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Encyclopedia9696
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00:00I made this video about Champion. They're a clothing brand that was really big in the 1980s and 1990s,
00:12became virtually non-existent soon after, and then almost decades later somehow made this huge comeback.
00:18It's an interesting story, and there's another one very similar to it with Fila.
00:23Not surprisingly, I've seen all these comments saying that I should make a video about them,
00:27and I'll admit, you've got me interested.
00:30In 1996, Fila was the third largest athletic shoe brand in the world,
00:35and the second largest in basketball shoe sales behind only Nike.
00:40I guess I was a little bit too young to experience that at the time, but I have trouble even imagining it.
00:45Fila, being one of the top athletic shoe brands, it sounds strange.
00:50I'm guessing it does to many of you too.
00:52So we have all of these questions, like how did they get to that point, and what happened to them,
00:57and how have they been making this comeback, seemingly out of nowhere?
01:00So, let's take a look at it.
01:02I have to start by saying, this is a complex company.
01:05They operate in 70 countries around the world, most of which utilize these regional licensing deals,
01:11meaning how Fila is represented and marketed can vary from country to country.
01:15The ownership has been changing quite a bit over the years.
01:18It used to be based in Italy, and now it's based in South Korea.
01:21More importantly, their biggest market has been forever changing.
01:25It has switched from Italy, to the United States, to other parts of Europe, over to South Korea,
01:31and then recently there's been a big push back to the United States, and China?
01:35It is all over the place, which makes it tricky to give information that accurately represents the entirety of the Fila brand.
01:42I mean, the currency conversions alone.
01:44And then they bought this billion dollar golf company back in 2011, which further complicates things.
01:49So I'm gonna try to keep it all simple, but just keep that in mind.
01:53Here's some basic sales numbers that I think do a good job in representing all of these rises and falls.
01:59In 1997, they had sales of 1.4 billion dollars.
02:03And by 2003, that was down to 792 million, which is almost cut in half.
02:10Moving ahead to 2016, it was not much different.
02:13But then by 2018, they were up to 2.51 billion.
02:18As I said, there's a lot of factors surrounding this, but it illustrates that the rising period was before 1997,
02:25the falling period was between 1997 and 2003, and the comeback started right around 2016.
02:32So let's try to provide some meaning behind these numbers.
02:35Fila actually goes back over 100 years.
02:38The company started back in 1911 by the Fila brothers over in Italy,
02:41but honestly, for the first 60 plus years, there's really nothing relevant that happened.
02:46They were comparatively much smaller.
02:48They made knitwear that you would wear under your clothing.
02:51It was not meant to be worn on the outside, so no one would even see it.
02:55And when that's the case, I'd say the brand is significantly less important.
02:591974 is when things changed.
03:01They started making athletic clothing and hired this new managing director to try to make a name for their brand.
03:07Their vision at the time was to become more of an upper-scale sportswear brand.
03:12They weren't concerned with basketball or football.
03:15They instead set their focus on these higher-end sports,
03:18I don't know what you want to call them, but skiing, tennis, golf,
03:22I guess you could say the more country club type sports.
03:25The first time they drew real attention was in 1975,
03:28when they signed this endorsement deal with Bjorn Borg,
03:31which is one of the most popular tennis players of all time.
03:34The deal was big in that it helped them get their foot in the door to the tennis community.
03:38It was followed by other endorsements, and for the next 15 years,
03:41they were mostly considered a higher-end brand for tennis players.
03:45To maintain their image, Fila refused to sell their brand at lower-end retailers.
03:50It was exclusive to Nordstrom and Macy's and places like that.
03:53Then in 1988, they had some issues with their inventory,
03:57and it led to a bunch of Fila clothing being sold in the United States at a discount.
04:02Which is not good for a luxury brand.
04:04It makes people perceive it as cheaper, and it makes them less willing to pay that premium for it.
04:09Now, I can't confirm there's a direct relation here, but I feel there is.
04:13With the brand losing a little bit of its value, it made it more accessible for people with lower incomes.
04:19Maybe, in the past, someone aspired to buy some Fila clothing, and now that it was more accessible,
04:24they were finally able to.
04:26I say that's the case, because starting at about 1990,
04:29the Fila brand started gaining a lot of popularity in the urban community and among casual basketball players.
04:36Again, it's a bit of speculation, but I think they accidentally started attracting this demographic,
04:41and once they learned what was happening, they started taking advantage of it.
04:44That was the start of it, and throughout the first half of the 1990s,
04:47they transformed from an elite European tennis brand to a more accessible American basketball and general sports brand.
04:56Considering how important shoes are in the basketball community,
04:59they also made a big shift toward the shoe market, which was now responsible for over half of their sales.
05:05Overall revenue grew 15 times larger over this time, and they were making a profit too.
05:10I would say Fila was on top of the world.
05:13In 1994, they took a chance by making a big endorsement deal with a promising young player
05:18entering the NBA named Grant Hill.
05:20In 1995, he won the Rookie of the Year award, which helped propel the sales of his Fila shoes.
05:26The next year, they introduced the Grant Hill 2, which was a massive success and a huge contributor
05:31to their number two position in the basketball shoe market.
05:33They even had these plans to continue expanding.
05:36They were going to reinvest all the income they had just made, and add that to the millions they had made
05:40from their big stock offering. They were getting involved with different sports by signing
05:45endorsement deals with various volleyball players and soccer players.
05:48They were expanding geographically. That's actually when they made their first huge push
05:52in South Korea, and made that their second biggest market behind the United States.
05:57They were getting involved in women's fashion by designing new clothing lines,
06:00and they actually bought this French company that specialized in that.
06:04They were finding their way into just about any market you can imagine, and then things went bad.
06:09Their 1997 revenue was their highest, and it took a big turn from there.
06:13In 1998, their US sales dropped almost 50%, and they were now losing money.
06:19That pattern continued, and within a few years, they were practically gone, within the US market anyway.
06:25They started closing all of their stores, laying off their employees,
06:28taking it easy with those endorsement contracts.
06:30They basically retracted back to where they were in the 1980s.
06:35They went back to sponsoring tennis players in tournaments,
06:38they started opening more stores in Europe, they even raised their prices,
06:42and went back to those higher-end stores.
06:44So, I have a few potential reasons as to why things went bad.
06:48The biggest one is probably Nike, and let me explain that.
06:52The early 90s was a strange time for these athletic brands.
06:56See, the demand for these products was suddenly way higher than ever before,
07:00and because of that, none of the existing brands were large enough or dominant enough to fill it.
07:05So, there was now an opportunity. We see this a lot with technology.
07:09Video games in the 1980s is a good example.
07:12If you were an athletic brand, this was your chance to grow,
07:15and even if you weren't really an athletic brand, like Fila, this was your chance to become one.
07:20The public was still trying to decide which ones were cooler, and which ones made the better stuff.
07:25It was a case of the demand growing faster than the supply, but since everyone started flooding into the market,
07:31eventually the supply caught up. Which can be bad news for some of the suppliers,
07:35because in the late 1990s, it was sort of becoming a survival of the fittest type situation,
07:40and Fila didn't race to that occasion, and I think we all know Nike was the big one to come out of it.
07:46My second reason is they were becoming too diversified.
07:50I talked about how many different markets they were trying to be a part of, and maybe they weren't ready for all of it.
07:55I suspect that if they had invested all of their money and attention into one market, like the NBA for example,
08:02they might have made it there. But since they instead chose to put a little bit of money into a bunch of different areas,
08:07they didn't really win any of them.
08:10And then for my final reason, I'm gonna say that Grant Hill did not help things very much from this point.
08:16Looking at the biggest NBA player endorsements of the 1990s, Nike had Michael Jordan, which is hard to compete with,
08:22Reebok had Shaq, which is also hard to compete with,
08:26Fila had Grant Hill, which I don't want to say anything bad about Grant Hill, I respect him,
08:31but he is not Michael Jordan or Shaq.
08:34In fact, in 1997, right about the time when things were taking a turn for Fila,
08:38they made this $80 million dollar extension with Grant Hill to keep him endorsing their products for the next seven years.
08:45As most NBA fans can tell you, three years later, he had a bad ankle injury that kept drawing him away from the game for years,
08:52and most would agree he never truly came back from it.
08:55So right at a time when Fila was struggling, it was not helpful to have their main basketball player sitting on the sideline.
09:02Again, no disrespect to Grant Hill, but particularly after the year 2000,
09:07he probably was not the best player they could have chosen.
09:10Now, as far as the comeback, fashion brands are tricky.
09:14There's typically not one defining thing to point to to explain their popularity,
09:18but I did put together five potential reasons behind it.
09:22The biggest reason may be the simplest.
09:24It's because they're from the 1990s.
09:26Everything from the 90s is coming back,
09:28and since the Fila popularity happened to be isolated to the 90s,
09:32we all associate them with that time period.
09:35It's like people are looking for an excuse to bring something back from that time,
09:38and something like this is perfect.
09:40The second biggest reason, I would say, is their new leadership.
09:44It's this man from Korea, Jean Yoon, he goes by.
09:48He raised $400 million to buy the company back in 2007 when they were at a low point,
09:54and he's been dedicated to bringing them back ever since.
09:56He's made a bundle doing it, too, because he currently owns 20% of it.
10:00He was the one most responsible for making them big in South Korea back in the 1990s,
10:05when he actually worked for the company,
10:07and he just seems to have the dedication and desire to push them in the right direction.
10:11And then, for the next reason, how about these partnerships?
10:15Rube Chinsky.
10:17Alright, I'll admit, I'm not too trendy when it comes to fashion,
10:20but I guess he's influential, and he was one of the first ones to premiere a partnership with Fila in 2016,
10:26along with other brands and designers that are doing similar things.
10:29It helps push them toward a younger demographic,
10:31and just, overall, helps improve the public's perception of them.
10:34To go along with that last statement, we have celebrities that are now wearing Fila products,
10:39such as Kendall Jenner and Rihanna.
10:41Those are influential people that have a following that's likely to be influenced by their fashion choices.
10:47And finally, I'm bringing him up again, Grant Hill.
10:50Honestly, I can't imagine this is too significant at this point,
10:53but I guess it comes full circle, because in 2018, he signed a lifetime contract to endorse Fila.
10:59If anything, I would say this further supports the 90s comeback aspect to it,
11:03because Grant Hill tends to be remembered as a 90s player, and anyone who was following back then
11:08likely associates him with the brand.
11:11Not to mention the re-release of the popular Grant Hill 2.
11:14Let me know in the comments, what do you think of my explanations?
11:17I know I keep saying it, but this is a tricky topic.
11:20So I want to ask, in your area, in your demographic, from your perception,
11:24how do you explain what's been happening with Fila?
11:27Did I cover it pretty well, or are there other factors that need to be considered?
11:30What's your perception of them?
11:32Does it follow this same pattern of being cool in the 90s,
11:35and then falling off up until the last few years?
11:38I'd like to hear what you have to say.
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