Three-point play

Nobody’s really surprised that sales of basketball shoes account for 52% of the estimated P2-billion athletic shoes market in the Philippines. What has, however, puzzled many is why it has taken AND 1, a basketball-geared footwear and apparel company based in the United States, so long to enter this most lucrative of Asian markets.

"AND 1 has been around since 1993 but I only got to see its products in 1996 when I attended a sporting goods trade show in Atlanta. At that time, AND 1’s products were limited to trash-talk shirts and shorts and I didn’t think then that apparel was a good match for the other sports products we were distributing," said Robert Bachmann, president and general manager of Relzbach Sports, Inc.

Relzbach Sports is a subsidiary of holding company, Relzbach Ventures, which is chaired by Kurt Bachmann, a member of the only Philippine Olympic basketball team which has brought home a medal.

Relzbach bagged the AND 1 Philippine distributorship in March 2000.

"Our first shipment consisted of 8,000 pairs of shoes. We were initially worried because there was no widespread brand awareness even through there were already some shoes being smuggled in. We sold all our stock in two weeks, helped out by AND 1 endorser, Vince Carter, having just won the National Basketball Association’s slam-dunk contest," said Bachmann.

Today, Relzbach’s distributorship covers not just the Philippines but also Thailand, Vietnam, Laos, Cambodia, Myanmar, Guam, Saipan, Brunei, and Hawaii.

Distribution

Locally, the company has a distribution network of 140 outlets, 80% of which are based in Metro Manila It also maintains six stand-out concept stores, including two clearance stores where stocks that are at least eight-month old are sold at 70% discount.

"Being up to date is an important purchasing factor for our targeted markets. Our primary market is the 13- to 18-year-old highly aspirational male. Our secondary market are the weekend athletes, aged 20 to 30 years old," said marketing and product development manager Tet Fojas-Bachmann. "We have had customers who bring to our stores pictures of NBA players wearing the shoes that they want to buy. We tell them that NBA players get to wear shoes that are not yet in commercial production."

Relzbach places orders six to eight months ahead of delivery. Since AND 1 comes up with new models per season and does not accept reorders, putting in orders for the right products at the right price every quarter is imperative. For example, orders for performance or on-court shoes, which account for 70% of total sales, averages 20 to 24 single keeping units or one style in one color combination in sizes 7 to 12 plus half sizes.

"Because 75% of our business is through consignment, we have a computerized system that closely monitors inventory and receivables for each outlet ," said Bachmann.

Expansion

This year and next, Relzbach expects sales growth to follow the 20% average registered in previous years, fueled by the opening of 10-15 new outlets a year, including a concept store in Guam.

"We have already saturated Metro Manila with outlets. The success of provincial outlets will depend on tie-ups with the right partners. A provincial outlet would carry an average of 150 to 200 pairs," said Bachmann. "This year’s growth has been partly fueled by the introduction of training or pre-game shoes, which are lightweight, breathable, and stable. Next year, AND 1 will launch its post-game shoes and a kids line."

To maintain AND 1’s brand awareness, Relzbach uses the American formula of getting local professional basketball players to endorse the shoes. The company is also bringing in this year the 16-man AND 1 Mix Tape players, who have been tagged as the best playground basketball players in the world.

"We will pit Mix Tape with local playground teams, who promise to display spectacular moves that will wow the audience and that will humiliate their opponents. After all, that’s what AND 1 is all about. In the playgrounds of America, the term means you are fouled on the way to scoring two points on a basket and you get an additional free throw for a three-point play," said Fojas-Bachmann.