BROOKS SPORTS INC., a 78-year-old athletic-shoe company, got a new owner and new corporate headquarters this spring, relocating from Rockford, Mich., to Bothell. Along with the new digs it has a new mission: to change its image and carve a bigger niche in the $6 billion U.S. athletic-shoe industry.
The offices of Brooks Sports Inc. are quiet and serious. The carpeting, chairs and tables sport tones of light gray. The running shoes that line the walls are soft pink and muted blue.
The subdued mood whispers the message Brooks wants to convey: Shoes built to last. Built to make you better. Serious shoes for serious runners.
For years the company has been so quiet that it has almost disappeared into the background noise of the ultra-competitive, hyped up, "Bo knows" world of athletic-shoe sales.
The neon flash of a Nike is definitely missing.
Brooks, formerly headquartered in Rockford, Mich., moved its operations to Bothell last month. It has new owners and a new mission: to become the best-known running-shoe company in the world by the mid-1990s.
When people talk running shoes, President Killick Datta says Brooks should be the first brand name that crosses their lips.
Reaching this goal will not be easy. Even though Brooks is the No. 2-selling brand in Norway and does well in Europe and Japan, it has less than a half-percent market share in the $6 billion U.S. athletic-shoe market. Its sales of $100 million annually - about $30 million U.S. and $70 million international - barely equal what Nike spends each year on advertising.
In an industry with as many as 25 nationally distributed shoe brands, money and marketing savvy mean everything. Brooks traditionally has lacked both.
The challenge is clear as Datta stares out the window of his Kirkland apartment. He sees runners, lots of runners. The problem is few of those runners wear Brooks.
"Sometimes, I want to rush out and tell them, `You're wearing the wrong shoe.' "
For the past decade, Brooks was owned by Wolverine World Wide Trading Inc., a company best known for Hush Puppies.
Wolverine ran the company adjacent to a tanning plant and had little interest in pouring money into promotion. The thinking was that Brooks was a solid, well-established shoe with a loyal following. Put it on the shelf and it would sell.
Now, in its sleek, new 100,000-square-foot Bothell headquarters, Brooks almost has the feel of a new company. Its annual U.S. sales of about $30 million have been relatively flat in the 1990s, partly the result of slowing sales in the athletic-footwear industry. Now, with the industry seeing some pickup nationwide, Brooks says it's poised to grow.
"We have a fresh start, a fresh focus, a fresh philosophy," Datta says. "Now we just have to let the public know what we're all about."
But introducing a new Brooks is only part of the challenge. The company must also convince longtime recreational runners to forget the Brooks of the past.
Fifteen years ago, Brooks was among the nation's top three selling brands.
In the mid-1970s, it came out with a special cushion wedged into the heel that gave runners more shock absorption. That, coupled with a synthetic material that allowed sweat to escape easily, won Brooks rave reviews from Runner's World magazine. Runners loved the technology and demand exploded.
Then, disaster struck. Brooks' manufacturer in Puerto Rico could not keep up with demand. Shoes began to arrive at sporting-goods stores without tongues, with the wrong number of eyelets or frayed nylon uppers. Runners found that even shoes with no obvious defect fell apart after a few jogs.
Nearly 30 percent of the shoes were returned, compared with an industry average return rate of 1 percent. Brooks scrapped 50,000 defective pairs.
A feud between the company's top two officers, who were brothers-in-law, broke out. After the Puerto Rican government disclosed that the company owed $183,885 in electrical bills, the company filed for Chapter 11 bankruptcy.
Hoping to cash in on the running-shoe craze, Wolverine World Wide bought the company's name, trademark and patents.
But while successful at selling its sensible Hush Puppies shoes, Wolverine failed to catch onto the marketing techniques that were crucial to Nike and Reebok's success. Brooks, as a result, floundered in the 1980s.
While Brooks struggled, Datta, then an MBA student in England, wrote a graduate thesis about Nike's spectacular growth. He wound up working for Nike in Europe through the 1980s and later joined LA Gear.
Wolverine hired Datta to oversee its European operations in 1990. Two years later, the company asked him to take over the helm at Brooks, hoping he could turn it around.
When Datta arrived at the Michigan headquarters, he realized that the only way to do that would be to shake it up entirely. He went to Wolverine's chairman and asked him to put the company up for sale.
"To change Brooks, I would need a lot of money upfront," he says. "Wolverine wasn't ready to put the money into Brooks."
Brooks was sold in February for $21 million. The buyers wound up being two entrepreneurs: Kjell Rokke from Seattle and Bjorn Gjelsten from Norway.
The pair owned several successful businesses, most notably a chain of athletic stores, which introduced Brooks' shoes in Norway in 1991 and within a year made it the country's second best-selling brand, surpassed only by Nike.
"They showed what could be done with the right amount of money and marketing," Datta says.
With the deal in place, Datta is ready to put his turnaround strategy in place. He has hired a new staff of 65 marketing, graphics design, advertising, finance and other professionals, and doubled Brooks' advertising budget.
He also is tightening the company's focus.
Doing what it does best
Like most athletic-footwear companies, Brooks sells shoes for a variety of recreational sports. Like most of its competitors, however, it lacks the resources to sell shoes in all of these categories.
So Datta has decided it can't be another Nike or Reebok. Instead he plans to put the company's energies into what Brooks sells best, running shoes, a move that many in the athletic-shoe industry say makes sense.
"Running is what they're known for," says Bob Wischnia, senior editor of Runner's World. "It's what they've always done best."
By moving its corporate headquarters to the Northwest, Datta hopes to give the company a psychological lift.
Besides being in the same area as one of its owners, Brooks joins a hub of other athletic-shoe companies, including Nike, Adidas, Avia and Diadora, a small athletic-shoe producer based in Kent.
This, coupled with the region's outdoorsy, recreational sports culture, gives Brooks a potential marketing tool.
"Laid-back people, healthy living, wellness, that's all identified with the Northwest," says Dick Harvey, a Seattle marketing consultant. "If Brooks can find a way to build that sense into their marketing, they can make themselves part of the region's culture."
Being in the Seattle area also puts Brooks closer to its manufacturer in Taiwan, which could help give the company more ability to source high-quality materials and monitor the overall shoe-building process.
Brooks plans to spend $5 million in advertising this year, peanuts compared with what Nike and Reebok spend, but twice the amount it spent last year. Without the resources to launch expensive TV ads, the company must spend the money creatively.
One way to do that is by cultivating relationships with specialized athletic stores, such as Super Jock 'n Jill in Greenlake.
"I see customers, people who come in off the street more than they do," general manager Chet James says. "I can help companies like Brooks by giving them ideas of what will sell."
As market leaders Nike and Reebok continue to grow and open retail outlets of their own, small companies, such as Brooks, are likely to grow increasingly important to these shops.
But the relationship is a two-way street. While Datta talks of educating retailers, Super Jock 'n Jill's James adds that for such a partnership to work he needs the chance to give Brooks input about what runners really want.
At Super Jock 'n Jill, sales clerks generally talk to customers about their running style and weekly mileage before selecting shoes that would fit the foot. The customer then is told to lace up the shoes, run out the door and around the block to get a sense of how the shoe feels.
Likewise, when James visits Brooks' headquarters, he likes to see shoe designs in the early phase. James might suggest changes such as lowering the shoe's collar, adding a couple eyelets or even a slight redesign of the midsole.
Despite its problems of the past, Brooks still has a reputation for making sturdy, reliable shoes. But it also has a reputation for making stodgy, somewhat boring shoes.
Datta grimaces at this description but admits the company is trying to become more "stylish."
He goes on to describe his market as the 21- to 40-year-old runner who has "matured to Brooks" after going through a flashy, neon Nike phase.
"Not everyone feels comfortable wearing those bright colors," he says. "I don't want to play the glitz game."
Is it possible to sell shoes without doing that?
Retailers say yes. Industry surveys show most athletic-shoe customers usually want a shoe for a specific sport but only occasionally have a specific brand in mind. Though some are undoubtedly attracted to a shoe's cosmetic features, most are looking for a good value. Brooks' shoes retail for $55 to $110, typical prices for athletic shoes.
"If the shoe is good, built well, it will sell, no matter what it looks like," James says. "But it has to be a well-built shoe in the first place."
Last year, Brooks introduced the Eldorado, a shoe that featured an inner-sock within a sturdy outer shoe. The shoe retailed for $70 but attracted little attention. Nike, meanwhile, produced a similar shoe called the Air Huarache, retailing for $100, that not only attracted media attention but also sold extremely well.
Datta blames the difference on cosmetics and the way Nike hyped the shoe. Nike's shoe was bright white, neon blue and purple. The New York Times described it as being like a "turned-on horseshoe crab."
Brooks' counterpart came in a subdued gray and pink.
James, however, believes the Nike shoe sold primarily because Nike made it well. Brooks' Eldorado used a lower-quality material and while it was $30 less, retailers like himself considered the Huarache the better value.
"I would have rather seen Brooks spend more money on producing a better-quality shoe that might have sold for a little more but would have given the customer something stronger."