New Balance: Shoe Fits - ' Hitting Stride '
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Hitting Stride
Nike officials would not comment on New Balance or its growing popularity, much like a marathon runner refusing to look back at a
competitor closing in. But, the way things are going, New Balance will soon
be breathing down Nike's neck.
Though overall sales of athletic shoes in the U.S. have fallen since 1997, research
firm Mintel Inc. predicts sales will grow 2% percent a year through 2007. Serious
growth for any single company will require taking market share away from other
players, and it's precisely why Holland's system for codifying what weekend
warriors want is so important. Right now, it's New Balance that's taking share.
According to the National Sporting Goods Association, Nike sold $134.6 million
worth of athletic shoes in the U.S. in 1997, while New Balance sold only $10.9
million. By 2002, Nike sales had fallen to $89.5 million, while New Balance
sales quadrupled to $39.7 million.
"New Balance is the real comer of the group," Shanley says. "They are focused
in a way that we've never seen from a Nike or a Reebok or any other athletic-shoe
company. They understand the importance of offering narrow and wide shoe sizes
and they build relationships with their retail partners."
Product manager O'Brien sees Holland's system as an essential mechanism for
wrestling away a chunk of Nike's basketball-shoe market share.
"When I took over three years ago, product planning was more of a manual process,"
he says. "Meetings took longer, everything took longer." Now, meetings go faster.
And results are better. "I've been able to plan my business more effectively.
I don't make as many mistakes."
For example, every time a customer buys a pair of New Balance shoes from any
of the 3,600-plus Foot Locker retail store locations, that data is transmitted
from the Foot Locker point-of-sale system directly to New Balance headquarters
in Boston. The exact same size, model and color of shoe is then reordered for
that particular retail location, guaranteeing a steady and predictable flow
of inventory for the Foot Locker locations.
Nike doesn't have the same relationship with Foot Locker, which forces Foot
Locker buyers to order Nike shoes six months in advance of shipment. That's
a long time in an industry that can be turned upside down by something as simple
as a hip-hop artist wearing a pair of shoes in a music video or, more acutely,
by sexual-assault charges leveled against a superstar-athlete endorser.
Foot Locker isn't the only retailer New Balance has that arrangement with. "We
have more than 50 retailers who do it," says Mescon. All of New Balance's major
retail "partners," including Nordstrom and The Sports Authority, provide the
data, as do a number of smaller regional shoe chains. New Balance takes the
risk of creating more shoes—as long as its partners supply the information
about which shoes sell as soon as they're sold.
Projects: Management 
