Reebok reboots its business, hardcore style

It is hard to imagine what Harold Abrahams would have made of the Reebok InstaPump Fury.

The design is hardly restrained. One version, a gaudy red and green furry creation, will cost those wanting to make a fashion statement an eye-watering $370. Other models look rather like the street art which teenagers spray paint on walls and New York subway trains.

They are rather different from the running spikes which Abrahams wore when he became the 100m champion at the 1924 Paris Olympics, an event which years later was brought to the silver screen in the Oscar-winning film, Chariots of Fire.

But for many observers they are symbolic of the radical overhaul of the company’s strategy brought about by Matt O’Toole, Reebok’s president.

A 54-year-old father of five, he has taken the company back to its roots, building on what made the company inextricably linked with the fitness boom in the 1980s.

Some of the footwear may be a tad colourful, but there is a sense of honouring the tradition of a company which started life as JW Foster and Sons above a sweet shop in Bolton, England, in 1895.

Matt O’Toole has taken the company away from mainstream sport.
Matt O’Toole has taken the company away from mainstream sport.Picture: Getty Images

The company morphed into Reebok in 1958 when the founder’s grandsons felt the name of an African antelope better conveyed the image of speed and athleticism they desired.

Its transition from a British to a global brand began when Paul Fireman became interested in the company at a Chicago trade show and acquired the US marketing rights in the late 1970s.

This was the era of Jim Fixx and the jogging craze and Reebok, under Fireman, cashed in. Then, in another innovative move, the company introduced a shoe for women — and cornered the market as a result.

“This began the fitness revolution of the 1980s and Reebok was at the centre of it,” Mr O’Toole said. “The company’s growth from a couple of million dollar company to a $2 billion company was really born out of its focus on fitness shoes, which no other company had really thought of.”

Quite simply, the 1980s was a time when Reebok was, no pun intended, fleeter of foot than its rivals. At the end of the decade it brought in the Reebok Pump, as the company decided to muscle in on basketball — the classic urban American sport.

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The wearer was guaranteed a perfect fit thanks to a pump located at the tongue of the shoe. Despite being far more expensive than the Nike Air, it was a commercial sensation, with 20 million sold worldwide.

But by the 1990s there was a slight air of Reebok having gone out of fashion, in much the same way as the Filofax or shoulder pads. The prescription was to try to be all things to all people as sales declined. Like its rivals, it wanted to be known as a major sports brand.

In Britain it was still known for its soccer boots — Ryan Giggs and Thierry Henry endorsed them. For a time it was impossible to avoid seeing the Reebok logo. Liverpool and Manchester City wore the company’s shirts, as did dozens of teams outside Britain. Bolton Wanderers’ home ground became the Reebok Stadium.

Reebok exploited the popularity of cricket in India, kitting out five teams in the hugely popular premier league. In the US it was the supplier for every team in the National Football League for a decade, until 2012, and had similar exclusive deals with the National Basketball Association and the National Hockey League.

In 2006, Adidas bought Reebok for $US3.8 billion, establishing the now American company as a subsidiary. It was not a marriage made in heaven. While Adidas’ sales grew, those of Reebok flatlined. There was no stopping the Nike juggernaut.

“I think if we look back at that period in the 1990s, it was primarily an arms race with Nike,” Mr O’Toole said.

“By the end of the 1990s even though Reebok had acquired a lot of sports bona fides, Nike was a much bigger brand and was able to compete much more effectively in terms of sports marketing contracts.”

The figures had been pretty grim; sales fell by 14 per cent between 2007 and 2009. Something drastic had to be done.

A veteran of the fitness industry, Mr O’Toole decided that rather than disowning its heritage, Reebok should celebrate it. The company was in danger of losing its unique selling point and being lost in the general sportswear market.

“With the benefit of hindsight, any time you change your strategy to try to be more like your competition, you lose a bit of yourself,” Mr O’Toole said.

“This is the oldest sports brand; the Fosters were dedicated to making the best running shoes. All of those things are part of the rich history of the brand. It was important to go back to what made us great.”

His prescription was a brave one. He said the company should withdraw from mainstream sport, effectively turning its back on $US550 million worth of existing business.

In Europe, Reebok pulled out of soccer. It surrendered the naming rights of Bolton Wanderers’ stadium in 2013, while in the US it was replaced as the NFL kit supplier by Nike in 2010.

Mr O’Toole handed over the ice hockey deal to Adidas, which was an interesting move given this was the very sport which had propelled his rise up Reebok’s corporate ladder.

In 2010, the change in strategy saw Reebok sign a 10-year partnership with CrossFit, a company that creates workout programs for hardcore enthusiasts who delight in punishing their bodies in rather spartan gyms.

Mr O’Toole was a member of a CrossFit gym himself and what he describes as an “aha moment” came when he received a call from the owner asking why he had not been training.

“That would be the exact opposite of what happened if you joined a big gym — you sign up and put your credit card down,” he said. “The last thing they want you to do is show up.”

“There are a lot of people for whom fitness is part of their life.

“There is this group of consumers in their 20s and 30s. They are just out of university. There are only three things which are important to them: their new career, their family and their fitness activity.”

CrossFitters are working out together in gyms which are very different from the traditional facilities where people work out in splendid isolation, pounding treadmills listening to music on their phones.

Reebok also cottoned on to the growing popularity of mixed martial arts, nailing its commercial colours to the Ultimate Fighting Championship.

“The fastest-growing fitness trend in the world is training like a fighter. You train like a boxer or mixed martial arts fighter,” he said.

It is estimated that 35 million people train like a fighter, even if they do not get into the ring or cage. The majority are women, which is why Reebok saw UFC fighter, Ronda Rousey, as an ideal ambassador.

Just as women fuelled the fitness boom in the 1980s, Mr O’Toole believes that they could do so again three decades later.

In the 1990s, Mr O’Toole argues, people were buying sportswear to sit on a couch.

“A lot of people have coined the term ‘athleisure’,” he says, taking a sly dig at fashion houses that have gone into the fitness attire business.

“While they are making products which look athletic, we are making a product that works.”

That is not to say that Reebok is averse to selling “lifestyle” wear. The classic items are still out there, complete with the Union Jack logo. But it is the stuff which is worn in the gym which accounts for 65 per cent of turnover.

The Reebok CrossFit Games.
The Reebok CrossFit Games.Picture: ames

Catering for the active participant rather than the spectator is a philosophy which not only has permeated the company’s marketing strategy but has even shaped the way in which it operates at a sprawling campus on the outskirts of Boston.

Staff are encouraged to work out in the spacious office gym and there is a fair chance that an intern will find Mr O’Toole on a machine alongside them.

“Reebok is not really interested in providing designer leisurewear for couch potatoes,” Mr O’Toole declares. “We don’t want to create a generation of New England Patriots fans who aren’t active.”

Some analysts remain sceptical and over the past few years there have been suggestions that Adidas ought to cut its losses and ditch Reebok.

But Mr O’Toole believes that he has found the marketing sweet spot which will see the company flourish.

“At our core we are a fitness and running brand,” he said.

The Daily Telegraph

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