National Basketball Association Most Valuable Player Allen Iverson helped Reebok International Ltd win a customer: 13-year-old Chaz Gass.
"It's the Iversons I'm into," said the Trenton, New Jersey, teenager, who has gotten two pairs of Reebok US$115 Answer IV basketball shoes featuring the player's face on their soles in the past year. Gass' previous five pairs of sneakers were manufactured by Nike Inc.
Reebok is on a drive to raise its cachet among the consumer group most sought after by athletic-shoe manufacturers: teenagers.
After lagging competitors among 13 to 24-year-old buyers, the No. 2 athletic-shoe maker is hoping Iverson will add youthful hipness to its image.
"It's very important we get cool with that consumer," said Bob Munroe, Reebok's senior vice president for North America.
"First and foremost we are doing that with Allen Iverson." The effort has begun to pay off. Basketball sneakers were Reebok's fastest growing product category, rising 20 percent in the first half of the year, led by increased sales of shoes marketed with Iverson's nickname, "The Answer." Reebok won 14 percent of the US$10.5 billion American athletic-shoe market last year, surpassing Germany's Adidas-Salomon AG to take second place behind Nike, according to Wells Fargo Van Kasper analyst John Shanley. Nike has about 40 percent of the market.
Reebok's shares have risen 64 percent in the past year, and they were the best performer in the Standard & Poor's 500 index last year. Second-quarter profit, reported last month, rose 33 percent to US$14.1 million on sales of US$711 million.
Thirty to 44-year-olds have been Reebok's largest consumer group, making up about 36 percent of sales, while 13 to 24-year-olds have generated about 23 percent of revenue, said Munroe. At Nike, teen boys accounted for about 35 percent of sales last fiscal year, Sanford C. Bernstein & Co analyst Faye Landes wrote in a report in May.
Boys aged 13 to 19 spent US$2.25 billion on 40.6 million pairs of athletic shoes last year, according to market research firm NPD Group. Men aged 25 to 34 made up the second-largest purchasing group, shelling out US$1.41 billion for sneakers.
"The teenager is the biggest opportunity," said Matt Powell of Princeton Retail Analysis, a consultant for athletic-shoe retailers. "If you don't have them, you are not going to be a significant player in the athletic-shoe industry." The Canton, Massachusetts-based Reebok is also pursuing younger consumers through an endorsement contract with tennis star Venus Williams and through an advertising campaign entitled "Defy Convention." The 60-second commercial, launched during the first episode of Survivor II: The Australian Outback, included shots of a sumo wrestler doing gymnastics, elephants playing soccer and a man leaping over a car.
Outfitting contracts
In December, Reebok signed a 10-year contract to outfit National Football League teams. Last week, the company signed a deal to supply on-court apparel for 11 NBA teams in the 2001-2002 season and become the exclusive supplier for all 29 teams in the 2004-2005 season. The contract will end Nike's present role of outfitting 10 teams.
"The hot market is the young urban market," Nike spokesman Eric Oberman said. "That seems to be the market that everyone is putting concerted effort in reaching." Oberman said the contract wasn't "mutually beneficial" for Nike and the NBA and that Nike maintains a separate relationship with the league. Seventy percent of NBA players wear the company's shoes either voluntarily or through endorsement contracts with the largest athletic-shoe maker, he said.
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