The Edge

Skechers' Battle to Become the #2 Shoe Brand in the U.S.

How the sneaker maker went from Kardashian flop to an $8 billion behemoth in less than four years

Skechers' Battle to Become the #2 Shoe Brand in the U.S.

The 30th Los Angeles Marathon in March 2015. Skechers is now the title sponsor of the LA Marathon. Photo: AP

In 2012, Skechers was hit by a $40 million lawsuit filed by the Federal Trade Commission, which accused the shoe maker of falsely claiming that its Shape-Ups (famously endorsed by Kim Kardashian during the Super Bowl) would help wearers tone muscles, fight heart disease, and lose weight. Contributing to the damage, the company manufactured too many of the shoes, leaving a large inventory when the toning fad faded.

Fast forward three years, and the SoCal-based company has clawed its way back from the public-relations disaster, with a stock market valuation that's skyrocketed from $600 million to $8 billion, according to Bloomberg. Net sales reached $2.4 billion in 2014, up 29 percent from 2013 and 52 percent from 2012. In May, Skechers catapulted past Adidas, New Balance, and Asics to claim the number-two spot (behind Nike) in the U.S. athletic footwear market. In his Sneakernomics blog on Forbes.com, industry analyst Matt Powell called Skechers the hottest athletic shoe brand on the market—and that was last year, when it was still in fifth place. “I think they’re doing a lot of stuff right,” says Powell, vice president of The NPD Group.

So how does a brand transform from punchline to powerhouse in just a few years? A clever marketing campaign, coupled with a diverse array of product offerings. Instead of pinning the company’s profits to one product, the new-school Skechers makes a wide variety of shoes that appeal to different types of customers, Powell says. “They now have over a dozen different categories that are doing well,” he says.

One success story is Skechers Performance, the athletic arm of the company that launched in 2010 as an answer to the growing popularity of running nationwide. The brand recently became the title sponsor of the Los Angeles Marathon, and it scored a marketing coup when sponsored athlete Meb Keflezighi won the 2014 Boston Marathon wearing a pair of its midfoot-striking sneaks.

“Meb’s win gave our performance brand additional visibility to the general public, who may not have been aware that Skechers makes performance running shoes,” says Rick Higgins, senior vice president of marketing and merchandising for Skechers Performance. “Our target has been core runners and has expanded to recreational runners.”

Though Meb’s triumph lent athletic cred to a brand better known for outfitting retirees than elite runners, sports stars are only a small piece of Skechers’ overall marketing strategy. Its roster of celebrity endorsements speaks to the broad-based, everyman appeal the company strives for—from teen pop icons Demi Lovato and Meghan Trainor to aging greats like Ringo Starr and Sugar Ray Leonard.

“I think they are really smart about which people they’re picking to endorse the brand,” Powell says. Skechers’ emphasis on comfort (many styles have a memory-foam insole) and a marketing message that’s less urban-centric than many competitors also resonates with average Americans, he says. “They really have their finger on the pulse of what’s happening with middle America.”

Despite its record pace in recent years, Skechers still has plenty of room to grow: Even as the brand elbowed its way into second place earlier this year, number one Nike/Jordan still commanded 62 percent of the athletic footwear market, compared to Skechers’ five percent.

“I think the future is really bright for them,” Powell says. “When a brand can have that many winners across the spectrum, it says to me there’s some real longevity there.”

Filed To: Running Shoes, Athletes, Gear

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