Puma goes backto sports

Puma is ditching its “sports lifestyle” tag to be unequivocally positioned as a “sports” company again: This is the strategic angle outlined last week in Herzogenaurach by Bjørn Gulden, the company's chief executive since the start of July.

The new approach is encapsulated in a brand tagline to be used in Puma's advertising from the second half of next year, “Forever Faster,” as well as an internal motto urging Puma to become “the fastest sports brand in the world.”

While the vision delivered by Gulden was short on targets and other figures, it marked the first public appearance of the Norwegian executive since he took the helm over from Franz Koch at the request of Kering, the French majority shareholder of Puma. Donning a black Puma jacket and a laid-back demeanor, Gulden painted a candid picture of the company's weaknesses, as it reported yet another quarterly sales decline and profit warning, albeit due to non-operational extra costs (see details below).

Gulden pointed out that improvements would not occur until next year at the earliest, due to the lead times in the industry – unlike the situation at Pandora, the Danish jewelry group that he turned around before joining Puma, and where vertical distribution made reforms much more immediate.

The return to a focus on sports had already been initiated by Koch, marking a clear departure from the strategy pursued by Jochen Zeitz, the chief executive who revived Puma, and who prided himself on inventing the sports lifestyle concept subsequently adopted by many other brands. Gulden said that this strategy had been adequate a few years ago but that the current situation called for Puma to clearly identify itself as a sports company again: sharp performance products would drive sales of lifestyle products, Gulden indicated.

The new management readily admitted that the five-year “Back on the Attack” plan launched in 2010, calling for sales to reach at least €4 billion by 2015, was no longer relevant. That business plan had been outlined by Zeitz in 2010, just before his formal departure as Puma's chief executive and the transition to Koch, who left last March after less than two years at the helm. The new mission statement urging Puma to become the “fastest” sports brand also contrasts with the Zeitz mantra that Puma should be the “most desirable brand.”

Carried out during three months of intensive talks and travels, the Norwegian's diagnosis pointed to the lackluster sell-through of the Puma brand in the market. Gulden acknowledged that product has probably been the most significant weakness of the brand – especially in footwear, which Gulden described as Puma's Achilles heel.

For this reason, Gulden emphasized the importance of two team members who are not part of the executive board to “fix the product engine:” Torsten Hochstetter, who came from O'Neill and the Adidas Group to start as global creative director at Puma mid-July; and Kevin Tolchard, formerly at Umbro and Nike, who became the director for global merchandising at Puma earlier this year.

According to Gulden, the poor sell-through is due to the fact that some of Puma's products are not commercial enough. This does not mean that the brand will target cheaper price categories, but that designers should be more focused on the development of products that will sell.

Gulden also said that Puma is under-represented at retail in the leading sporting goods stores and over-sold in less attractive channels. However, Gulden added that this situation had already improved in the last year. He knows the retail sector well because he has been a top executive of Deichmann, an international discount-oriented shoe retailer that is a major customer of Puma and other sports brands, directly and through its Ochsner Sport stores in Switzerland.

The next item on Gulden's list of complaints was a lack of clear marketing stories that would help to make the brand's statement more distinctive. Gulden himself will take care of building such stories and implementing the wider marketing strategy. He said that the group had halted the search for a chief marketing officer and that he would fulfill these functions himself for the time being. He wants the company to tell fewer marketing stories, while exploring them more deeply.

Another related issue is the lack of spending on marketing assets. Gulden said that Puma already has an enviable roster of iconic athletes and brands under contract, but has failed to sufficiently invest in advertising to take advantage of these tie-ups. Probably the most striking example is that of Usain Bolt, the Jamaican sprinter, whom Puma could have used more broadly, following up on his interest in football, car racing and music, among others. Puma renewed its contract with Bolt in September. Media spending will be raised in 2014, although Gulden declined to specify the rise (arguing that the budget had not yet been set).

The sports categories on which Puma will focus will be led by football, running, training (with fitness) and golf. Gulden said the company has already done well at building its football business, but has not sufficiently develop distinctive products in running. Puma will also delve into its technical product archives to serve the lifestyle market, as it has recently done with the Trinomic, based on a running shoe from the ‘nineties.

The “faster” approach adopted by Puma's new management was outlined internally at the end of September, at a meeting that brought together about 800 employees at the Puma brand center in Herzogenaurach, as well as some of the company's key past and present partners – from Bolt to Boris Becker, Linford Christie and Merlene Ottey. The Forever Faster catchphrase refers to the products made by the company as well as the fun and thrills associated with speed.

The new tagline should be consistently applied to advertising from the third quarter of 2014 but could already appear in some guises at the football World Cup in Brazil, starting on June 12. Three Puma-clad teams have already qualified for the finals of the World Cup: Italy, Switzerland and Chile. Up to eight Puma teams could qualify. Puma will only be launching the jerseys in March.

With regard to the Puma organization itself, the new approach is meant to lead to faster development and faster innovation. With its fashion-forward reputation, Puma could probably afford to take more risk than others in this regard, Gulden said. Speed should also apply to decision-making: The new chief executive wants to give each team member more leeway to act fast, even if that sometimes means more mistakes. And the company should also be faster in addressing issues with retailers, Gulden added, although he found at Deichmann that Puma was not particularly slow in this respect.

While dissecting Puma's weaknesses, Gulden was eager to emphasize the assets of the brand, from its heritage to its partnerships in sports and even its logos, as research found that the formstripe on Puma's footwear comes out in fact as the most natural representation of speed on a shoe. The new chief executive also praised the enthusiasm and commitment of the team at Puma, where he found employees eager to start with a new approach.

The compliment was returned by several officials at the company, which hosted a get-together with all four of its board members at its head office last week: Gulden was praised for his easy-going style, contrasting sharply with the ultra-disciplined Zeitz, as well as his clear views and hands-on style. Gulden's sporty outfit at the presentation was also a departure from the designer suits favored by Zeitz and Koch. He has kept the Norwegian habit of addressing everyone with the informal “Du” in German.