In Sunday's Business section, the employer of Tammy Blank was misstated. She is manager of the shoe department at M.C. Sporting Goods in Chicago. (Published 7/24/90)
In Universal Studios's 1989 film "Back to the Future II," teenage hero Marty McFly emerges by accident into the 21st century to find brilliant orange sneakers that magically entwine around his feet, pressurize to fit and tie automatically in seconds.
Audiences may have barely noted the gimmick in a movie filled with special effects, but to millions of teenage buyers and the $5 billion sneaker industry that caters to them, the film displayed a prescience worthy of its title. The modern sneaker has become a miracle of space-age technology and star-studded marketing.
What blue jeans were to children of the 1970s, sneakers have become to kids -- and parents -- of the '90s. Athletic shoes have become statements of fashion, personality, rebellion and celebrity worship -- and a lucrative opportunity for companies to market self-image in a range of colors and styles.
Business has boomed for almost all of the 25-plus major manufacturers that sell in the U.S. market. But for all the competition, the market has consolidated into a Big Three -- Nike, Reebok and L.A. Gear -- that account for 60 percent of sales. Their combined annual advertising spending of $180 million exceeds the annual revenue of nearly every other competitor.
If this is a lucrative market, it is also a volatile one.
West Germany's Adidas had pioneered the industry for decades with its running shoes before Nike Inc. came along in the 1970s, followed by Reebok and L.A. Gear in the '80s. The market has become a turbulent mix of fashion and sport that demands that manufacturers adapt to the rapidly changing tastes of different regions, ages and sexes. Just last week, Adidas passed into the hands of flamboyant French industrialist Bernard Tapie, for a price so low it surprised many in the industry.
When a sneaker is hot, the potential profits are considerable. The average cost of a pair of basketball, walking and running shoes hovered between $40 and $47 last year, up an average of about 7 percent, while top of the line models reached $175. And who can get by with only one pair?
"If you talk about performance, you only need one or two pairs. If you're talking fashion, you're talking endless pairs of shoes," explained Kevin Ventrudo, chief financial officer of L.A. Gear, the Southern California company that has watched revenue rocket to $535 million last year from $11 million in 1985.
Street Smarts The shoe-making, shoe-buying boom began with the running craze of the late '70s but has become a street-level testament to a society in love with sport, health, leisure and youth -- or at least the appearance of youth.
And what an appearance. The flimsy black and white canvas contraptions of bygone days are as distant a memory as the buggy whip. The modern sneaker declares itself in neon-colored leather, flapping ankle gauntlets, self-contained air-cushion pumps and transparent panels that open onto the shoe's sole. It boasts technology such as liquid cushioning, computer-monitored stitching and advanced polyurethane padding.
But in a business where industry watchers say 90 percent of athletic shoes are never used for sports, do they deliver? Just ask the kids in your neighborhood.
"If you got the right kind of shoes, it fits you," said Jerome Noble, 10, describing the qualities of the perfect specimen walking through a Washington shopping mall. "They gotta be the right shoes for the way you move, the way you jump; they gotta be curved in the right ways. But most of the time, they gotta be the right style."
The punishment for not showing the correct style may be stricter than ever, as marketing keyed to America's athletic giants and worship of the hip young lifestyle have built shoes into unequalled signs of status in inner city and suburb alike.
"They're important," said Elisia Archer, 14, a visitor from California. "They're very important. I'm a really fashion-conscious person and I never go out with the wrong pair."
But the power of shoe marketers extends far beyond children. Beginning with the aptly named "Revolution" advertising campaign by Nike Inc. in 1977 and spurred by the fitness and women's aerobic trends, the customer base of the market has broadened considerably.
Sneakers have won wide acceptance that is reflected by the footwear of commuters, retired persons and growing numbers of professionals at work and play, said Robert Carr, publisher of Sporting Goods Business Magazine, a trade journal.
"It's more voguish," said David Phan, 35, employed by the Treasury Department. "I see my friends have them and so I have them."
For all the burgeoning demand in the suburbs, the origin of the fashion boom in shoes stems from the inner cities. Demand for the "freshest" look and status associated with footwear has fueled tremendous sales in otherwise economically exhausted areas.
Flying the Colors For the last two years, shoe models have emerged with variations in color and design almost weekly, with shops stocking up to 175 lines. Retailers like inner city Boston's Mickey Finn Sporting Goods have arranged with manufacturers to add up to 25 colors for each shoe.
"Every three months you need to come out with a new color or you're dead," said Burt Holand, buyer for Paragon's Sporting Goods in New York City. "The kids come in looking for colors, they're looking for something different, they're looking for style, any kind of symbol that sets them apart from the guy next door."
What drives them is advertising. In 1986, Nike and Avia Group International, a Reebok subsidiary, specifically targeted inner-city youths for marketing campaigns. In a Nike town like Chicago, where company spokesman Michael Jordan plays basketball with the Chicago Bulls, changing media campaigns can alter entire inventories.
"It's amazing," said Tammy M. Blank, manager of Chicago's McMage's Sporting goods. "People used to buy the regular Air Jordans. Now they're buying the cross-trainers, anything with Bo Jackson," the multi-sport athlete and new Nike pitchman for multipurpose shoes.
Such advertising is opening a market of young buyers. Industry studies report that 4- to 15-year-olds spend $18 billion annually, up to $800 million of that on footwear. Consumers between the ages of 15 and 22 account for 30 percent of shoe sales and influence another tenth.
Criticism has mounted, however, that the shoe companies have overstepped their bounds.
In May, Sports Illustrated capped off a series of reports that expensive, heavily advertised athletic shoes and sportswear were prompting an accelerating number of killings and robberies in inner cities. The shoes have also been tied to drug money, with some city store owners commonly reporting youths buying $100 shoes by the armful, flashing up to $3,000 in cash.
"Any time we serve a drug warrant, we find five to 50 pairs of completely new, very expensive sneakers still in their boxes," said D.C. Metropolitan Police Sgt. James D. Vucci. "
Last week, Consumers Union also condemned the intrusion into the lives of children by Nike and Reebok, among many other companies, which have targeted the young through sponsored television news programs for schools and classroom materials. The study also found that, in May, more Nike advertisements aired on MTV than on all sports programming combined, and more Reebok advertising was carried on children's cartoon programming than on sports.
"We're embedding in the curriculum messages to tell children to spend money on products like tennis shoes so they can grow up and be like basketball players," said Peggy Charren, director of Action for Children's Television, an advocacy group that participated in the study. "You have to be nuts to think that's a rational thing to do in this society."
Shoe companies dismiss such criticism.
"It's our feeling that one thing we do really well is communicate a very positive inspirational message to the public through our advertising," said Nike spokeswoman Liz Dolan. "All our advertisements are about achievement and praise in doing something good for yourself."
A Marketing Slugfest
The criticism about advertising certainly isn't deterring the companies. Nike, Reebok and L.A. Gear are due to spend more than $180 million in advertising this year, rolling out dozens of new lines.
"I think the Big Three will gain market share and will get more competitive. It will be like Coke and Pepsi slugging it out every year," said Gary Jacobsen, footwear analyst with Kidder Peabody. As the market matures further, success will depend increasingly on nontechnical aspects, particularly marketing strategy and advertising, said Heidi Steinberg, footwear analyst for Salomon Brothers.
The result, said publisher Carr, is that as a major shoemaker, "You cease to be a shoe company; you become a marketing company."