Less than a month into his new job, Gene McCarthy, CEO of Asics America, already has big plans to take Asics to the next level in the region. The changes include a more-focused direct-to-consumer effort to connect with consumers as well as an extensive marketing push to get the message out around Asic’s heritage in running.
“I think this is one of the best kept secrets in the industry,” said McCarthy in an interview at Asics’ Manhattan showroom last Thursday just before the New York City Marathon. “It’s a very famous brand that a lot of people don't know enough about.”
A global “refresh” of the brand will be coming in 2016. Added McCarthy, “We are going to reveal it and give it it’s personality and show you it’s heart and soul and start having a good emotional dialogue not only with our loyal following but with consumers who may not know us or may not consider us right now.”
Specifically toward runners, Asics will be taking a more consumer-based focus to fully engage today’s broad range of runners. Said McCarthy, “If you have a consumer focus, sales and distribution will follow. So we are now paying very close attention to how consumers are behaving in their everyday life.”
The range of runners runs from avid runners, which McCarthy describes as “the heart” of Asics’ current reach, to those liking to wear running shoes partly due to the prestige of an athletic brand.
“Without getting categorical, we’re just looking at what the shifts are and how people are taking care of themselves and using ‘running shoes,’” said McCarthy. ‘I think if you pay attention that way, that will give birth to what the category opportunities are.”
McCarthy will look to build on the success of his predecessor, Kevin Wulff. Becoming CEO in 2010, Asics America’s sales grew from $680 million to a record of over $1 billion in 2014. Milestones for Wulff included expanding the apparel category past the $100 million mark and successfully repositioning Asics as a multi-sport brand with bigger pushes into training, tennis and golf. He transformed Asics' lifestyle category, restructured Asics Americas’ leadership team, and launched direct-to-consumer, including opening several flagship stores.
Still, Wulff’s exit became cloudy after Windsor Financial Group, which had the exclusive rights to operate Asics full-price stores in the U.S., last month filed a high-profile lawsuit against the company. In June, Asics America terminated its partnership because of undisclosed “material breaches” by Windsor, including non-payment of its licensing fee.
The Windsor suit charged that Asics sought to drive the licensee out of business and subsequently acquire the outlets on the cheap by reneging on promised inventory and marketing support. All 13 of Asics inline stores were subsequently closed this year.
Asked to respond to the lawsuit, McCarthy remarked that one of the reasons he joined Asics was because he’s “super impressed with its business integrity and it’s a very well-run company. And being Japanese-owned, it also very, very important that the business is run with integrity.” But he couldn’t comment further on the lawsuit except to assert it has no merit.
“I can tell you that it’s without merit, it’s baseless, it’s actually frivolous,” said McCarthy. “It’s in the hands of our attorneys and we are vigorously disputing this and are very confident the court will find us in favor.”
Regarding the closed stores, McCarthy said Asics’ store in the Meatpacking district on 14th street in Manhattan was reopened last Wednesday to support activations around the New York City Marathon, which Asics has sponsored for years. As far as reopening other stores, Asics is still figuring out what the exact plans will be.
“Of course we want our fleet back but we want our fleet right,” said McCarthy. “They can’t just be stores; they have to be venues for consumer experiences. So as the brand is going through a refresh, the stores have to be a visual manifestation of that.”
The stores also won’t be operated by a third-party this time. Said McCarthy, “We’re better off owning and operating our own stores. We’re good at it so why wouldn't we.”
He felt it wasn’t his place to comment on the timing of Wulff’s exit but also feels a different approach will be needed to expand the reach of the Asics brand.
“To take a brand to hit a billion dollars is terrific but to grow it even further is completely different,” said McCarthy. “The mistakes that some brands make is they just think ‘Do the same thing but a little more.’ So that’s one of the reasons I’m here. There has to be a dynamic shift in how we think about going to market.”
Beyond making sure its stores serve more as ‘beacons for the brand,” marketing will receive an overhaul starting in 2016. Paul Miles, who formerly worked for Nissan Motor and also helped launch and expand the UNIQLO chain, has be hired as global head of marketing and is working on establishing a more youthful message around the Asics brand, although not necessarily by age.
“What we would like to talk about is what is emotional age of consumers’ everywhere and how are they viewing themselves in in terms of their relationship to fitness, health and exercise,” said McCarthy. “So we’ll have more of a refresh of the brand coming out next year but along with that they’ll be a voice that is talking more to a much more youthful, not younger, emotional age.”
Overall, McCarthy is excited to get back firmly into the running category. As a youth, he went to Fordham on a running scholarship after being inspired to become a runner as a 13-year old after seeing Marty Liquori and Jim Ryun racing on the cover of a Sports Illustrated issue. After college, he wound up reaching out to Liquori, who got him his first job in the industry, a part-time one at his sporting goods stores, Athletic Attic, in Florida. Liquori also helped McCarthy reach his goal of running a 4-minute mile, albeit the metric equivalent of one.
His first vendor job was with Nike, which he joined as a tech rep in 1982 and stayed on for 21 years. McCarthy then spent three years with Reebok, became co-president at Timberland, came back to the athletic side to run footwear for Under Armour and most recently, was president of Merrell.
“It’s come full circle because now I’m with a real, real running brand,” enthused McCarthy. “And there is a difference between a running brand and a brand that makes running shoes. This is a running brand.”
On the positive side, he remarked that Asics has an “amazing established core running base” that's confirmed by company research. He said, “When people try on our product we tend to keep them for a really long time.”
Asics also stands out because slightly more than half of buyers are women.
“A lot of our competitors can’t boast about that,” he said. “We also are acutely aware of women’s influence and their affect on everybody in their lives and their purchases. So we are gong to have a dedicated team that’s focused on the women’s business. I will describe it as ’For her, by her.’”
Pointing to his early beginnings as a tech rep and his personal passion around the sport of running, McCarthy said run specialty remains “near and dear to my heart” and the brand will continue to provide the channel with “the proper energy and attention,” including premier product. But he also said Asics won’t be dramatically altering its distribution model because finding growth means reaching a wide array of consumers.
“We’re also a publicly-traded company and it’s important for us to consider all aspects of running and fitness and health in the industry and that does require going to where people shop and not everyone in the world shops at run specialty.”
Regarding newer categories, a big push will continue around training although McCarthy wants to his team to expand the scope of the opportunity.
“The word ‘training’ is limiting and it’s also a catchall phrase,” said McCarthy. “But again, it highlights that consumers are taking care of themselves differently than they may have 20 years ago. So training is hugely important to us.”
A particular focus around training will be on apparel. Said McCarthy, “People now are taking time to look really good when they work out and there’s a physiological advantage to that when they go to the gym and they go out for a walk or a jog or a run. How they look is really important to them. It’s an emotional thing. Apparel does connect that way so we’re going to focus very heavily on apparel.”
McCarthy also believes Asics’ DTC efforts will be critical in fleshing out the opportunity in training. He added, “The idea of training as a category on the wall has limitations so that’s why direct to consumer is going to be a bigger play for me.”
Noting that he’s spent more time with the apparel team than other area, McCarthy said the training apparel push will be part of an overall expanded effort around apparel to further Asics’ differentiation efforts in the marketplace. He noted, ”If you don't have apparel, you’re not a brand, you’re a shoe company.”
And while technologies to meet the performance needs of runners remains an expectation, style needs to stand out. He added, “We want people to feel good about themselves when they put it on.”
In other emerging categories, Asics has found “some good success” in tennis and the brand benefits from the sport’s global reach.
“It is also a prestigious sport and has an element of style and fashion to it,” said McCarthy. “Plus, you cannot get better marketing than having someone on television waiting for a serve with their logo on their left chest. So tennis as a revenue-driving business for every company has limitations but tennis as a brand-equity building business is terrific.”
Similarly, Asics will continue to grow golf, particularly for brand-building reasons.
The Windsor lawsuit also mentioned that Asics had been planning to enter the basketball category to support future growth. McCarthy said no set plans are in place to enter basketball with many different options are being explored overall in his first month on the job. Still, he pointed out that that he was involved launching the Jordan brand while at Nike and also helped launch basketball for Under Armour in 2010. Added McCarthy, “I know that market very well but right now everything is under review.”
Continued investments will also be made for the company’s two retro brands, Asics Tiger and Asics Onitsuka, to expand the brand’s reach beyond core runners. Asics Tiger, which was relaunched last year with the Gel-Lyte III, is reaching a younger consumer while Asics Onitsuka stands out for its “cool slim style” and its nostalgic recall.
“It’s not something that we’re going to use to help us with our performance business,” said McCarthy of the lifestyle business. “It’s an incremental opportunity because it gives us a chance to talk to a consumer that, quite frankly, may not be as avid a runner as a person who wear a Kayano.”
McCarthy doesn't seen any major changes in how Asics services the market but also said the brand plans to be ahead of any omnichannel shopping changes. Increased shopping via mobile phones over the next couple of years and feeding the consumer need for “instant gratification” will alter the dynamics of product distribution in the marketplace, he asserted. That includes how it’s shipped, where it’s shipped and other areas. Said McCarthy, “We don't just want to participate in this industry, we want to be a leader in just about everything we do, including logistically.”
Like his predecessor, McCarthy said Asics America does have a growth plan although it’s not ready to fully reveal the details.
“I will say its’ aggressive but it’s not insurmountable,” said McCarthy. “But the strategy that was deployed to get Asics to this point over the last five years will not be the strategy to get us to the next plateau.”
