Following acquisition by adidas Group, Reebok resurfaced with a new goal rooted in its old strong suit: to be the leading fitness brand in the world. First up: CrossFit.
To do that, it’s hitched itself to a millennial target and four fitness brands defining modern exercise, chief among them CrossFit. Reebok is enjoying the exclusive licensing rights to CrossFit’s trademark and title sponsorship of its summer games, but can the fitness program make Reebok relevant again?
“The real test is still in front of us—making the Reebok brand more relevant to consumers.”
Those are the words adidas Group CEO and chairman Herbert Hainer said to shareholders in a 2007 annual report. At the time, Reebok had been a subsidiary of adidas Group, the global sporting goods parent company of adidas and TaylorMade, for just more than a year. Reebok, once the leader in the athletic footwear market, ahead of Nike, had fallen out of relevance more than a decade earlier. When it was acquired by adidas Group for $3.8 billion in January of 2006, Hainer warned critics of the long road to the brand’s recovery.
Each March for the next four years, the group CEO assured investors that Reebok was finally on the right path. In 2009, the “clear roadmap” to success set out Reebok’s plans to dominate women’s fitness, challenge men’s sports, and revive heritage styles. By 2010, the success of the “toning category”—featuring footwear that promised to tone wearer’s legs—seemed to have revealed a better way forward. But by 2011 toning was waning and Hainer grasped at Reebok’s running and fashion shoes for a bright spot.
While the brand continued to search for an identity and a foothold in the market, the seed of a partnership with great promise had been planted. If and when it would bear fruit was yet to be seen.
The CrossFit Courtship
Among the crowd of CrossFit enthusiasts that flocked to Carson, California, in July of 2010 for three days of fitness competition was the director of sports marketing for Reebok. A CrossFitter himself, Chad Whittman was there as a spectator but was also on a mission: to make contact with Greg Glassman and introduce the founder of CrossFit to Reebok.
Both brands were at an inflection point. CrossFit, a high-intensity exercise regimen created by Glassman to practice functional movement, had outgrown its former arena, a ranch in Aromas, California. For the first time, the CrossFit Games would be hosted at the Home Depot Center in Los Angeles to accommodate the growth of the sport. At the time, CrossFit had been gaining popularity for a decade. CrossFit Inc. was incorporated in 2000, but Glassman’s program was first picked up in 1995 by a police force in Santa Cruz, California, and later by visitors to CrossFit.com, where anyone interested could find a new workout posted each day. But with troubling media coverage about the potential dangers of the demanding sport and little infrastructure, word of mouth had yet to build a following as strong as any of its component activities (Olympic lifting, gymnastics and aerobics). Reebok was on its way out of American football as it radically shifted its focus away from sports and back to its fitness roots.
“When [Reebok] was the most powerful and meaningful … it was centered around fitness,” says Yan Martin, vice president of brand management at Reebok. Fitness in 2010 looked a lot different than it did in the 1980s, though. Women had ventured outside the mirrored studios where they once did step aerobics and had begun to make their way toward the dumbbell rack. While Reebok wanted to leverage the equity it had in its women’s fitness category, it also wanted to carve out a place in the modern fitness market.
“Our president, at the time, was working out at CrossFit New England and came back one day and said, ‘This thing is amazing. It’s what fitness will be for years to come,’ ” Martin says.
Meaningful fitness—exercise that lets people discover their potential—and community orientation were two tenets that Reebok identified as central to both modern fitness and CrossFit. “We felt it was a perfect fit based solely on purpose,” Martin says.
That summer, Steve Weiss was among the team from CrossFit that traveled to Reebok headquarters in Canton, Massachusetts, to learn more about how the two brands might work together. Initial conversations mentioned nothing of licensing, revenues or business synergies. Rather, the brands talked about shared values. “They really convinced us they believed in CrossFit as a lifestyle and a fitness program and they wanted to help elevate that movement rather than just trying to sell apparel,” Weiss says.
Although the brands meshed ideologically, a business case had to be made as well. CrossFit was seeking a title sponsor of its annual games as well as global infrastructure to grow the sport. (In six years, the number of CrossFit affiliates has grown from approximately 1,500 to more than 12,000 in 150 different countries). Reebok would in turn get exclusive rights to create CrossFit-branded footwear and apparel and an authentic position in one of the fastest-growing movement in fitness. “Reebok was using CrossFit as a lighthouse as they transitioned away from team sports,” Weiss says. The brands penned a 10-year deal, and Reebok took its first step in pursuit of the “Fitness Generation.”
Putting Faith in the FitGen
CrossFit was the first of four strategic partnerships Reebok would go on to make with athletic brands aligned with the FitGen—a segment, or “tribe,” defined by Reebok as, “a generation hungry to get back to the basics.” Following CrossFit with obstacle-course race series Spartan Race and group fitness studio Les Mills in 2013, then mixed martial arts promotion company UFC the following year, Reebok rounded out its “tough fitness” category.
The next year also saw the debut of a new logo, the Reebok Delta, whose three sides represent the physical, mental and social transformation people experience when they commit their lives to fitness. As president Matt O’Toole described it in a press release that year, “It’s not a logo, it’s a symbol … a way of life.” The lifestyle of fitness is what sets the FitGen apart from those that came before it. “What we’re seeing is that what we call the Fit Gens—the consumer who’s typically in their 20s whose entertainment is working out—they’re responding to our version of fitness, which is much more challenging but also much more social,” O’Toole told Footwear News in 2015.
With a core group of partners assembled, Reebok debuted its multichannel “Be More Human” campaign on Super Bowl Sunday in 2015. The TV spot, titled “Freak Show,” features everyday people flipping tractor tires, leaping over flames, and stepping in unison to a high-intensity instructor, but also fighting fire in a burning building, playing patty cake with their kids and maneuvering in a wheelchair. According to the narrator: “We do it to get better. Period.”
“One thing that’s hard on the fitness and training side is capturing emotion,” says Ellen Schmidt-Devlin, director of the University of Oregon’s sports product management program. That’s why brands often use sport to create an emotional association with their products. That Reebok figured out a way to use training to capture emotion is one reason Schmidt-Devlin believes the campaign is effective.
“Reebok is trying to intermingle lifestyle, fashion and competitive sport. They’re trying to say, ‘Life in general is a sport.’”
John Rowady, CEO of sports marketing firm rEvolution
“The intensity, the visuals: this is beautiful stuff, but this is millennial marketing,” says John Rowady, CEO of Chicago-based sports marketing firm rEvolution. “[Millennial marketing] is about custom human experiences. … ‘Be More Human’ is this general cast on trying to study and target the millennial audience. Reebok is trying to intermingle lifestyle, fashion and competitive sport. They’re trying to say, ‘Life in general is a sport.’ ”
If Reebok needed a foundational segment to which it could sell its new definition of fitness, numbers would suggest they’ve tapped into the prime patrons of the fitness industry. According to the Nielsen Les Mills Global Consumer Fitness Survey (2013), 76% of regular exercisers are 18-34 years old. A 2015 study by Technogym reported that 69% of millennials believe physical competitions are a good way to keep fit, and 77% would like their workout to be as interactive as possible.
“I think there’s a lot of trust and loyalty with this generation of buyer,” Rowady says. “If you’re listening to them, you’re part of the community, you’re born in the space and you’re what they feel is the legitimate company that is part of their lifestyle, they’d rather reward you over another brand.”
That’s what Reebok is banking on as it competes in a fitness category whose customers are no longer the fringe. “We feel we play a big role as community participants,” Martin says. “We understand that we were the first mover in the marketplace. … What makes our company unique is the fact that we are our consumers.”
Among the more than 10,000 CrossFit-affiliated gyms that have opened since Reebok and CrossFit joined forces, 108 are co-branded Reebok affiliates. Reebok CrossFit One, the 500-member affiliate located on Reebok’s campus in Canton, has become a place of pilgrimage for CrossFitters around the world. “We had Katrin Davidsdottir (female winner of the 2015 Reebok CrossFit Games) here last week,” Martin says. “[Reebok CrossFit One] has become a symbol of how authentic the relationship is between CrossFit and Reebok.”
Reebok’s CrossFit-branded products are a manifestation of the community, as well. Whether it be Kevlar-infused shorts to protect against barbell abrasion or the ever-evolving CrossFit Nano—a shoe designed for diverse workouts allowing athletes to run, jump, weightlift and rope climb in the same pair of shoes—every product takes a consumer-focused approach, says Mike Kratochwill, senior director of training and CrossFit asset marketing for Reebok. “We have hundreds of hours of video of top CrossFit athletes sitting with our developers, designers and marketers talking about what they like and don’t like. All of our product is designed, developed and executed by someone who does CrossFit here at Reebok.”
Competitors Take Aim
In April 2015, Nike released the Metcon 1, a competitor cross-training shoe to Reebok’s CrossFit Nano. Because of CrossFit’s trademark status, Nike, like any brand other than Reebok targeting the CrossFit consumer, can’t market or describe the Metcon or its successor, the Metcon 2, with the word CrossFit. But that hasn’t stopped the powerhouse brand from trying. With its own sponsored CrossFit athletes, such as Lauren Fisher and Mat Fraser, Nike has taken an interest in Reebok’s brand of competitive fitness. Days prior to the 2015 Reebok CrossFit Games, (during which athletes were required to wear CrossFit-branded Reebok shoes and apparel) Nike released a version of the Metcon 1, designed as an homage to the Air Jordan 1, which Nike calls its “first outlawed shoe.” “During the biggest event in the world of high-intensity training, our athletes have been banned from wearing the Metcon 1,” Nike said in a product description below the words, “Don’t ban our shoe. Beat our shoe.”
“Nike is the classic guerrilla marketer,” Rowady says. “Nike invests and gets into marketplaces that other people start. They want to be dangerous enough to understand the space and target audience, and if it goes well, they’ll want to be further in.” The scale of Nike’s resources make it a tough competitor in any category it chooses to enter, he says, so the challenge for Reebok will be the balance between building an endemic reputation for itself in the CrossFit category and protecting its market share. “The question,” Rowady says, is, “Does Reebok need to be an owner rather than a sponsor to really protect their long view, in the way that Vans owns their own events?”
But for the next four years, at least, no amount of marketing can wrest from Reebok its exclusive rights to the CrossFit trademark. “It’s tough for competitors to compete with the position Reebok has,” Schmidt-Devlin says. “Every other brand needs to come into [the CrossFit] territory and define it differently.” In lieu of carving out their own CrossFit categories, competitor brands, she says, will either align CrossFit products with another category in which they’re strong, such as running or basketball, but this can make the products more gender-focused. “Reebok defined CrossFit in a space where there’s equal respect [among the genders]. It’s a niche between fitness and sports, and in that niche, there’s equality and empowerment. Gender doesn’t matter,” she says.
That niche creates both a safety net and a ceiling for Reebok in the adidas Group and the athletic apparel market. “Reebok’s not really Reebok any longer,” Rowady says—at least not the Reebok it was at its height. “It’s a niche brand under the adidas portfolio.” As such, Reebok’s role is not as a contender with Nike, Under Armour or other brands of their size. Rather, it fills out the specialized segments for adidas Group, he says. While training is one of adidas’s key categories, CrossFit and Reebok’s other brands of tough fitness diversify the portfolio enough to make their own category.
“Reebok had to have made a determination to move into a place where they’d have few competitors so they could own the space and be heard,” Rowady says. “Reebok can be relevant and define a sustainable growth pattern for the brand in the [CrossFit space]. And I think that’s what they’ve done.”
The Numbers Story
Profound. That’s the word Kratochwill uses to describe the impact CrossFit has had on Reebok. Kratochwill has been with the brand for eight years and seen its transformation catalyzed by its partnership with CrossFit.
Since Reebok became the exclusive licensee of CrossFit’s trademark and the title sponsor of the CrossFit Games, Reebok’s training category has nearly doubled, composing nearly 34% of the brand’s net sales. Q4 of 2015 marked the 11th consecutive quarter of growth for the brand overall and the third consecutive year of double-digit growth for its training category, of which CrossFit is a big driver Kratochwill says.
The numbers suggest CrossFitters and cross-trainers are beginning to trust Reebok to outfit their fitness, but across all its categories, the brand’s sales have hovered between $2 and $3 billion since 2006, while adidas Group overall sales have trended up by about $6 billion.
Last year, adidas Group had to quash speculations that it would divest Reebok.
“Can Reebok leverage their leadership in [the CrossFit] category to rebuild their brand? I don’t know,” Schmidt-Devlin says. “It would be interesting to see if people believe enough in their products to say, ‘I trust you for CrossFit, now I trust you for my running shoe or my sports bra.”
Apparel is one area where Reebok is particularly optimistic about growth. Since 2012, Reebok’s overall apparel business has grown 19% year-on-year. “Apparel is key,” says Dan Sarro, corporate communications manager at Reebok. “Traditionally Reebok had been heavily a footwear brand with a lot of our apparel in licensed business, with the NFL, for example. Branded apparel wasn’t really there. The new partners we have have generated a huge increase in our apparel sales so we’ve become a footwear and apparel brand the way we want to be.”
Just as important to Reebok’s viability is the growth of CrossFit as a brand and a sport, which will depend not only on how many gyms open up, but media sponsorships and how much airtime the games get on television. Thus far, in Rowady’s estimation, Reebok has yet to truly break through the growth ceiling it’s been under for a decade.
“You run the risk of really destroying the brand by uncoupling it from the much broader strategy Reebok had,” he says. “They seem to have stabilized and made sure they didn’t have any massive downturn in their sales by refocusing. That’s really hard to do. It’s also very difficult to find something that’s increasingly more popular that matches with their original roots. The real question is, will CrossFit continue to grow and have expansive audiences? I feel it’s going to be a long climb to continue to grow that fan base.”
Michelle Markelz is managing editor for the AMA's publications.