Big Business: Strategies for Growing Footwear Brands

Nike 2015 Black History Month Collection
Nike's Air Max 1.
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Growth and expansion—domestic or global—seems to be the recurring mantra of footwear companies seeking to increase their influence and by extension, their profits.

More money, more brand recognition, and more shareholder value—it all seems to make sense. But experts say, when footwear companies begin to grow at a rapid pace there’s a lot that can get lost in the shuffle and if the growth transition is not carefully managed there can be a boom and bust.

“I think the biggest issue with becoming bigger is when companies don’t pay attention to all the touch points they might have with consumers or lose control of what the brand means,” said Morningstar analyst Paul Swinand. “There’s so much going on [and] nobody can control everything.”

B. Riley & Co. LLC analyst Jeff Van Sinderen said the idea of big business could “cloud a company’s vision” and disrupt important parts of the business’ objectives.

Mega athlete endorsements, for example, represent one type of “big business” move that can be a shoe company’s undoing if something goes wrong.

“Athletes are important but companies need to be disciplined in how they manage sponsorship,” Van Sinderen said.

Athletes might have major influence but a single DUI or domestic dispute could quickly interfere with a mega-star’s marketability and the footwear company is left to do damage control and determine the best tactic for ending or maintaining a partnership with the disgraced endorser.

“Take care of the brand, first and always,” said Matt Powell, sports industry analyst with NPD Group. “It’s always about great product.”

Companies should also pay careful attention to the types of endorsers they choose with respect to the brand’s overall look and feel, insiders say. It might seem like a no brainer but amateur and even veteran shoe companies may find it tempting to jump on the opportunity to align their brands with someone simply because he or she is the Hollywood “It” girl or guy of the moment. However, an authentic connection between the brand’s look and feel and the potential endorser’s image may not exist.

“You have to invest in brand equity that is durable and not just a fashion [trend],” said Swinand. “That’s why for the long-run, [as it relates to] brand equity, athletic sponsorships work and music stars do not—a music star can be hot one year and ‘not hot’ the next.”

As far as event endorsements go, Powell says such investments rarely pay off.

“Opportunities are limitless; resources are not,” Powell cautioned.

Another potential growth pitfall involves licensing.

“This isn’t an issue for mega companies like Nike or Adidas, but for small to medium sized brands wanting to make it for the long run, the growth can be your undoing,” said Swinand. “Usually, the company pushes ahead with a wider and wider range of products and distribution outlets and eventually they’ve strayed so far that they dilute the equity by which consumers once understood them.”

It all comes down to careful, precise strategy centered around a clear understanding of brand identity, experts say.

“The message is: understand what your brand is and what it is not,” Swinand said.