What do Fendi, Pokémon and BNP Paribas have in common? At some point in time, they’ve all collaborated with FILA. It’s a brand that some of us love to hate, but these diverse – and bizarre – partnerships are often the mark of a good streetwear brand, even if FILA didn’t intend to become one when it started out.
With its roots in men’s, women’s and kids’ underwear manufacturing, the brand began its foray into sportswear in the seventies, producing functional clothing and accessories for a variety of physical activities, and sponsoring famous athletes on the side. It was a model that served the likes of Nike and Adidas well, but FILA soon fell by the wayside. Between 1997 and 2007, sales fell by nearly 91%. And it was in 2007 that Yoon Yoon-Soo, a former FILA employee in South Korea, acquired the brand for only $400m. Compare that to annual revenues at the time at Nike and Adidas of $16.3bn and $12.5bn respectively.
A large leg up
It’s a mix of strategy and sheer luck that got FILA out of a sticky situation after 2007, with a bunch of global macro trends compounding to work in its favour. First was the rise of the athleisure sector: according to Allied Market Research, the sector was worth $155bn in 2018, a figure expected to rise to $257bn by 2026. Then came the vintage trend, coupled with nostalgia for old brands and nineties – particularly hip-hop – culture. Tupac, Run DMC and Biggie Smalls all had history with FILA. After that, Gen Z arrived, embracing ‘ugly’ clothes and accessories. Alone, FILA’s iconic chunky Disruptor shoe made up 30% of all FILA sales on sneaker resale platform StockX, reports the company’s senior economist Jesse Einhorn.
In other words, consumers were starting to engage with FILA as a heritage brand – and, to start with, FILA had nothing to do with that. Of course, having since repositioned itself as a lifestyle brand, it has been able to capitalise, with sales increasing by 205% between 2016 and 2018. FILA isn’t alone in this counter-intuitive trajectory: since 2016, Champion’s annual revenues have grown 138%, to $1.9bn in 2019. Fellow Italian brand Diadora has opened up to the Chinese market through a dedicated online channel, and Kappa was selected as the official London ESports kit supplier.
Compared to these brands, and in light of Covid, the athleticwear market is showing slower growth, estimated at only 3.7% a year by ReportLinker. But the bubble might burst for these brands, too: analysts’ estimates for FILA sales are projecting a dip in 2020 and the sneaker resale market is in free fall. ‘The average amount that a FILA resells for is only about 10% above retail price, whereas a healthy hype is around 60%,’ Jesse says.
The question now is whether these brands can sustain a growth based solely on fluctuating consumer trends. Business professor and streetwear influencer Dr Frank Richardson – also known as Khalli Vegas on Instagram – asks the same question of FILA: ‘Is it willing to make a proper investment to win back that hardcore older consumer base, who place an emphasis on quality, or just stick to current market strategies of influencers under the age of 30?’
An old face
Not only did FILA reposition just as dad trainers and fanny packs came full circle, but also as consumers started demanding more storytelling from their brands. FILA was able to draw back into its 109-year history, with a heritage pop-up in London and a museum in Biella, Italy, its city of origin.
While pop-ups give the illusion of scarcity, FILA’s products are anything but scarce: it would be risky to rely on the streetwear trend. So, it’s still serving sportspeople, albeit quietly, sponsoring the Filipino rugby sevens team and the South Korean volleyball team. Jesse questions whether FILA can be aligned to the likes of Yeezys if not based on a scarcity model: ‘The hallmark of a good streetwear brand is its ability to enhance its value with limited-edition drops. FILA has always been focused on affordability, and it’s hard to go to the other end of the spectrum from that.’
Still, everyone wants a piece of FILA. Despite 62% of its sales being in footwear, between 2013 and 2019, it was accessories that showed the most growth: 203% to be exact. These low-price, low-commitment purchases give consumers brand access without the luxurious price tag. And with demand for casualwear surging by nearly 50% due to lockdown, FILA is in a good spot to keep growing – if it repositions in good time, that is.
This article was first published in Courier issue 39, February/March 2021. To purchase the issue or become a subscriber, head to our webshop.