The athletic footwear industry is a highly competitive environment where the top four manufacturers hold over 70% of the market share. The barriers to entry into the industry are comparatively low, as anyone with new creative design ideas can produce and market their product, but the success of smaller companies is oftentimes shaky. Brand loyalty, ample capital, and broad based sourcing create an environment where the bigger companies such as Nike and Reebok have little trouble maintaining market share. Nike enjoys the largest share, with 42.3% of the nearly $8 billion market in the year 2000. Reebok was second with 11.9%, Adidas had 10.8%, and New Balance had 9.6% of the market. The remaining 25% must be divided among the …show more content…
The footwear companies must choose their distribution channels carefully because they want to make the product available, yet remain true to their image and goals. Retailers account for the largest percentage of sales, so manufacturers must be especially careful with their relationships with them.
Technological advancement is becoming more and more of a player in the footwear industry. With computer-aided design (CAD), companies have been able to successfully shorten their design to distribution cycle to only a few months. Also, new technology has facilitated new quick-response programs that link retailers with manufacturers to allow the retailer to have the correct inventory when it is needed called electronic data interchange (EDI). Immediately after a sale is made, electronic point of sale scanners read the information related to the sale such as price,