Invest in sport or aim for fashion? In 2013, confronted with sales at half-mast, Puma revised its strategy. Good idea.
In the battle of the sports planet, there are Nike, Adidas … and Puma, the eternal outsider. Far from the first two, the brand founded after the war by Rudolf Dassler, the brother of Adolf, creator of Adidas, went through a critical phase in the late 2000s. Redeemed for nearly 4 billion euros by François- Henri Pinault in 2007, Puma disappoints its new owner, PPR (now Kering): from 2011 to 2013, its profits fell from 230 million to 5 million euros! The equipment manufacturer pays cash a growth crisis that made it in less than fifteen years from the status of SME to that of multinational, with a turnover multiplied by ten.
Exits Jochen Zeitz, his historical boss, accused of having privileged fashion at the expense of sports articles. In the summer of 2013, Björn Gulden, an ex-footballer, was appointed manager of Adidas and then head of Pandora jewelery. He takes orders at a time when the sport market is going quite well and where running and fitness are constantly making followers. But while the Japanese Asics and the American Under Armor compete for the third step of the podium, Puma must find its positioning. Between emphasis of the brand’s sporting vocation and fashion temptation, how will Björn Gulden balance his efforts?
THREE SOLUTIONS WOULD HAPPEN TO HIM:
- Go back to basics by capitalizing on sporting goods
Even if the brand still suffers in this market, it has acquired a certain legitimacy, especially thanks to the golf, with its brand Cobra, which designs very technical products for this sector. But it is not necessarily the best way to reconnect with the profitability long awaited by Kering, shareholder of Puma to the tune of 83%.
- Take a radical fashion turn, with mono-brand boutiques
Puma, a fashion icon? One after the other, sports brands give way to the temptation of fashion, followed by their customers, men and women, seduced by sportwear. But this strategy, which requires large capital outlays, does not even guarantee a return on investment, as shown by the descent into the underworld of the Tacchini brand.
- Choose a mixed model, halfway between sport and fashion
The two areas can be combined and their association allows to reach a wider target, provided, nevertheless, not to skimp on the marketing means. It is a question of making judicious choices in the sponsorship of clubs and sportsmen. And knowing how to calibrate the dose of technology needed to stay on the cutting edge of innovation, like its competitors Nike and Adidas.
When Antoine Griezmann scored his two goals in the semi-finals of the Euro against Germany, last July, we hail the feat … but we especially notice his shoes! One is yellow, the second pink flashy. Björn Gulden, Puma’s boss, can rub his hands. No doubt: the brand, which accompanies since its debut the French sacred best player of the Euro 2016, had the hollow nose. Other stars to wear Tricks: Olivier Giroud, Arsenal striker, Marco Reus, the German player from Dortmund, or Mario Balotelli, OGC Nice’s Pertussis. Paying choices, since, after the Euro, Puma increased its market share in France by 2.4% on sales of cleated shoes. Its performance in the first half of the year is equally admirable: + 41% on footwear, when other brands have to settle for a meager 2.1% growth.
Puma claims to have ‘done everything’ for an amicable agreement, in vain. ‘History repeats itself,’ jokes Neil Harriman, the legal director of the cougar, a little tired.
Footballer Antoine Griezmann wears Tricks signed Puma:
On the race side, Puma is even faster, with a 83% jump in sales, while the market is up by just 6%. What can make to forget the terrible year 2013 when the brand saw its net profit melt 93%. Björn Gulden, who had just arrived, explained: ‘You can not transform a company in a few months. In the sports industry, it takes almost two years between the time you start working on a product and the day it’s in the store. ‘History is saying it’s right.
In figures: 3.3 billion euros of turnover in 120 countries. 50% of turnover achieved on shoes alone. 6.5% growth in 2015 compared to 2014.
The shops have been transformed and the whole strategy is already bearing fruit: the profits in free fall of the year 2013 belong to the past.
Above all, the two equipment manufacturers accuse each other before the plagiarism court. Their new sneakers, ‘Boost’ at Adidas and ‘NRGY’ at Puma, look strangely similar to their sole in eTPU, a damping granulated component. Puma had started developing the technology with the BASF chemist, but this one stopped collaboration to work with Adidas.