Where does Reebok go from here?

With Reebok, the brand that was No.1 in the world back in 1988 (albeit for a short while), it has been a series of unprotected rollercoaster rides, for a brand that has remained relevant, though diluted over decades of change and confusion.

Hindsight is usually 20-20. Sometimes though, even in hindsight, things are not as clear as day. And as the dust settles by Q1 2022 when the acquisition of Reebok is complete from Adidas to Authentic Brands Group, what lies ahead is an uncertain future full of hope in a river infested with crocodiles. Now, let us unpackage Reebok - the past, present and its potential future.

The Past (1958-2005)

Reebok was created fondly by Joe and Jeff Foster and named after a species of antelope (the grey rhebok). It was the first brand that created spiked running shoes. It was the first brand that created footwear exclusively for women back in ‘82, with the Freestyle (And Reebok did it first way-back-when before it was in vogue to target the woman consumer as a growth vehicle some three decades later). Reebok covered the top four sports and more including running, athletics, basketball and tennis back in the 80s and 90s where it rocketed to the Number 1 spot ahead of Nike by the mid 80s. It lost some of its sheen for half a decade as Nike first edged ahead, and then scorched.

Reebok began a fightback for survival and growth by the time the 90s ended, and by 2000 with Venus Williams winning Wimbledon and the Summer Olympics in Reebok, ownership of uniform rights to the NBA and WNBA squared away for a decade from 2001 (or so they thought) and a celebrity endorsement deal with Jay-Z in 2003 which started with a sell out half a million pairs, they were back on a track of positive growth. With the first half of the 2000s Reebok was back on track to make a comeback to relevance and reverence under celebrity halo.

The Present (2006-2021)

By the time Adidas bought Reebok in 2006, between Adidas and Reebok, they were together 80% of Nike in sales (2005). And there was finally a chance to challenge number one.

But what unfolded was a tragic comedy of epic proportions (At least for Reebok). When the brand was at a fork and in dire need for some real TLC and support, over the next 15 years, there was too much thinking, too many directional changes, too many logo iterations, and a total loss of customer. Sales never cross the $3billion mark from 2006 for a decade and then struggled to hit even the $2billion mark for the next 5 years.

The brand went from +6% average growth from 2001-2005 to -6% from 2006 to 2010 (averaging -5% right upto 2019, not including the 2020 pandemic effect). Against this, Adidas clocked 16% growth from 2006-2008 against Nike’s 10% and Reebok’s -10% in the same time frame (a 40% average improvement over the 5 years prior to acquiring Reebok).

Whether by unintentional bad strategy, systematic sabotage or sheer bad luck against what could have been a stroke-of-genius change in direction for Reebok, the acquisition that was meant to create a meaningful challenger to the number one, lay waste to a potential comeback for Reebok. At the same time Adidas gained much needed market share and sales growth to continue catapulting it towards bigger and better.

While Adidas and Reebok functioned as different entities, with competition within the brands on product and mind-space of the customer, the mothership always won. Adidas itself replaced Reebok in 2006 as the official uniform supplier for the NBA and WNBA. Adidas then took steps to move Reebok from its direct competition to concentrating on specific sports (mostly those that were not in direct competition), relegating it to a niche customer base. A move that would forever ruin the future of Reebok as a wholesome sporting goods brand. And Adidas drove all the top endorsements, be it in sport or celebrity.

From a brand that was strong across the sporting industry (read running, basketball, athletics and tennis) it went to a brand that would focus exclusively on fitness and its ilk. The brand turned to an arguably large, but in reality, niche market with a pricing strategy that was completely off what this new brand could now demand in its new form. And even though there were some great products, the star of Reebok faded ironically in line with the number of logo iterations it went through over the years.

Looking back, perhaps by 2015 itself, the only way forward was to cut the cord between Adidas and Reebok, if Reebok was to stand a chance. And after a decade of what may have been unintentional mismanagement (we leave it to the readers, historians and insiders to decide) Reebok was a short shadow of its glorious '80s and fightback 2000s.

However in all that doom and gloom, by 2019, Adidas revived Reebok and its financials enough (we will not even get into the Adi x Rbk Frankensteins for the purists) to put it on the block and we now have a deal in 2021 with a lost decade and a half of the brand that challenged (and won) against Nike, with $2 billion down the drain in actual cash for its owner (accounting for inflation) and perhaps over $10 billion in lost opportunity.

The Future (2021 - )

Fast forward to today.

Now where Reebok again stands is at a precipice, starring up at the sky and then at the rocky bottom of the ocean. It stands at a point where Reebok, the brand could go the Pierre Cardin way (from the first real luxury brand to open stores across the globe back in the 70s, to a brand that now has its products sold exclusively at 90% off at outlets), or it could fight back to stay part of the sneaker culture as a true heritage brand that will rebuild its true believers.

Looking at the history of the Authentic Brands Group, the company has successfully spun off many brands to franchisees, allowing for all kinds of leeway including product creation rights leading to brand dilution that could end any brand depending on the length of rope it gives (albeit leading to profitability to shareholders in the short term). Should it take this path with Reebok, we will see a fairly quick downward spiral for the brand and what is left of its equity, quickly relegating its place only in nostalgia and history (but serious cash in the coffers of the investors by means of royalties). But should ABG take an austere path sinking in time, effort and heart (and this is a BIG if!), Reebok still stands a real fighting chance to claw back and build on its heritage, styles and past to forge ahead recreating some of its past glory over the next five years.

On a personal note, with a cemented emotional bond for the brand that gave me my first ever pair of branded sneakers, a pair of triple white Reeboks (from the early 90s), I hope for a revival. But to take a less emotional angle, a cat only has so many lives, and ABG will hold in its hands the future of its new baby - only this time there will be no do-overs no matter what direction it takes. For better of worse, the brand stands at fork from which there is no going back.

Disclaimer and Sources:

1. All numerical values on the brands have been derived from across various statistical websites and the analysis has been based on this.
2. References:?https://investors.nike.com/investors,?https://www.adidas-group.com/en/investors/financial-reports/ and other statistical sites like statistica.com
3. All numbers have been calculated to the best of the author's ability and the conversion against the Euro basis year averages.
4. All the content?in?this article are based purely on the author's personal research and hypothesis and is not representative of his past, current or future employers.