The Decline of Reebok...What Happened?

I think that we need a refresher on Reebok because I'd say that they've fallen on some tough times I haven't been relevant for 10-15 years most would argue that their peak was 20-30 years ago they're just not cool today and not like they used to be very few people are bragging about buying their new pair of Reeboks in fact a good portion of their sales now comes from their line of classic shoes which I'm sure they'd spin it in a different way but it's really just a way of capitalizing on their former popularity they were so big and so awesome before that the best way they can sell shoes today is to remind everyone of those good times let me highlight some of those good times in 1988 Reebok was said to be the number one athletic brand in the United States and number two throughout the world behind only adidas in the world of basketball at times arguably it was the biggest brand out there in 1992 they signed a young up-and-coming NBA player named Shaquille O'Neal to an endorsement contract meaning that one of the greatest basketball players ever to play the game spent a good portion of his career backing Reebok 1996 they did the same thing with a young player named Allen Iverson then in 2001 they signed a deal with the NBA making them the exclusive supplier of the uniforms for most of the teams and a couple years later it was extended to every team so if you watch any NBA game from Satan 2003 all the uniforms were made by Reebok looking at the world of football it's the same thing numerous endorsements around that time and again if they were the exclusive supplier of their uniforms that deal included all of the replica jerseys and a lot of the other NFL clothing so for years Reebok supplied all the uniforms to two of the largest sports leagues in the United States it wasn't contained to that either they had major involvement and basically any sport for the Olympics in 1996 held in Atlanta Reebok claims that one-third of all the athletes were wearing their stuff it was even outside of sports a survivor at the head show was insanely popular when it debuted and Reebok was a sponsor that provided all their clothes and shoes for the cast and crew I think I've proven my point from the late 80s to the early 2000s was everywhere yeah today they're practically non-existent in any major sports league or anywhere really so let's look closer into this brand and try to figure out what happened Reebok goes way back and has a few different beginnings it actually has roots going back to 1890s England it was started by this guy named JW Foster who named the company after himself then in the 1950s two of his grandsons started their own shoe company that specialized in running shoes that was called Reebok and eventually took over the company that their grandfather had started but comparatively all of that is small stuff in 1979 is when big things started to happen that's when Reebok took some of their running shoes and showed them off in a sporting goods show in Chicago attending this show was a man involved in the business of camping supplies named Paul fireman he was impressed by the shoes Reebok was offering stayed in touch and within a few months acquired the rights to sell their shoes in the United States things weren't very fast at first as should be expected to raise money he even ended up selling over half of his company to a separate British shoe maker with the condition that he would remain in charge 1982 everything changed when they found their market seat in that year aerobics was becoming a huge fad and Reebok saw an opportunity and if you don't know aerobics is all this stuff Jane Fonda was known for popularizing it and eventually everyone was putting out their own tapes Reeboks idea was if you want to sell running shoes there's a lot of competition but if you want to sell aerobic shoes you'd be just about the only one so they released the first ever shoe where the design the materials the fit the appearance were all specifically made for aerobics the shoe was called freestyle initially they paired it with a promotion offering free classes with Richard Simmons and it just put them on the map over the next few years they had millions in sales primarily due to these shoes and remember to this point Reebok is still a small shoe company in England all of this success was happening in the United States where Paul fireman had the rights to sell their shoes so in 1984 the US company bought the initial Reebok company for $700,000 then famously in 1985 civil show a big celebrity at the time wore them to the Emmys apparently indicating that they had made their way into women's fashion in the next year in 1986 here's what I suspect happened they looked at their sales mix and saw that they were doing really well when it came to women's aerobic shoes but not really anything else those shoes made up almost half their sales the year before and they were nervous about being so reliant on one particular market especially when they suspected that the whole aerobics thing it may have been a bit of a fad which we now know it basically was and that meant that at any moment their sales could have a significant drop and they'd be mostly unable to control it with all of these concerns they felt pressure to utilize their name recognition and other resources to diversify they expanded into just about every other market that made sense all in 1986 they started making sports clothing you know not just shoes but actual clothing sports accessories a line of children's shoes with the name that I can't say without laughing here it goes we box and we can't forget the basketball shoes also in 1986 the logo changed it used to be I guess just the Union Jack the British flag but they felt that this one was more active and better reflected the athletic image that they were trying to promote the following year they introduced walking shoes tennis shoes golf shoes becoming really popular in all of it meaning that they were now selling to men women children a variety of products for a variety of activities I would call that diversified they also started acquiring other companies in 1987 alone they bought for other large shoe makers and like I said one year later in 1988 all of these efforts made them the number one athletic brand in the country with 1.79 billion in sales where would I be if I didn't mention this in 1989 they introduced the Reebok Pump you actually pump up the shoe and the padding inflates theoretically making it more comfortable and form-fitting it's a little before my time but I've always seen it as more of a gimmick than anything else let me know if you think otherwise but by the way here's a clip from the 1991 NBA slam dunk contest so he's got the favorite right there he's hooking up the two they were promoted by Dominique Wilkins and Shaq and I guess just pop culture in general then I guess I've already talked about where they went from here endorsements Olympics in 97 they had the DMX series league contracts Survivor I'm not going to say it was all perfect they've always had identity issues concerning whether their sports brands strictly a fitness brand a fashion brand all of those companies that they acquired had different images in 1992 they introduced a casual line called box but then in 1994 they announced they were transitioning strictly into a sports brand maybe it's because they became so successful so fast from so many different customers that they never had the chance to find their identity so that may have held them back but obviously not too much then we can't ignore Nike back in 1988 when Reebok was number one and Nike wasn't as much of a concern but then they became huge and that's bad for Reebok but you have to consider that Nike was already huge in 2001 when Reebok was landing all of these league contracts the NBA and the NFL went with Reebok instead so the emergence of Nike may have pushed them from number one but it didn't take them off the list here's Reeboks revenue ranging from their number one spot in 1988 all the way to 2004 now the entire market grew and if you were to collect data concerning market share it would probably reflect something different though their core market was always changing and questionable at times but this is useful obviously a big drop there may be caused by some of the factors I mentioned but the fact is 2004 was their best selling year the data stops there because in 2005 all of Reebok was bought by Adidas it cost them 3.8 billion dollars which was a 34% premium based on their stock price the whole idea behind this acquisition was that Nike was just so far ahead maybe combining these two will just help them catch up so much for that plan because starting about right here Reebok sales have really gone down it's been the perception of many people including myself that adidas has been promoting their own brand and just allowing Reebok to fail it's hard to do comparisons of before and after the acquisition because everything's mixed together now reported in euros since adidas is from Germany but here's my attempt using an approximate exchange rate from 2004 the Reebok sales from their last independent year equate to about 2.9 billion euros in their first full year with adidas in 2006 Reebok sales were reportedly just under 2.5 billion euros that's a pretty significant decrease and consider it was coming off of a growth period in 2018 that number was well below 1.7 billion but sales from adidas branded products have tripled over that span in 2006 27% of their total revenue was from Reebok and in 2018 that was down to 8% there's so many variables that contribute to that but maybe it could mean that the company has been focused on Adidas and willing to sacrifice Reebok more potential evidence is that NBA contract Reebok made a 10-year deal with the NBA in 2001 meaning it was meant to extend through 2011 well I don't know the exact legality of it but when Reebok was bought by adidas it somehow allowed for changes in that contract the end result was in 2006 not even a year after the acquisition adidas signed an 11 year contract with the NBA to sponsor them and supply their uniforms so effectively everything shifted from Reebok to adidas it makes me think that adidas was more interested in promoting their own brand rather than Reebok they effectively took away 5 years of NBA promotion which for a brand like this is significant in 2014 the Reebok logo changed for a second time it's now this Delta symbol meant to represent change it's reflecting how they want to be seen as more of a fitness brand as opposed to a fashion or sports brand change like getting into shape I suppose the way I see this is they're backing up Cross Fit has been the new emphasis along with yoga and still aerobics remember in the 80s they exploded because they were able to transition from a very specific fitness market into a much more general market of sports well this is the exact opposite from sports back to Fitness it just seems that whenever there's an opportunity in sports adidas would prefer if adidas had it so they've pushed Reebok back into their corner where there's less confliction for years there's been these rumors in conversation about adidas potentially selling Reebok I'm not alone in my theory and many people think that Reeboks best chance in succeeding is pulling away from adidas in June of 2019 Shaquille O'Neal the diesel himself who has a long history with Reebok expressed interest in buying the brand O'Neal said he wants to buy the athletic giant because he dislikes how its current owner adidas has diluted the brand so much to where it's almost gone I don't know if he can afford it nor do I really see this happening anyway but it shows his thoughts on the state of the brand let me know in the comments is there any hope for Reebok are they going to come back in a big way are they going to go away completely or will they continue the strange path of classics and CrossFit nothing against CrossFit but it'd be cool to see them doing more also how is your perception of Reebok changed over time did you see them different in the 90s than you did the 80s and is your perception of them today different than either of those personally I used to think they were cool but I just don't think of them anymore they're so far off my radar that I didn't even realize that that logo changed in 2014 until just now let me know if that's the case for you - along with any other thoughts you have about Reebok I'd like to hear what you have to say thank you for watching [Music]

Channel: Company Man

Views: 1,093,273

Rating: 4.8820119 out of 5

Keywords: Reebok, Sports, Basketball, Sneakers, Shoes, Basketball Shoes, Business, Reebok Pumps

Id: RAM8s7lNXtw

Length: 12min 23sec (743 seconds)

Published: Wed Nov 06 2019

Reddit Comments

[u/thejewmiester]

They didn't give our not the bag that's what happened

[u/myotheraccountsucked]

Reebok is hitting on college campuses in my opinion.

[u/Sixty-to-Zero]

Don’t show this to Dunne

[u/gucci_ghost]

Lack of Brendan Dunne