K-Swiss Is Making Big Strides Without Utilizing Star Power
Nike has Tiger. Reebok snagged Alan Iverson. And Adidas has been on a roll with Orlando Magic basketball star Tracy McGrady.
But don’t expect K-Swiss Inc. to engage in the multimillion-dollar race to sign sports stars to tout its athletic footwear and clothing. About the most the Westlake Village shoemaker ever ponied up was $90,000 a year for the “Woodies.”
Never heard of them?
That’s exactly the point, says K-Swiss President Steven Nichols, whose company claims 1% of the overall $16.3-billion athletic shoe and apparel market. Only die-hard tennis fans know they’re the most successful men’s doubles combo in history.
“No one gets to see doubles much, so that’s how we could afford them,” says Nichols.
Welcome to the anti-celebrity company.
By necessity and intent, K-Swiss has charted a relentlessly contrarian course in a star-dazzled industry, now buzzing over which company will sign Los Angeles Laker Kobe Bryant and Ohio high school basketball phenom LeBron James to new shoe deals. Such contracts are measured in the tens of millions of dollars.
Yet K-Swiss has rarely paid more than $5,000 or so for a player endorsement, preferring to aim low on the glamour-o-meter. Among its pitchmen: Oba Carr, a welterweight best known for having lost to Oscar de la Hoya in a 1999 championship bout. It once signed baseball’s player of the year -- for the minor leagues.
Now, the company has abandoned sports celebrities altogether to put its marketing money on a decidedly no-name advertising campaign for its K-Swiss Classic shoes, a perennial favorite with its five stripes and D-shaped shoelace rings. Offering no slick mottos, special effects or smiling personalities, the ads simply show teenagers talking about the shoes against the backdrop of a mild rap beat.
The low-concept strategy seems to be working. During the last quarter, the company shipped 943,000 pairs of the Classic -- up 160% over last year. Overall, the company’s share of the “lifestyle-fashion” segment of the shoe industry increased this year from 13.4% to nearly 19%, according to Sportscan Inc., a firm that collects sales data on sporting goods.
K-Swiss had 14 models among the top 50 sellers, an industry benchmark, second only to Reebok with 18. (Those rankings do not include sales through Foot Locker, one of the world’s largest athletic shoe retailers.)
“I think the ads have resonated with people, and they’ve placed them smartly in markets where they’re trying to reawaken people to the brand,” including Southern California and the Northeast, says Virginia Genereux, analyst for Merrill Lynch Global Securities.
It also hasn’t hurt that shoppers’ tastes in athletic shoes seem to be changing. With the economy down, buyers are less interested in pricey fashion treads than they are in getting good value, say stock analysts. Meanwhile, teenagers -- who account for roughly 50% of sneaker sales nationwide -- are particularly hungry for anything retro.
While industry giant Nike Inc. has hustled to reintroduce older models, the trend couldn’t be sweeter than for K-Swiss, whose white-on-white Classic hasn’t changed since brothers Art and Ernest Brunner introduced it 36 years ago as the first leather tennis shoe.
K-Swiss has stuck with the shoe against a constant churn of fashion that has exalted the lowly sneaker into a status symbol packaged in metal casing and carrying a price tag of $150 or more. Driving this development were not only technological changes -- gel-filled soles and air-filled cushions -- but the desire of shoppers to identify with the marquee sports stars hired to tout the footwear.
K-Swiss tried something of that approach when it promoted its training shoe line, which is different from the Classic. Dubbed its “up and comers” campaign, the company hired “emerging” athletes who, in many cases, up and went. Signed for between $3,000 to $5,000 each, their names now read like a Who’s Who of Sports Agate.
There was Bill Muckalt, a journeyman National Hockey League player who once went 70 games without scoring a goal. Erin Veenstra-Mirabella, a cyclist who came in 10th in the 2000 Sydney Olympics. Kris Farris, a standout as a UCLA offensive lineman who’s now looking for work on a National Football League team. Kristin Schritter, a pro beach women’s volleyball player who has been dogged by injuries. And the former minor league player of the year, outfielder Gabe Kapler, who hit two home runs with the Colorado Rockies last season.
The biggest name among the “up and comers” was quarterback Aaron Brooks, now piloting the New Orleans Saints. K-Swiss landed him for $12,000, but only for his less ballyhooed rookie year.
“They don’t have the budget to afford the big-name athletes,” retail securities analyst David P. Campbell of Davenport & Co. says about the K-Swiss campaign, which ran from 1999 to 2001. “That’s about all they could do.” Sales of the training shoes sputtered, he noted.
About the hottest sports stars K-Swiss had going was the tennis duo of Todd Woodbridge and Mark Woodforde from Australia. Known as the “Woodies,” they racked up a record 61 tournament titles, won five straight Wimbledons and captured the gold medal for doubles at the 1996 Atlanta Olympics.
“These guys were, to us, like Michael Jordan,” says Nichols, referring to the Air Jordan campaigns made famous by Nike. In K-Swiss’ case, the Woodies were hired to impress a select crowd of tennis fanatics whom the company was targeting for its high-performance athletic shoes.
The average sports fan, however, never heard of the Woodies because TV routinely pulls the plug on its national tournament coverage before the doubles ever get underway. Besides, whatever advantage K-Swiss gained in its niche marketing disappeared three years ago. “They retired,” says Nichols.
For its current Classic shoe campaign, K-Swiss has gone even more downscale.
The effort was overseen by a marketing department that Nichols put together after sales took a nosedive in the mid-1990s, from $155 million to $107 million. The new group immediately instituted a consumer research effort that periodically dispatches employees to malls, shoe stores and high schools in 12 American cities to ask representative teens what they think about new styles and color schemes.
Nichols says the system has been remarkably accurate.
“These teams go out and when they come back, they almost always have the same information,” says Nichols. “Somehow, a kid in Miami, either through osmosis or mental telepathy ... gives the same answer as a kid from Seattle.... This is what almost always blows us away.”
The Classic ad campaign has taken the same tack, posing its own set of questions: What exactly do you like about the white-on-white shoes? And when do you wear them?
The result has been a string of sound bites such as “I like them clean and white” and “I like my K-Swiss fresh out of the box” and “with my jeans.” K-Swiss then lined up a dozen teenage actors and had them repeat the words over a light rap background, also approved by young shoppers.
The ads began airing in February on MTV; the WB (which is partly owned by Tribune Co., publisher of the Los Angeles Times); the Black Entertainment Network; Fox Sports; and ESPN. Those outlets are key to reaching the 12- to 24-year-old demographic group that sneaker companies covet, says Nichols.
Companion print ads, which have run in Vibe and other youth-oriented magazines, are even plainer: They show a bunch of teens holding the shoe.
While the campaign won’t win any Clios, Nichols says he’s more than satisfied. The company posted $236 million in revenue during the first nine months of 2002 -- the same as for all of last year. Earnings for the nine months ended Sept. 30 climbed to $23.9 million, or $1.30 a share, from $18.8 million, or 96 cents, during the year-earlier period.
The company’s stock is up 34.5% this year, after reaching a 52-week high of $27.75 on Dec. 2. K-Swiss shares closed Friday at $22.33 on Nasdaq.
And that was all achieved without some high-priced big name pushing its products -- a lesson not lost on the sports agents who represent star athletes in shoe deals.
“They stopped calling long ago,” says Nichols.
