Reebok has got a big New Year's resolution: It wants to get back into running.
The athletic brand—which in recent years has built product launches and marketing efforts on social-based fitness crazes like CrossFit and the Spartan Race—is investing more heavily in the running shoe category after a lapse in interest for several years. The renewed focus on running shoes is resulting in some new product launches, like this month's debut of the $150 Reebok Floatride Run. That new shoe features a proprietary foam and aims to compete with market leaders including Nike, Asics, and Reebok's sibling brand Adidas.
"Floatride is a starting point for us," said Scott Daley, the general manager of Reebok's running business, in an interview with Fortune. "What you'll see over the next 12 to 18 months is a continued pipeline both for Floatride but in other innovation for things we think the market is missing."
Reebok's re-entry into the performance running shoe market comes as the brand has been growing slower than competition in recent years, especially in the home market. Steered by Adidas (ADDYY, +0.75%) since a $3.8 billion acquisition in 2006, Reebok and Adidas have actually ceded market share in the sports category to Nike (NKE, +0.84%) since their union—which was meant to give Adidas a firmer competitive edge in the U.S. market. The U.S. market is critical because it is by far the largest by revenue for athletic apparel and footwear.
And while Reebok remains a laggard in the brand's home market, the Adidas brand is back on track. It has posted big double-digit sales increases in the performance and lifestyle categories last year in the U.S., putting pressure on Nike and Under Armour (UAA, +3.36%). Still, Adidas CEO Kasper Rorsted has said that while Adidas is performing well in the U.S., the company remains under-indexed in the market. "Therefore, we will continue to invest into our team, our infrastructure and our business in the U.S. to accelerate our growth, improve the quality of our sales and increase," he said in a note to shareholders.
There had been signs that Reebok would be more serious about running. The brand last year signed a partnership with the popular road relay series Ragnar. A focus on running shoe innovation is a further sign that Reebok is serious about the running category.
Reebok has vowed that by 2020, it wants footwear franchises like Floatride to represent at least 25% of the brand's total footwear business. That keen focus on franchises—often built on proprietary technology that touts performance benefits—is similar to the businesses that Nike and Adidas have recently built on the Flyknit and Boost technologies, respectively.
While performance running footwear sales were flat in 2016, observers say there's plenty of room for Reebok to enter the category and find success. "Running is the most brand diverse category in footwear," said NPD Group sports industry analyst Matt Powell. "Reebok was never known as a strong running brand, but they were a player. They do have a heritage of having made running shoes back in the day." Powell also points to the success that emerging brands like Altra and Hoka have had in building a business by first entering into the running shoe category.
An early sign of encouragement can be found in the pages of Runner's World. That publication called another Reebok running shoe, the new OSR Harmony Road, the "Best Runner's Debut" for the spring 2017 shoe guide. It also seemed a bit surprised that Reebok is getting back into the sport. "Reebok, yes Reebok, is back with a standout running shoe that was a pleasant surprise for our wear-testers," the review proclaimed.
Floatride is aiming to stand out with an unusual upper that almost feels like a sock when you put it on. There's also a 3D-molded heel and cushioning that Reebok says aims to feel as minimal as possible for the runner that's wearing Floatride. "The key insight was a distraction-free run," said Daley. He says that the shoe is one of the most important product initiatives that Reebok has planned for 2017.