THE ATHLETIC FOOTWEAR INDUSTRY 1

The Athletic Footwear Industry

Brianna Bang

ENTR 290: Opportunities and Concept Development

Brandon Baumbach

April 9th, 2019

Table of Contents

Background………………………………………………………………………………………..3

Industry Overview…………………………………………………...…………………………....5

Market Size and Growth Trends…………………………………………………………………..

Competitive Overview…………………………………………………………………………….

Demographic and Cultural Trends………………………………………………………………...

Intellectual Property……………………………………………………………………………….

Summary…………………………………………………………………………………………...

Conclusion………………………………………………………………………………………….

References………………………………………………………………………………………….
THE ATHLETIC FOOTWEAR INDUSTRY 3

The Athletic Footwear Industry

Background

Footwear has and will always be an essential part of an individual's everyday attire.

Athletic footwear, sometimes referred to as “tennis shoes” or “sneakers”, is divided up into

different subcategories for their individual unique purposes. These subcategories include aerobic

shoes, running and walking shoes, trekking and hiking shoes and sports shoes. There is a long

process and a lot of thought that goes into creating athletic footwear. They are designed by

conducting research that includes motion analysis, ground reaction forces and loading rates,

foot-pressure measurement, ankle range of motion, foot morphology, and electromyography.

Prototypes are then fabricated and put through testing that focuses on flexibility, stability,

traction, and durability (Athletic Shoes, 2008). Shoes must also appeal to consumers by having a

desirable or unique design.

For many years, athletic footwear was created for the sole purpose of protecting

individuals feet from the harsh outside terrain and giving active individuals proper support. In

1917, Converse introduced a basketball shoe called the classic high top. In 1921, a former

basketball player for the Akron Firestones named Chuck Taylor popularized this shoe by

endorsing the Converse classic high tops and wearing them at basketball clinics across America.

Converse began to see a shift in their target audience in the 1970s when high tops became a

symbol of counterculture. “A white T-shirt, blue jeans, black leather jacket, and high tops

became the uniform of youth rebellion” (Athletic Shoes, 2008). Converse changed the way

athletic footwear is viewed by creating a versatile shoe that can be used for sports, fashion and

casual wear. They paved the way for other brands to create athletic shoes with more than one
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purpose. In the early 80’s, Nike, a popular athletic shoe and clothing brand, made a large splash

in the fashion industry when they released the Air Force 1. The Air Force 1 was the perfect shoe

that could be worn either on the basketball court or be used as a fashion statement for consumers'

everyday style. According to Nike.com, the original Air Force 1 is still for sale, along with

hundreds of different versions of the shoe with unique color schemes.

Industry Overview

According to statista.com, the athletic footwear market was valued at $19.6 billion in

2017. The industry's 2017 NAICS code for manufacturing footwear is 316210. This code applies

to the manufacturing of all footwear except orthopedic extension footwear. The athletic footwear

industry is dominated by two main athletic sportswear companies, Nike and Adidas. Athletic

footwear revenue is only one source of revenue for these two companies as they also sell athletic

apparel and equipment.

Nike, Inc.

Nike, Inc. is the largest firm in the athletic footwear industry. According to statista.com,

Nike’s footwear revenue for the 2018 year was $31.35 billion. This number reflects the revenue

for shoe sales specifically, and not the revenue for the entire company. For the 2018 year, they

had 73 thousand employees across 1,182 stores across the world. “US-based Nike is the world

leader in athletic footwear and apparel. The company, which is traded as NKE on the New York

Stock Exchange (NYSE), has acquired several footwear and apparel companies over its history

such as Cole Haan, Bauer Hockey, Converse, Hurley International, Starter, and Umbro” (Number

of Nike Retail Stores, 2019).

Adidas

Statista.com states Adidas footwear revenue for the 2018 year as $21.92 billion. They had

approximately 57,016 employees across 1,342 stores worldwide in 2018. They own the brands

TaylorMade golf company, and Runtastic. Adidas also acquired the brand Reebok in 2016, which

was a competitor of Adidas. Adidas did this so they could try and compete with the leading

company in the industry, Nike (Girard, 2005).

Puma

Puma’s footwear revenue for the 2018 year was $4.65 billion, and employed around

12,894 people, according to statica.com. “Global sportswear Puma is looking to open 35 new

stores in the coming year to increase its footprint in the country. The brand that currently has 355

stores across 120 cities added 60 new ones in the last one year and are looking to launch 35 in

tier I, II and III cities” (BestMediaInfo Bureau, 2017).

The line graph presented below compares Nike, Adidas, and Pumas footwear revenue

from the years 2010 to 2018. As you can see, Nike generates a significant amount more in

footwear revenue over its competitors, Adidas and Puma.

Note. Footwear / shoe revenue Nike, Adidas & Puma 2010-2018 | Statistic. (n.d.). Retrieved from
https://www.statista.com/statistics/278834/revenue-nike-adidas-puma-footwear-segment/
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Market Size and Growth Trends

Market Size

The athletic footwear market was valued at $222.4 billion in 2017 by Credence Research,

Inc. “Athletic shoes are built for high performance and are considered part of an athlete’s gear.

They make up just one part of the sporting goods market typically thought to include footwear,

equipment, and clothing” (Athletic Shoes, 2008). The athletic footwear industry and the sporting

goods industry rely on each other to bring in customers resulting in a larger market. They both

target athletes by offering them a piece of an “athletes gear”. In addition, the pool of potential

customers is expanding by individuals who want athletic footwear for fashion and everyday

casual wear.

Growth Trends

Credence Research, Inc. said that the athletic footwear market is “expected to reach 292.7

billion by 2026, expanding at a CAGR of 3.1% during the forecast period from 2018 to 2026”.

The athletic footwear industry is predicted to grow in future years due partly to increased

participation in athletic activities for health benefits and social media and creative marketing

techniques.

“Obesity is a major health issue in developed countries, such as the U.S. and Europe,

with one out of three persons being obese. The regional populace is focused on activities such as

yoga, gym, and jogging to combat obesity. Hence, the demand for athletic footwear is higher in

these countries. The rising health awareness among consumers is expected to further increase

this demand in the coming years” (Athletic Footwear Market by Product Types, 2019). As long

as individuals are concerned about their health, they will continue to purchase athletic footwear.
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We also see growth in this industry due to the increase in social media and creative marketing

techniques. Social media has expanded very rapidly in the past few years, and has created the

perfect platform for companies to promote and market their products. One social media app that

has made this especially easy is Instagram. Celebrities and other social media influencers can

now promote a brand's product on their Instagram by simply posting a picture of them wearing a

certain shoe. Influencers can be paid to promote a brand, or they can post a picture without

having any sponsorship from a company. Either way, these posts create buzz for a company and

are seen by millions of potential customers. Companies like Nike are increasing the amount of

money they spend on marketing per year, as can be seen in the diagram presented below.

Note. Pratap, A. (2018, December 25). Nike Marketing (Advertising & Promotions) Expenses 1999-2018. Retrieved from
https://notesmatic.com/nike-marketing-expenses/
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Competitive Overview

Everyone has most likely heard of the brand Nike before, as it is one of the most popular

and well known athletic footwear brands world-wide. “Incorporated on September 8, 1969, this

American multinational corporation has long been dominating the athletic footwear market in the

US. It’s also one of the best sports shoes brands in the world. The sportswear giant with its “Just

Do It” slogan has captured a huge share of the US market and is a leading footwear brand around

the world for products that include athletic apparel, footwear, equipment, and accessories.”

(Technavio, 2018) Nike sponsors some of the largest names in sports such as Cristiano Ronaldo,

LeBron James, and Michael Jordan. These sponsorship deals usually last for years, assuring Nike

that they will have constant publicity from these big sport athletes. Nike has been the leader in

athletic footwear for years, but are now facing high competition from brands such as Adidas and

Puma.

Adidas offers similar designs and products compared to Nike, and are slowly creeping up

on the leaderboard. “Adidas (ADDDF) brand sales in North America were up 25% in 2017,

compared with 3% for Nike (NKE). Adidas is still much smaller than Nike: Adidas brought in

$5.3 billion in 2017 compared with Nike's $15.2 billion. But Adidas has a better sense for what

consumers want to buy, which is making Nike sweat” (Clash of Titans). Adidas can thank big

TV stars such as The Kardashians for wearing their shoes on TV as well as on social media. Not

only is Adidas making a name for themselves with TV stars, but also with big time athletes such

as James Harden, who turned away from Nike in 2015. Adidas also just secured a partnership

with Beyonce to create new shoes and apparel. "This is the partnership of a lifetime for me,"

Beyoncé said in a statement. "Adidas has had tremendous success in pushing creative
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boundaries. We share a philosophy that puts creativity, growth and social responsibility at the

forefront of business" (Taylor, 2019). This partnership is incredibly big for Adidas, and will

create a lot of buzz for their company.

In 2017, Adidas also announced that they will introduce a 3D-printed sole that allows the

consumers to customize their soles for better support and comfort. “The "Futurecraft 4D" is

printed through a process called digital light synthesis, which uses UV lasers to create a shoe

that's durable and flexible. Most 3D-printed materials are hard and stiff” (CNN).
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Demographic and Cultural Trends

Demographic Trends

Demographic trends in this industry focus on young people and more specifically young

men. Large companies target young athletic men that want to “look cool” while wearing a shoe

that performs well. “Women, too, wear athletic shoes but a far larger percent of female athletic

shoe users wear those shoes primarily when they are participating in athletic activity. Men are

more likely to wear athletic shoes while doing their day-to-day activities, as a general-purpose

shoe” (Athletic Shoes, 2008). In addition, middle to upper class income families are targeted in

this industry. Companies can get away with overpricing their shoes because this target market

can afford it.

Cultural Trends

Cultural trends become apparent when looking at the values and attitudes of consumers.

Consumers make purchases based off these things and can shed light on trends within an

industry. In a report published by Technavio’s in 2016, they established that the top three trends

driving the athletic footwear industry in the US are the increased use of eco-friendly products,

innovation in sole technology, and growing preference for premium and customized products

(Top 3 Trends Impacting the Athletic Footwear Market, 2016).

Increasing eco-friendly products. Technavio’s report explained that consumers are now

demanding eco-friendly products due to the growing need to preserve the environment. The

report states that “Vendors are catering to this demand by increasingly focusing on

manufacturing products that can reduce the negative effects on the environment. As a result,

organic cotton, recycled rubber, plastic materials, and water-based adhesives are replacing
THE ATHLETIC FOOTWEAR INDUSTRY 12

traditional leather, synthetic rubber, nylon, polyurethane, and other synthetic materials in the

manufacturing of sports apparel and athletic footwear”. Top companies in the athletic footwear

industry are fulfilling consumers' demands by developing new strategies to reduce environmental

effects. For example, Nike has created a shoe recycling program for the purpose of reducing their

carbon footprint. Adidas has also hopped on board with this initiative. “Building on such

environmental initiatives, Adidas developed a strategy that aimed to reduce the environmental

effects of its products by 15% by the end of 2015. The company plans to cover its entire value

chain from product development to sales under this newly developed strategy”.

Innovations in sole technology. High competition among competitors is pushing

companies to create new and innovative sole technologies. Not only are consumers looking to

buy the most popular and stylish shoe, but they also want a shoe with the best comfort and

support. Technavio’s report states that “The latest technology that is gaining popularity is the use

of polyurethane capsules in the manufacture of athletic footwear. These capsules provide the

runner with buoyancy, allowing runners to expend less energy. The Adidas Energy Boost 2.0 is

one such running shoe that is manufactured using polyurethane capsules”. Not only is sole

technology advancing, but so is the technology within the shoe. “Some shoes are also

manufactured with built-in sensors to track the speed, distance covered, and calories burned.

Puma's RS series allows users to connect their shoes to an Apple II and upload distances they ran

and calories burnt” (Top 3 Trends Impacting the Athletic Footwear Market, 2016).

Growing preference for premium and customized products. Consumers are now

looking to customize and create new looks for the shoes they purchase. “About 25% of the
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footwear purchased online is customized, which aggregates to USD 2 billion worth of all

customized footwear sales” (Top 3 Trends Impacting the Athletic Footwear Market, 2016). The

process of customizing shoes online is now a reality thanks to advancements in computer

technology and the growth in online shopping. Large companies now offer customization of

shoes on their website. Nike, for example, offers NikeID which allows consumers to customize

certain shoes and purchase them on their website. Technavio also adds that “Adding to the

increased demand and need for customized athletic footwear, there is also a high demand for

premium products among consumers in general. Higher prices of products influence consumer

perceptions about the product”. When consumers look at high priced shoes, they don’t

necessarily see just a high price tag. They see a shoe that is going to give them the best comfort,

quality, durability and style.

Intellectual Property

As stated earlier, Nike is the largest athletic footwear firm in the industry. Due to the

large size and scale of Nike, it has to have several trademarks. Probably their most familiar

trademarks are the nike swoosh symbol, along with their phrase “Just Do It”. Nike terms of use

states “All trademarks, service marks and trade names (e.g., the NIKE name and the Swoosh

design) are owned, registered and/or licensed by NIKE. You do not acquire a license or any

ownership rights to any trademarks, service marks, or trade names through your access or use of

the Platform or Content” (Nike. Just Do It).

It is also interesting to note that Nike states they have the license to use all comments,

feedback and ideas as their own. “You understand that any comments, feedback, or ideas you

send us are provided on a non-confidential basis and you grant to NIKE a perpetual, worldwide

license to use all comments, feedback and ideas you may share with us, without notice,

compensation or acknowledgement to you, for any purposes whatsoever, including, but not

limited to, developing, manufacturing and marketing products and services and creating,

modifying or improving products and services.”

Summary and Conclusion

Summary

To summarize, athletic footwear has evolved throughout the years from specifically being

used for sports to being now used as fashion statements and in everyday wear. Nike is the current

leader in this industry but is facing high competition from competitors like Adidas because of

their ability to push creative boundaries and secure partnerships with big names like James

Harden and Beyonce. Today, athletic footwear is a billion dollar industry and is estimated to

continue to grow in future years due to increased participation in athletic activities, social media,

and creative marketing. Men, specifically young athletic men are the top buyers in this industry,

and companies can get away with charging a lot for their shoes because their target market can

afford it. Cultural trends such as increasing eco-friendly products, innovation in sole technology,

and growing preference for premium and customized products explains why consumers will

continue to buy within this industry. In addition, large companies like Nike have many

trademarks to ensure they have legal rights to their own designs and products due to the size and

scale of their company.

Conclusion

In conclusion, the athletic footwear industry is thriving and will continue to thrive for

years to come. If someone is looking to branch into the athletic footwear industry, they have a

chance to be very successful considering Credence Research, Inc. valued this industry at $222.4

billion in 2017. However, they will have to compete against very large names like Nike and

Adidas which would be quite a challenge. These companies have had great success within this

industry because they cater to consumers' needs by offering them new styles, customization, and
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new sole technology. They spend millions of dollars on marketing which includes partnering

with big time sports athletes and celebrities, as well as using influencers over social media sites

to create buzz for their products.

References

Adidas (ADDDF) brand sales in North America were up 25% in 2017. (n.d.). Clash of the

Titans: Adidas and Nike continue to battle it out. Retrieved from

https://money.cnn.com/2018/04/16/news/companies/adidas-nike-sportswear/index.html

Athletic Footwear Market by Product Types (Sports, Running and walking shoes, Hiking and

backpacking shoes, Aerobic and gym wear) and by User (Men, Women, Kids) - Global

Opportunity Analysis and Industry Forecast, 2015 - 2022. Retrieved from

https://www.alliedmarketresearch.com/athletic-footwear-market

Athletic Footwear Market Size, Share & Growth | Industry Report, 2025. (n.d.). Retrieved from

https://www.grandviewresearch.com/industry-analysis/athletic-footwear-market

"Athletic Shoes." (2008) Encyclopedia of Products & Industries - Manufacturing. . Retrieved

April 08, 2019 from Encyclopedia.com:

https://www.encyclopedia.com/manufacturing/encyclopedias-almanacs-transcripts-and-m

aps/athletic-shoes

BestMediaInfo Bureau. (n.d.). Puma expanding India base, to open 35 more stores. Retrieved

from

https://bestmediainfo.com/2017/12/puma-expanding-india-base-to-open-35-more-stores/

Top 3 Trends Impacting the Athletic Footwear Market in the US Through 2020:

Credence Research. (n.d.). Footwear Market By Material (Athletic, Non-Athletic Footwear), By

Material (Plastic, Synthetic Rubber, Leather, Plant Based, Others), By Distribution

Channel (Hypermarkets, Online Channels, Specialty Stores, Others), By End-user (Men,

Women, Kids) - Growth, Future Prospects & Competitive Analysis, 2018 – 2026.
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Retrieved from https://www.credenceresearch.com/report/footwear-market

Footwear / shoe revenue Nike, Adidas & Puma 2010-2018 | Statistic. (n.d.). Retrieved from

https://www.statista.com/statistics/278834/revenue-nike-adidas-puma-footwear-segment/

Girard, L. (2005, August 03). Adidas rachète l'américain Reebok pour tenter de faire jeu égal

avec Nike. Retrieved from

https://www.lemonde.fr/economie/article/2005/08/03/adidas-rachete-l-americain-reebok-

pour-tenter-de-faire-jeu-egal-avec-nike_677359_3234.html

Nike. Just Do It. (n.d.). Retrieved from https://www.nike.com/

Nike Trademarks: Everything You Need to Know. (n.d.). Retrieved from

https://www.upcounsel.com/nike-trademarks

Number of Nike's U.S. retail stores 2009-2018 | Statistic. (n.d.). Retrieved from

https://www.statista.com/statistics/241642/number-of-nike-stores-in-the-us-since-2008/

Pratap, A. (2018, December 25). Nike Marketing (Advertising & Promotions) Expenses

1999-2018. Retrieved from https://notesmatic.com/nike-marketing-expenses/

Taylor, K. (2019, April 04). Beyoncé is partnering with Adidas to create new shoes and apparel

and relaunch athleisure brand Ivy Park. Retrieved from

https://www.businessinsider.com/beyonce-partners-adidas-athleisure-ivy-park-2019-4

Technavio. (2016, August 23). Retrieved from

https://www.businesswire.com/news/home/20160823005099/en/Top-3-Trends-Impacting

-Athletic-Footwear-Market
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Technavio, & Technavio. (2018, September 18). Top 15 Sports Shoes Brands in the US 2018 |

Athletic Footwear Market. Retrieved from

https://blog.technavio.com/blog/top-15-vendors-athletic-footwear-market-us