Puma Takes Bold Step In Shoe Market

In 2017, the U.S. athletic footwear industry was a $19.6 billion market, with almost 100 million people claiming to have bought athletic shoes last year. Nike and Adidas have long dominated the American market. Puma recently took a bold step to stake its claim by signing Deandre Ayton and Marvin Bagley, the first two picks in the recent NBA Draft. They also signed the 14th and 16th picks — Michael Porter Jr. and Zhaire Smith — along with Rudy Gay. The last NBA athlete to represent Puma was Vince Carter, back in 1998.

The use of celebrity athletes has had a powerful impact on building not only shoe sales but the clothing and apparel market influenced by brand identification. Fans can see the shoes NBA stars wear on the court and purchase the same shoes, unlike other team sports. Nike has LeBron James, Michael Jordan, Kobe Bryant, Kevin Durant and many other NBA stars as spokesmen. Combined with massive amounts of high production value advertising, Nike has been the dominant brand in this space. LeBron James' signature shoe alone produces $340 million in annual sales. Adidas has been the main competitor.

Adidas signed James Harden, Damian Lillard and Kanye West as celebrity spokesmen and their sales rose by 20% between 2016-17. The Adidas "Superstar" shoe became the top-selling shoe in this country, and the sales of that shoe rose by six times. Puma has its work cut out with the jump back into basketball, but the cyclical nature of the shoe market offers an opportunity. The younger generation of purchasers can be fickle and look for the next "it thing," as they often look to celebrities to dictate trends and fashion. Puma hired platinum-selling and Grammy award-winning artist Jay-Z as the Creative Director of Basketball Operations. He is a powerful figure with the potential to create heat around Puma shoes.

Puma is an athleisure company using shoes to support its activewear. They have a very strong presence in international soccer with stars like France's Antoine Griezmann, Argentina's Sergio Aguero and Belgium's Romelu Lukaku. Puma's recent ambassador campaign used celebrities including Usain Bolt, Kylie Jenner, Selena Gomez and Rihanna. This has had a dynamic effect on their EBIT (Earnings Before Interest & Tax), which rose by 70%. According to Puma's released financial reports, the 2017 Q1 profits increased by about 92% to $54 million over the previous year's Q1 profits, so people are beginning to take notice. With their bold return into NBA basketball, this is a company on the rise.

Keep your eye on Puma's unique strategy as they have their desires set on becoming next hot thing in basketball and eventually American shoes and leisure wear.

Remy Wilson contributed research to this article

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