Issue: Nike takeover of Converse triples sales, moves away from base
Commentary by: David

The Wall Street Journal today detailed changes in the Converse line stemming from its 2003 acquisition by Nike. WSJ reporter Stephanie Kang notes that among these has been a serious commitment to R&D which has allowed Converse to regain court access (in the 1950’s, Converse dominated pro basketball) with the ‘Wade’.

Nike is quoted in the Journal article saying all the right things. Nike CEO Mark Parker says, “It’s such an iconic shoe that we’re trying to be careful not to overextend it.” Nike has also forced Converse to create a ‘brand book’ that details the brand image and guidelines for using it.

By short-term financial measures, the acquisition has been successful. Converse’s share is up significantly and sales this year are up 12% - ahead of the industry.

Many observers were concerned with this acquisition because of Nike’s spotty record with acquisitions, primarily from the disastrous integration of Bauer, an iconic ice hockey brand. In that case, Nike put the trademark swoosh on the Bauer skates and alienated loyal fans who thought of Nike more as a giant corporation than an innovator.

In this case, Nike has been careful not to add the swoosh. Instead, they’ve made a different mistake. The very mistake Nike CEO Mark Parker is most anxious to avoid. Nike has overextended the Converse brand. How? By adding fashionista offerings to the plain Jane Converse line inlcuding the shearling trimmed sneaker-boots above.

The reasons for this are understandable. Converse has had two brand lives. In its early life, the brand was about performance. Like Nike, the inspiration came from an athlete (Chuck Taylor) who was both a pro basketball player and later a Converse salesperson. The Chuck Taylor put Converse on the map. Ironically, it was the era of Nike with Michael Jordan that knocked Converse off the map and the brand might have died if the Chuck Taylor had not been adopted by a different group. The second brand life grew out of the grunge movement in Seattle where legendary rockers including Kurt Cobaine adopted Chuck Taylors as an anti-fashion statement.

Nike is trying to revive both lives for Converse. They have put significant r&d efforts into getting Converse back onto the court with a new line (Wade). This has been a successful effort and from the persective of this advertising blog it is probably fine for the brand.

Where Nike has stumbled is in the second part of this revitalization. Instead of finding ways to seed Chuck Taylors more deeply into the Gen X post-grungers, Nike has taken the cultural adoption of Chuck Taylors as a license to try to make them glam and hot. In fact, the fur-trimmed Chuck Taylors pictured above look more like Uggs to us and less like the basic walkaround shoes that say ‘cool’ and ‘no b.s.’ at the same time.

It is hard to argue with a brand when they are reaping the rewards of extending their audience. But we believe that Nike has caused Converse - particularly the Chuck Taylor line - to walk away from the base franchise that has protected them for a generation. Our prediction is that Converse will follow the path of Tommy Hilfiger and rise only to fall. A steady build among the faithful would be far better for the brand.

This entry was posted on Friday, June 23rd, 2006 at 12:36 pm and is filed under commentary, Converse. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.