Introduction to the Footwear Industry

Simply said, most people own a pair of shoes – multiple pairs of shoes to be more exact. Many of the shoe companies sell in both retail and in wholesale markets, but there are different types of sectors in the footwear industry. The global footwear industry is broken down into sectors: type (athletic or non athletic), end user, material distribution method and region. In this research, I will be focusing on the athletic footwear sector of the industry by focusing on the three brands listed below.

Introduction to Nike

When Nike was founded in Oregon in 1968, the company was called “Blue Ribbon Sports”. Now, as one of the leading athletic footwear companies, Nike also sells sports and outdoor apparel and accessories. Nike acquired various shoe companies such as Converse, Cole Hann and Canstar Sports and is endorsed by famous athletes such as Michael Jordan and Tiger Woods.

Introduction to Adidas

Adidas AG, more commonly known as “Adidas”, was named after the founder, Adolf (Adi) Dassler, whose family began manufacturing shoes in Germany after World War I. Adi decided to gift a pair of his shoes to Jesse Owens, a track star. After winning multiple races, the shoes Owens was wearing gained global popularity. Adidas’ shoes are typically light weight and are popular among soccer players worldwide.

Introduction to Puma

Adi Dassler happened to have a brother named Rudolf (Rudi). After the two brothers had varying opinions in regards to a business conflict, Adi and Rudi decided to break off on their own and Rudi called his business “Puma”. Puma operates with four main principles: heritage, sport, technological innovation and design. Puma also puts a strong emphasis on creating sustainable products for their customers.

Why These Brands?

I chose to compare data from these brands because I am a loyal Nike customer and I wanted to look into how Nike’s competitors are doing in the footwear market. After researching different athletic footwear companies, Nike, Adidas and Puma had the most similar public statistics published. This allowed for me to create meaningful charts that had information on all three brands. It is important to note that because all of the companies are global brands, some of the data is not from the U.S.. All of the data in this research report was collected from the free version of Statistica.

Data Collection

The first data set that I looked at compared the top most valued sports brands worldwide in 2019. This data was reported by Forbes in millions of U.S. dollars and is shown below.

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Based off of this graph, it is clear that Nike was the leading valuable sports brand in 2019 with its brand value being $36,000. The next most valuable sports brand happens to be ESPN, but the next most valuable athletic footwear companies (in respective order) are Adidas, Puma, Under Armour, then Reebok. It is interesting to note that Adidas and Puma were originally part of the same company and now there is a clear distinction between their brand values.

My next dataset is reported from a survey conducted by YouGov. YouGov surveyed 1,005 French respondents aged 18-34 in August of 2018. The goal of the survey was to identify how French Millennials rank different athletic footwear brands and the results are shown below.

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As seen in the bar graph, Nike (once again) is the leading sneaker brand based off of the survey results. Nike earned 26% of the respondents’ number one ranking, whereas Adidas received 19% and Puma only received 5%. This is interesting to note because Nike is an American based company, whereas Adidas and Puma are European brands. Another notable find from this bar graph is that Converse was ranked as a separate brand, even though it was acquired by Nike in 2003.

Legally, all companies must report their quarterly financial statements. Using this data, I was able to compare the annual revenues of Nike, Adidas and Puma. Statistica gathered this data from the annual reports of each of the three companies and reported the global revenues in billions of Euros and the chart is shown below.

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By looking at this comparative line chart, it can be seen that Nike and Adidas have had an overall similar trend line in their revenue over the years 2006-2020. Puma on the other hand has generated an almost steady global annual revenue way below its competitors. As seen from the chart, all three companies hit their peak global annual revenue in 2019 and then decreased in 2020. This is most likely due to the COVID-19 Pandemic that negatively affected the economy as a whole in 2020.

In 2018, Nike decided to use Colin Kaepernick as a celebrity endorsement. Colin Kaepernick is a controversial figure because of his decision to kneel during the NFL National Anthem in 2016. Nike’s decision to be endorsed by Kaepernick led the company’s stock to go down 3% when the campaign was released, but Kaepernick’s new shoe line still managed to sell out on the first day of the campaign. Although this decision was seen as controversial by the public, it was an economic success for Nike as a company and based on the graph, the revenue for Nike also rose in 2018.

In addition to shoes, Nike, Adidas and Puma also sell apparel and accessories. Because of this, I thought it was important to look more specifically at how much revenue each company was making off of solely footwear (no pun intended). The data in the chart below shows the global annual revenue brought in by the footwear sector of each of the companies from the years 2010-2020. This data also comes from each of the company’s annual reports and it visualized in the charts below.

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What is interesting about this graph is that Nike and Puma’s trend lines seem to similarly follow the trend lines of their company’s total global annual revenues. This hints at the fact that the footwear sector makes up most of the global annual revenue generated by these companies. However, Adidas’ trend line seems to take a deeper dip in revenue generated from footwear sales in 2014 compared to its total revenue. This being said, it looks as though Adidas also made a slower recovery from this dip because the slope is less steep than in the total revenue graph.

Because of this finding, I decided to look at what may have caused this drop in footwear sales. After researching, it appears as though there was an “unpredictable golf market” in 2014. This hurt Adidas more than its competitors because Adidas heavily relies on the golf market to generate revenue. With a decrease in golf players, this caused the Adidas inventory to be too high as well as their operating costs. This ultimately hurt the company’s revenue as seen in the chart above.

Summary of Findings

After analyzing the data in the graphs that I created on Tableau, it is clear that Nike is the overall leading athletic footwear company compared to Adidas and Puma. In global annual total revenue and in global annual footwear revenue, Nike has come out on top. Additionally, in terms of brand value, Nike not only takes the lead ahead of Adidas, but Converse also leads ahead of Puma. Lastly, when millennials in France were asked to rank their favorite athletic sneaker brands, Nike won by a landslide. Nike’s success is not due to just one factor in their business model, but from multiple. From marketing tactics to financial decisions, a lot goes into running a lead business for over 10 years.

Conclusion

To expand this research further, it would be interesting to look at the amount of money each company spends on marketing/advertising expenses. Because each company has a different target audience, each brand must go about their advertising in their own way. These differences may account for some of the findings that I found in my research. Another finding that would be interesting to explore would be customer satisfaction with each company. By looking at the customer return rate, this would also give insight into how loyal each brand’s customers are to them. This research was not possible for me to conduct because I do not have access to this data. However, these datasets would allow me to dive deeper into the meanings behind each of the numbers I found in my conducted research.