Sole of a Woman : Troubled L.A. Gear Goes A-Courting in Strategy Shift

By DENISE GELLENE

April 29, 1995 12 AM PT

TIMES STAFF WRITER

As the city of Los Angeles goes, so goes . . . L.A. Gear.

In new commercials for its once-popular women’s sneakers, the company is using classic Los Angeles imagery to portray itself as a trendsetter. National TV spots depict the Hollywood sign or the Palos Verdes shoreline and end with the slogan “L.A.--It’s in Your Head.”

The company is hoping the campaign will help re-establish its women’s shoe brand as a fashion leader. In playing off its namesake city, L.A. Gear is betting that Los Angeles is defined less by earthquakes and riots than the steamy TV show “Melrose Place.”

“Attitude is reality,” asserts L.A. Gear President William Benford, who sees more than a few parallels between this money-losing company and its beleaguered namesake city. “The attitude of Southern California is that we are winners. And its products are winners.”

A winning performance has eluded L.A. Gear since 1990, when the company abandoned its fashion focus and turned its attention to men’s athletic shoes. The company has lost money in each of the last four years, and the hemorrhaging has continued in 1995.

The biggest sales declines have been in L.A. Gear’s once-successful women’s shoe business. U.S. sales of its women’s shoes fell 43% to $63.2 million between 1992 and 1994. Women’s shoe sales continued to drop in the first quarter of 1995, a slide the company attributed to lower consumer demand.

Benford is optimistic that the performance of the women’s line will improve as new, casual styles come to market. Indeed, there are indications that L.A. Gear may be on the right track.

NPD Group, a marketing research company, reports that industrywide, sales of women’s athletic shoes grew in 1994 while sales of men’s shoes remained stagnant. Casual and cross-training shoes gained in popularity in 1994 at the expense of serious performance shoes, such as those designed for running or aerobics.

But L.A. Gear’s efforts to rebuild its women’s business suffered a setback Friday when a deal to acquire Ryka, a troubled maker of women’s performance shoes, collapsed. L.A. Gear’s stock closed at $3.50 in New York Stock Exchange trading. In its heyday in 1990, the stock rose as high as $50.

L.A. Gear took the footwear industry by storm in the 1980s as a maker of trendy women’s shoes. In 1990, it had nearly 12% of the athletic shoe market and ranked third in overall sales, behind Nike and Reebok.

By 1994, the company’s share of the market had fallen to 4.7%, according to Sporting Goods Intelligence, an industry newsletter. It ranked fourth in sales, having been passed by Adidas.

The company was hurt by a foray into men’s performance shoes, which it has since abandoned, ceding victory to industry giants Nike and Reebok in order to focus on its children’s and women’s lines. The company continues to market men’s shoes.

“Competing against Nike and Reebok is pretty difficult to do,” said John Horan, publisher of Sporting Goods Intelligence. “They see in women’s fashion, in Valley girl-type shoes, much more opportunity.”

The new L.A. Gear women’s line seeks to fill the gap between unbranded casual footwear and high-end performance shoes. Prices range from $35 to $60 for a collection that includes walking and cross-training shoes as well as trendy sneakers with glamorous Hollywood names, such as the “Hepburn,” a plaid canvas version of a Mary Jane.

The company is targeting a customer older than the teen-agers who made its original sequined high-tops popular in the mid-’80s. It says the typical L.A. Gear customer is between 18 and 34 and interested in “affordable fashion.”

Winning back female customers won’t be easy for L.A. Gear. Keds, a unit of Stride Rite Corp., is also seeking to rebuild its business and is running its first TV commercials for women’s sneakers in three years. The ads feature warm mother-daughter scenes and the theme “Never stop growing.”

L.A. Gear also faces competition from Reebok and Nike, which are positioning their women’s shoes as functional but also fun. Nike, for example, says in print ads that its cross-training shoe can be worn “inside, outside, everywhere.” Sales of Nike’s women’s fitness shoes soared 39% during the three months ended Feb. 28.

Retailers say the jury is out on L.A. Gear’s strategy.

Keith Daly, general merchandise manager for Texas-based FootAction, has increased purchases from L.A. Gear, though he does not stock the brand chain-wide.

“Athletics is what is fashionable,” Daly said. “With L.A. Gear, function isn’t a driving influence.”

But Jack Gunze, an executive who oversees shoe buying at Sears, Roebuck & Co., said that “lifestyle is where they are placing their bet. There should be a place for that product.” Even so, sales of L.A. Gear women’s shoes at Sears are flat so far this spring, Gunze said.

In developing its women’s advertising, L.A. Gear’s agency, Chiat/Day, photographed closets of 50 women in cities around the country, snapping their favorite outfits to get a sense of what fashions they like. The women were asked to fill out six pages of questions about their tastes and lifestyles.

The results, said former L.A. Gear advertising manager Adam Bleibtreu, show that for most people, Los Angeles had an attraction “not as a place to go, as in, ‘I want to go to the beach or I want to roller-skate.’ It was more a state in your head . . . allowing for personal style.”

The new commercials show a pair of legs fitted with L.A. Gear shoes floating above landmark L.A. scenes such as the Hollywood sign and coastline. Upcoming ads are likely to pan over tile rooftops and palm trees.

Bleibtreu had wanted to use either the Universal or Sony film studios as backdrops, but discovered that the buildings “look like warehouses from the air.”

Walt Disney Co., despite boardroom links to L.A. Gear, nixed plans for filming its back lot, where a water tower depicts its trademark Mickey Mouse. (Vice Chairman Roy E. Disney is a major L.A. Gear investor, and L.A. Gear’s chairman is a Disney director.)

Bleibtreu said Disney was reluctant to let the Mickey image appear in the ad: “The Disney guys get real protective about it.”

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

If the Shoe Fits...

In an attempt to boost lagging sales, L.A. Gear is using an advertising campaign for women’s shoes that capitalizes on Los Angeles’ trendy image. While the company ranks fourth in athletic shoe sales, those sales have been flat over the last few years.

SALES (in millions)

1994: $416

EARNINGS (in millions)

1994: -$22

MARKET SHARE

Based on 1994 U.S. sales:

Nike: 30.1%

Reebok: 21.0%

Adidas: 5.1%

L.A. Gear: 4.7%

Fila: 4.7%

Other: 34.4%