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TIME: Almanac 1990
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1990 Time Magazine Compact Almanac, The (1991)(Time).iso
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time
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082889
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08288900.009
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1990-09-17
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BUSINESS, Page 54Foot's ParadiseWith a mix of fashion and engineering, athletic shoes leap offthe shelvesBy Barbara Rudolph
Jennifer the Valley Girl, whose most strenuous exercise
consists of cruising the local shopping mall, favors $64 pink L.A.
Gear athletic shoes with Western-style, imitation-silver buckles.
Arthur the accountant, who bicycles ten miles before picking up his
calculator in the morning, wears TC Lite, Nike's $85 cycling model.
His weekend tennis partner rushes the net in Reebok's $80
Italian-made Cosenza tennis shoes, with the brand name discreetly
scrawled in the corner.
Only fuddy-duddies still think of sneakers as inexpensive,
all-purpose athletic shoes with heavy rubber soles. Today's models
are an exacting mixture of fashion and technology, composed of such
materials as synthetic leather and Hexalite, a cushiony substance
used in Reebok's newest soles. Not just athletic shoes, they are
space-age wonders that boast such features as air-cylinder
suspension systems, anatomically molded ankle collars, outrigger
soles and adjustable support straps. They answer to names like Air
Skylon, 360 Jam, Disc-Drive and Tiger Gel Epirus. Manufacturers are
bombarding customers with different models for "technical" and
"nontechnical" running, for walking, wrestling and even coaching
and cheerleading.
As a result, Americans are lacing up 200 million pairs of
brand-name athletic shoes a year. Not satisfied to sell only shoes,
companies are diversifying into T shirts, sweaters and shorts
emblazoned with their names. All told, the market for athletic
shoes will reach $9 billion in retail sales this year, up about 15%
from 1988. In a grueling race for market share, once sagging Nike
is racing back with revenues of $1.7 billion for the fiscal year
that ended in May. Analysts estimate that Nike now claims a 26%
share of the market for brand-name athletic shoes. Based in
Beaverton, Ore., the company is nosing ahead of its archrival
Reebok, which controls about 22% of the market. Striding into the
No. 3 position is trendy L.A. Gear, which has grabbed about 13% by
selling shoes designed more for fashion than performance. Among the
runners-up: Converse, Adidas, Keds and New Balance.
When the jogging and fitness craze began in the mid-1970s,
athletic-shoe manufacturers were dubbed "Adidas and the Seven
Dwarfs." But by the early 1980s, while West Germany's Adidas
remained No. 1 outside the U.S., fast-rising Nike dominated the
American market. The company was started in 1972 by current
chairman Philip Knight, 52, a University of Oregon graduate, and
Bill Bowerman, 78, his former track coach, who used a waffle iron
to make their first soles. (The now famous Swoosh trademark on the
side of the shoes was designed by an art student for $35.) Nike's
sales sprinted from $270 million in 1980 to $920 million in 1984.
But the firm, named after the Greek goddess of victory, had trouble
managing its explosive growth. Not long after the company tried to
meet increased demand by assigning more production to Chinese
factories in 1985, Nike's quality inspectors were rejecting four
out of five of the Chinese-made shoes. Nike's push to satisfy the
expanding mass market eroded its performance image.
As Nike faltered, Reebok galloped ahead. Beginning its life in
the U.S. as a subsidiary of a British shoemaker founded in the
1890s, Reebok, based in Canton, Mass., is now a publicly held firm
that owns its former parent company. Its mid-'80s success came from
inventing and persistently exploiting the market for women's
aerobic shoes, a shift in the business that Nike had completely
missed. Reebok's revenues zoomed from $4 million in 1982 to $900
million by 1986.
This year Nike, which Knight has invigorated by decentralizing
decision making and encouraging innovation, has gained a second
wind with dozens of new models in 24 footwear categories. Nowadays
any top contender in the industry must constantly upgrade its
products (almost all of which are designed in the U.S. but made in
Asia) just to stay in the race. Though industry analysts estimate
that 80% of all sneakers are used for nothing more taxing than
taking out the garbage, consumers want the illusion of having a
competitive edge.
Shoe designers finely tune each category of shoe to its
particular activity by studying human motion and physiology.
Reebok's baseball shoes, for example, have a specially designed
cleat pattern called SpeedSlot for fast starts and stops. Crafty
Nike marketeers have also invented in-between products, most
notably the cross-trainer shoe, designed for an all-around athlete.
Cross-trainers offer enough lateral support for the sideways
motions of aerobics and basketball but are light and flexible
enough for jogging too.
On the cutting edge of shoe science, Nike and Reebok are
engaged in a battle that is based on thin air. The Air Nike line
of basketball shoes, which contain pockets of compressed gas in the
soles to provide cushioning, became an instant hit two years ago
when transparent plastic windows were added to show off the air
cells. The most popular model is the Air Jordan (price: $110),
named for Chicago Bulls superstar Michael Jordan, who receives an
undisclosed royalty for each pair of shoes sold. This year Reebok
is fighting back with its Energy Return System, found in its ERS
Showtime model (price: $79). Its soles contain an arrangement of
cylinders, made of a synthetic called Hytrel, which compress on
impact and provide extra spring. Taking the next engineering leap,
both Reebok and Nike have developed shoes with inflatable sides and
collars for extra support.
Not every manufacturer is chasing the perfect technology. L.A.
Gear has become a major contender by selling shoes mostly for show,
not sport. Adorned with bright-neon trim, buckles and rhinestones
and worn by svelte blonds in the company's TV commercials, L.A.
Gear's shoes suggest sex and Southern California. One of the
brand's top sellers is Street Brats ($60), with contrasting-color
laces, marbleized leather and tongues that stick straight up. L.A.
Gear was started in 1979 by Robert Greenberg, 49, a hairdresser
turned entrepreneur who keeps his finger on the pulse of California
shopping culture. Says he: "I'm a mallaholic. I need to go to a
mall at least twice a week, or I get the shakes." Sales at L.A.
Gear accelerated from $11 million in 1985 to $224 million in 1988
and are expected to more than double this year.
A shoemaker's fortunes rely heavily on advertising. Nike's
theme, "Just Do It," which urges would-be customers to get off
their couches and onto their exercise bicycles, has been widely
praised. But Reebok's recent "Let U.B.U." ad campaign, which
starred eccentric characters in surrealistic situations, was
considered a bust. All the major manufacturers have hired celebrity
pitchmen. Nike pays multitalented pro athlete Bo Jackson to sell
its cross-trainer shoe, and Joan Benoit Samuelson to advertise its
running line. L.A. Gear keeps retired Los Angeles Lakers star
Kareem Abdul-Jabbar on its payroll; his former coach Pat Riley is
under contract with Reebok.
Having paid heavily to pump up their images, footwear-makers
capitalize on their cachet by emblazoning their emblems on
clothing. Nike, whose apparel sales reached $208 million in fiscal
1989, sells hundreds of garments ranging from lemon-colored cotton
jerseys to hot-pink bicycle shorts. Next spring Nike will launch
an Aqua Gear line for wind surfers and other hardy types.
Manufacturers are furiously bringing out new clothes and shoes,
in part because they know that the industry's rapid growth is
slowing down. Baby boomers, for example, are slacking off in their
exercise regimens. While last year's 15% growth rate was healthy
by any measure, it was down from 29% the previous year. As they
pour money into R. and D., the shoemakers hope to come up with new
products that weekend athletes can't resist. One new customer of
note: Batman, whose movie shoes were based on Nike's cross-trainer.