Nike isn’t the only brand with a plan. Brooks Sports is looking to quintuple its $200 million in sales recorded last year to hit $1 billion by 2020. As the market for running shoes used for running continues to expand, it sees itself becoming a leader in the category.
To kick off this 10-year plan, Brooks, which is owned by Berkshire Hathaway, increased its marketing budget for 2010 by 42 percent, its R&D budget by a third, and its outlays for sales development and promotions by 21 percent.
Expanding sales outside the U.S. is a big part of its plan. Brooks has now set up its own distribution in most of Europe. For smaller markets, it has a hybrid distributor model in which its local sales team is effectively an agent while the company holds the inventory and receivables to minimize their investment. It also has a new partner in Japan, Runx, which is taking over the performance side of the business. Its long-time licensee there, Asahi, continues to handle the casual walking shoe business. It is looking toward China and South Korea next.
Back in 2000-2001, Brooks decided to focus solely on performance running. However, recently it has felt that this emphasis was weakened and now wants to remind everyone that it is the only brand that develops products solely for runners.
The numbers are promising. There are 90 million runners in the world, and in 2009 the number of competitors in road races grew by 11 percent. The specialty running retail channel rose by 7 percent in 2009 to $682 million.
The company hopes its new “Run Happy” marketing campaign will get its message across. It doesn’t plan any big changes to its product offering or mix, but just wants to reach more potential performance runners than those who shop in the specialty channel. It seeks to emulate what Under Armour has done in American football or what Lululemon has done in yoga.
Brooks pegs the performance running category as being worth $7 billion worldwide. It hopes that the “Run Happy” campaign will reach runners who aren’t as serious and hard-core as Brooks perceives some of its competitors to be. It wants to emphasize the fun aspect of the sport.
The company notes that many performance runners who don’t frequent specialty shops don’t have a great brand awareness of Brooks. It estimates that it ranks No. 5 with a 6 percent share of performance running footwear. But among specialty runners it reaches No. 2, with 21 percent, compared with the 25 percent held by Asics, a leader it wants to topple. In national U.S. chains, it figures it’s No. 6 with a 3 percent share, falling behind Nike (41 percent), Asics (28 percent), New Balance (10 percent), Saucony (5 percent) and Adidas (4 percent).
Brooks’ sales total from last year marked a single-digit increase in footwear but a drop in apparel. Just over half, $105 million, came from footwear in the U.S.
