student and Bowerman was Knight’s track coach. By 1971, their newly formed athletic shoe company was growing and the brand name was chosen to be NIKE, the Greek goddess of victory.
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At the same time, the famous NIKE “swoosh” design was created by a graduate student for the price of $35. 00. This logo represents the wing of the Greek goddess, NIKE (NIKE timeline).
In 1972, with some persuasion by Knight and Bowerman, NIKE shoes were worn by some of the runners at the Olympic Trials.
Following that, several major athletes began wearing NIKE shoes. As a result of this, an abundance of young runners wore NIKE shoes at the 1976 Olympic Trials (NIKE timeline).
This was the beginning of the NIKE legend. The good news for NIKE came in the 1970’s when jogging became a national craze. Everyone began wearing sneakers (even if they did not jog or run).
Eventually, the jogging habits of Americans slowed down, but athletic shoes would never again be thought of in the same way.
The bad news came when NIKE and the mostly male officers (former male athletes) missed the big opportunity in the women’s athletic shoe market. Business did pick up eventually in this market, but Reebok, NIKE’s challenger, took the immediate lead in women’s fitness (Lab ich 95).