FILA - The Rise and Fall...And Rise Again

I made this video about champion they're a clothing brand that was really big in the 1980s and 1990s became virtually non-existent soon after and then almost decades later somehow made this huge comeback it's an interesting story and there's another one very similar to it with Fela not surprisingly I've seen all these comments saying that I should make a video about them and I'll admit you've got me interested in 1996 Fela was the third largest athletic shoe brand in the world and the second largest in basketball shoe sales behind only Nike I guess I was a little bit too young to experience that at the time but I have trouble even imagining it Fela being one of the top athletic shoe brands it sounds strange I'm guessing it does to many of you too so we have all of these questions like how did they get to that point and what happened to them and how have they been making this comeback seemingly out of nowhere so let's take a look at it I have to start by saying this is a complex company they operate in 70 countries around the world most of which utilize these regional licensing deals meaning how Fela is represented and marketed can vary from country to country the ownership has been changing quite a bit over the years it used to be based in Italy and now it's based in South Korea more importantly their biggest market has been forever changing it has switched from Italy to the United States to other parts of Europe over to South Korea and then recently there's been a big push back to the United States and China it is all over the place which makes it tricky to give information that accurately represents the entirety of the Fila brand I mean the currency conversions alone and then they bought this billion dollar golf company back in 2011 which further complicates things so I'm gonna try to keep it all simple but just keep that in mind here's some basic sales numbers that I think do a good job in representing all of these rises and falls in 1997 they had sales of one point four billion dollars in by 2003 that was down to 792 million which is almost cut in half moving ahead to 2016 it was not much different but then by 2018 they were up to 2.5 1 billion as I said there's a lot of factors surrounding this but it illustrates that the rising period was before 1997 the falling period was between 1997 and 2003 and the comeback started right around 2016 so let's try to provide some meaning behind these numbers Fila actually goes back over a hundred years the company started back in 1911 by the Fila brothers over in Italy but honestly for the first 60 plus years there's really nothing relevant that happened they were comparatively much smaller they made knitwear that you would wear under your clothing it was not meant to be worn on the outside so no one would even see it and when that's the case I'd say the brand is significantly less important 1974 is when things changed they started making athletic clothing and hired this new Managing Director to try to make a name for their brand their vision at the time was to become more of an upper scale sportswear brand they weren't concerned with basketball or football they instead set their focus on these higher-end sports I don't know what you want to call them but skiing tennis golf I guess you could say the more country club type sports the first time they drew real attention was in 1975 when they signed this endorsement deal with Bjorn Borg which is one of the most popular tennis players of all time the deal was big and that it helped them get their foot in the door to the tennis community it was followed by other endorsements and for the next 15 years they were mostly considered a higher-end brand for tennis players to maintain their image Fila refused to sell their brand at lower end retailers it was exclusive to Nordstrom and Macy's and places like that then in 1988 they had some issues with their inventory and it led to a bunch of Fila clothing being sold in the United States at a discount which is not good for a luxury brand it makes people perceive it as cheaper and it makes them less willing to pay that premium for it now I can't confirm there's a direct relation here but I feel there is with the brand losing a little bit of its value it made it more accessible for people with lower incomes maybe in the past someone aspired to buy some Fila clothing and now that it was more accessible they were finally able to I say that's the case because starting at about 1990 the Fela brand started gaining a lot of popularity in the urban community and among casual basketball players again it's a bit of speculation but I think they accidentally started attracting this demographic and once they learned what was happening at they started taking advantage of it that was the start of it and throughout the first half of the 1990s they transformed from an elite european tennis brand to a more accessible american basketball in general sports brand considering how important shoes are in the basketball community they also made a big shift toward the shoe market which was now responsible for over half of their sales overall revenue grew 15 times larger over this time and they were making a profit - I would say Fela was on top of the world in 1994 they took a chance by making a big endorsement deal with a promising young player entering the NBA named Grant Hill in 1995 he won the Rookie of the Year award which helped propel the sales of his felis shoes the next year they introduced the Grant Hill - which was a massive success and a huge contributor to their number two position in the basketball shoe market they even had these plans to continue expanding they're going to reinvest all the income they had just made an ad debt to the millions they had made from their big stock offering they were getting involved with different sports by signing endorsement deals with various volleyball players and soccer players they were expanding geographically that's actually when they made their first huge push in South Korea and made that their second biggest market behind the United States they were getting involved in women's fashion by designing new clothing lines and they actually bought this French company that specialized in that they were finding their way into just about any market you can imagine and then things went bad their 1997 revenue was their highest and it took a big turn from there in 1998 their US sales dropped almost 50 percent and they were now losing money that pattern continued and within a few years they were practically gone within the US market anyway they started closing all of their stores laying off their employees taking it easy with those endorsement contracts they basically it retracted back to where they were in the 1980s they went back to sponsoring tennis players and tournaments they started opening more store in Europe they even raised their prices and went back to those higher end stores so I have a few potential reasons as to why things went bad the biggest one is probably Nike and let me explain that the early 90s was a strange time for these athletic brands see the demand for these products was suddenly way higher than ever before and because of that none of the existing brands were large enough or dominant enough to fill it so there was now an opportunity we see this a lot with technology video games in the 1980s is a good example if you were an athletic brand this was your chance to grow and even if you weren't really an athletic brand like Fela this was your chance to become one the public was still trying to decide which ones were cooler and which ones made the better stuff it was the case of the demand growing faster than the supply but since everyone started flooding into the market eventually the supply caught off which can be bad news for some of the suppliers because in the late 1990s it was sort of becoming a survival of the fittest type situation and Fela didn't race to that occasion and I think we all know Nike was the big one to come out of it my second reason is they were becoming too diversified I talked about how many different markets they were trying to be a part of and maybe they weren't ready for all of it I suspect that if they had invested all of their money and attention into one market like the NBA for example they might have made it there but since they instead chose to put a little bit of money into a bunch of different areas they didn't really win any of them and then for my final reason I'm gonna say that Grant Hill did not help things very much from this point looking at the biggest NBA player endorsements of the 1990s Nike had Michael Jordan which is hard to compete with Reebok had Shaq which is also hard to compete with Fela had Grant Hill which I don't want to say anything bad about Grant Hill I respect him but he is not Michael Jordan or Shaq in fact in 1997 right about the time when things were taking a turn for Fela they made this eighty million dollar extension with Grant Hill to keep him endorsing their products for the next seven years as most NBA fans can tell you three years later he had a bad ankle jury that kept drawing him away from the game for years and most would agree he never truly came back from it so right at a time when Fela was struggling it was not helpful to have their main basketball player sitting on the sidelines again no disrespect to Grant Hill but particularly after the year 2000 he probably was not the best player they could have chosen now as far as the comeback fashion brands are tricky there's typically not one defining thing to point to to explain their popularity but I did put together five potential reasons behind it the biggest reason maybe the simplest it's because they're from the 1990s everything from the 90s is coming back and since the Fela popularity happened to be isolated to the 90s we all associate them with that time period it's like people are looking for an excuse to bring something back from that time and something like this is perfect the second biggest reason I would say is their new leadership it's this man from Korea Jean Yoon he goes by he raised four hundred million dollars to buy the company back in 2007 when they were at a low point and he's been dedicated to bringing them back ever since he's made a bundle doing it - because he currently owns 20% of it he was the one most responsible for making them big in South Korea back in the 1990s when he actually worked for the company and he just seems to have the dedication and desire to push them in the right direction and then for the next reason how about these partnerships rube schinsky all right I'll admit I'm not too trendy when it comes to fashion but I guess he's influential and he was one of the first ones to premiere a partnership with Fela in 2016 along with other brands and designers that are doing similar things it helps push them toward a younger demographic and just overall helps improve the public's perception of them to go along with that last statement we have celebrities that are now wearing Fela products such as kendall Jenner and Rihanna those are influential people that have a following and that's likely to be influenced by their fashion choices and finally I'm bringing him up again Grant Hill honestly I can't imagine this is too significant at this point but I guess it comes full circle because in 2018 he signed a lifetime contract to endorse Fela if anything I would say this further supports the 90s aspect to it because Grant Hill tends to be remembered as a 90s player and anyone who was following back then likely associates him with the brand not to mention the re-release of the popular Grand Hill to let me know in the comments what do you think of my explanations I know I keep saying it but this is a tricky topic so I want to ask in your area in your demographic from your perception how do you explain what's been happening with Fela did I cover it pretty well or are there other factors that need to be considered what's your perception of them does it follow the same pattern of being cool in the 90s and then falling off up until the last few years I'd like to hear what you have to say thank you for watching [Music]

Channel: Company Man

Views: 620,394

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Id: P0E8z7d-qdI

Length: 11min 52sec (712 seconds)

Published: Wed Apr 29 2020