K-Swiss launched a 10-year strategic plan at the beginning of this year to assert itself as a Californian sports brand with a much higher emphasis on performance. This comes after several years of decline, which have seen the brand’s sales shrink from nearly $500 million in 2005 to about $241 million in 2009. The latest figures show that the brand has also suffered a lot of damage in Europe, where it is trying to rebound in part through new distribution deals in key markets such as Italy and France.
K-Swiss was famously launched in Van Nuys, California, in 1966 by two Swiss ski racers, Art and Ernie Brunner. They took an interest in tennis when they moved to the United States and came up with the first leather tennis shoe in the country, which became known as the Classic. Two decades later, in 1986, the company was taken over by Steven Nichols, an executive at Stride Rite, who vastly expanded the brand’s offering and continues to run the business with his son, David Nichols.
In recent interviews at their global head office in Westlake Village, California, K-Swiss executives pointed out that the brand’s sales of technical tennis shoes were roughly stable in the last years on a global basis and in key markets, although they currently make up less than 20 percent of the company’s sales. The brand remained one of the three largest suppliers of tennis footwear in the Netherlands and Germany, for example.
On the other hand, K-Swiss’ turnover in lifestyle shoes has been hammered by fashion trends moving away from the styles derived from the K-Swiss’ famous Classic white leather tennis shoes. At the same time, K-Swiss itself decided to clean up its distribution, moving the Classic out of about half of its American accounts, mostly family footwear stores.
The company started to reinforce its performance unit about three years ago when it recruited several executives from Nike and Adidas. This led to the introduction of a K-Swiss range of running shoes in the American market two years ago, and to its launch on a small scale in the U.K. and the Netherlands last year. The full-fledged introduction of an adjusted range of running shoes has just started in several other European countries.
The range consists of a line of performance shoes and a cheaper Tubes line of shoes intended for training and leisurely running or jogging. The performance models are targeted at a small number of specialist running stores. The Tubes range will be distributed more widely through sporting goods stores in several European countries. K-Swiss trail-running shoes are to be launched in Europe only in the second half of this year.
As part of the increased focus on performance, K-Swiss has hired its first sports marketing manager, Erik Vervloet, formerly at Adidas. He signed Tommy Haas and the Bryan brothers in the tennis market, along with Chris Lieto in triathlon. This sport was initially targeted by K-Swiss to establish the credibility of its running range. This paid off handsomely, since K-Swiss was worn by many Ironman winners last year, and the brand obtained a licensing agreement to use the Ironman name on its triathlon shoes. K-Swiss has also become the sponsor of the Los Angeles Marathon for this year and at least the following two years.
Support for the running range will contribute to a significant increase in the company’s marketing expenses this year. They are predicted to rise to a whopping 25 percent of sales, compared with an average of about 8 percent in the last few years.
The increased spending will partly go to finance a global television advertising campaign with the tagline “The Californian Sports Brand” with the pay-off “Have an Awesome Day.” It is meant to accompany the brand’s repositioning and to harmonize its perception around the world. Progressive, playful and creative are the brand values associated with California that the company wants to project. Consumer studies have shown that very few people are aware of the brand’s Californian identity.
Meanwhile, the brand is trying to expand again on the European market. After the closure of its subsidiaries in France and Italy as part of its cost-cutting measures, K-Swiss teamed up with Gitexpoint in Italy, a company founded by a former top executive of Diadora, Marcello Tonello, which distributes many important brands including Spyder and Nike Golf (see the last issue of SGI Europe). In France, K-Swiss signed a distribution agreement with Onifit, a company launched last year by Bruno Paul, formerly in charge of European key accounts at Reebok. Both the French and the Italian relaunch will start in earnest at the retail level next year.
Furthermore, K-Swiss moved into the Polish market this year with We Global Distribution. The company also has rights for the Czech Republic, Slovakia and Ukraine, which it will enter one by one in the next years. We Global Distribution was established last year by Norbert Wieladek, former manager and shareholder of Amer Sport (unrelated to the Finnish sports group), which long held the Converse license in Poland, along with distribution rights for Merrell, Skechers, And1 and many others. Several more Eastern European countries were added to the distribution list last year. Another country added this year is Portugal, where the brand teamed up with Bedivar, a local specialist in footwear.
