But Davis seems most enthusiastic about his new American Classics line of dress shoes for men, six styles of bucks, wing tips, and casuals. "They're as comfortable as any athletic shoe we have," he says. "The same technology goes into them." The shoes will compete in shoe stores against Reebok-owned Rockport, the titan of the dress-comfort class. Still, Davis expects to sell 200,000 pairs -- $10 million worth -- this year.
American Classics are considered part of New Balance's growing line of walking shoes. It has 28 walking models now, versus 24 for running, reflecting Davis's belief that his walking shoes will outsell his running shoes in five years. Many baby boomers are giving up running as their knees start to go. Exercise walking is a good alternative for them, and they'll need appropriate shoes.
Increased advertising. In this business, it's no longer enough to have a good product. Davis has to raise brand awareness. "We feel that nobody even knows about us," says Paul Heffernan, vice-president of marketing. "We have nowhere to go but up with our message: A shoe that fits better performs better."
To send that message, Davis will spend $6 million for advertising this year, up from $1 million in 1990. Some of that is earmarked for co-op print and radio ads with retail accounts, in keeping with his commitment to building partnerships with them. And for the first time, the company is going into national TV, spending $700,000 for commercials on ESPN, TNT, the Sports Channel, and the Discovery Channel.
In magazines, besides advertising in the likes of Runner's World and Tennis, Davis is going into general-interest books. Esquire, Travel & Leisure, Smithsonian, and Men's Journal are in the media plan, along with Sierra and Outside. And pursuing the important women's market, he's buying pages in Self, Glamour, and Working Woman.
An additional half-million dollars is going to point-of-purchase displays and other devices to enhance brand identity.
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Will It Work?
Is the strategy outlined in Quick Strike strong enough to guarantee New Balance's survival, let alone achieve Davis's stated goal of doubling U.S. sales over the next three years from $100 million to $200 million? Industry experts aren't so sure.
Width sizing. No competitors seem eager to take on the expense and complications associated with making their footwear in true widths, but that's not because there are clear barriers to entry. Most industry players just don't see the need.
"If customers kept telling retailers that the reason they buy a particular shoe is because it comes in widths, then the manufacturers would all be making shoes in widths," says Gregg Hartley at the AFA. "But apparently people are satisfied with what's out there."
More to the point, the size issue can confuse buyers. "As an average consumer, you don't care -- AA, EEEE, most people don't understand that, anyway," says Tom Brunick, director of the Athlete's Foot's WearTest Center at North Central College, near Chicago. "They just want to know if you've got a shoe that runs narrower or wider. That's what Nike and Reebok, among others, are trying to do." Says Dusty Kidd, Nike's public-relations manager, "When you have 25 or 30 different styles in a particular category, width is not a big issue." That approach hasn't hurt Nike. Its basketball business grew by $100 million last year.
The downside to carrying New Balance, according to some retailers, is that with width sizing you have to buy many more shoes. "We used to carry the brand," says one store clerk, "but it comes in widths, and that was taking up too much space in our stockroom. So we dropped it."
Another hurdle for Davis concerning width sizing is the retail sales force. Most sports-shoe buyers make their decision once they're in the stores; only 29% walk in wanting a specific brand. "For width to be a real factor, you need a clerk to sit down and spend some time with you," says Mark Tedeschi, New England editor of Footwear News, a trade journal. "And a lot of times, that just doesn't happen."
Quality. Brunick, for one, does not think quality is a comparative advantage for New Balance. And he ought to know. At his test center, his 1,200 wear testers put virtually all the shoes through the paces.
"New Balance likes to say they gain a quality advantage by manufacturing in the United States, but I don't think so," Brunick explains. "If you're running good quality control wherever you're making shoes, you're going to get good shoes, whether you have Americans or people in other countries making them."
Expanding the line. If Davis expects his walking shoes to begin outselling his running shoes, he could be disappointed. His market instincts are sound -- walking shoes are one of the hottest segments of the athletic-footwear business. But because they are, competition is brutal.
"They are going up against some big people," says analyst Gary Jacobson. "Nike, Reebok, and L.A. Gear all have walking shoes. Even Keds positions itself as a walking shoe."
Bernard Short, owner of Career Footwear, is considering adding Davis's American Classics line to his inventory. He's seen them at trade shows and likes them. But he admits it's hard to sell anything against Rockport. "They have the name recognition, like Coke or Kleenex," he says. "They were the first in that market, and they dominate it. Women will evaluate something new, but men are not that open-minded. When a guy comes in, he's got to have Rockports or what he had before."
