Nike vs Adidas: What happens when Reebok goes away?
Posted by ZA on March 9, 2009
For most of the last 20 years there have been three major brands of tennis shoes: Adidas, Nike & Reebok. Then in a bold move in 2005 Adidas acquired Reebok for $3.8 billion dollars. The idea behind the purchase is that Reebok would help to increase Adidas’ share of the tennis shoe market in the United States.
Darren Rovell provides evidence that the acquisition of Reebok by Adidas has not been a success. In fact Rovell says that Reebok is “going to be on life support” if they don’t hit a home run with their new women’s fitness line. He goes on to say that Nike’s market share has increased in the U.S. since 2005, while the combined Adidas & Reebok entity is basically treading water.
To me this is just another indication that it is only a matter of time until Adidas kills the Reebok brand forever, and starts selling their products under the Adidas logo. Adidas has given their Reebok deal over 3 years to take off, and it’s gone the other way. In the current economic climate its just not smart business for Adidas to try to carry two large operations, when they could combine the two products into one line. The cost savings would be significant and inheriting the current Reebok deals (e.g.- NFL sponsorship) would further the Adidas brand in the United States.
I recognize that closing up shop at Reebok would lead to a lot of layoffs. That is obviously not something that I want to see happen to any company. But the sad reality is that Reebok is not getting the job done for Adidas, and they are already slashing personnel. So it is better that Adidas make this change now, rather than wait until the Reebok brand is completely irrelevant. Would I like to see a strong Reebok brand? Yes, because a third strong brand would only make Adidas and Nike better. I just don’t think Reebok has enough bullets left to be that brand.