Hip-Hop Fridays: Rappers Choose Reebok by Joseph Pereira and Stephanie Kang

Last April, critics thought Reebok International Ltd. was taking a big risk when it rolled out a line of sneakers endorsed by a rapper with a drug-dealing past. But a day after the launch -- when the company received word that 40 pairs of the shoes had been stolen from an urban store in Philadelphia -- "we knew we had a hit," says Micky Pant, Reebok's chief marketing officer.

That they did. Within days consumer demand created such a shortage that the S. Carter -- named after hip-hop star Jay-Z, originally known as Shawn Carter -- was selling on eBay for $250, more than twice its retail price of $100.

The unexpected success of the S. Carter is changing the way sneaker makers think about marketing. For decades, squeaky-clean athletes had a near-total monopoly on sneaker endorsements. Then sneaker companies began picking up athletes with a little more attitude. Earlier this year, fashion footwear-maker Lugz Inc. got famed hip-hop disc jockey Funkmaster Flex to promote a line of its boots.

Nike Inc., No. 1 in the sneaker business, has collaborated with various songsters on limited-edition shoes but expresses skepticism about using controversial rappers as pitchmen.

Reebok, however, is enraptured with the idea. With half a million pairs of S. Carters shipped to retailers, the company is racing to sign other rappers as endorsers. This month, Reebok will roll out a second S. Carter line and a new hip-hop line, the G-Unit, named after one of the songs of rap's top performing star, 50 Cent. Reebok expects to sell 600,000 pairs in the S. Carter and G-Unit lines, a welcome bump in a saturated athletic-footwear market where sales have been flat for more than five years.

Hip-hop's influence in fashion has become pervasive over the past several years. Sean "P. Diddy" Combs's Sean Jean label, Jay-Z's Rocawear brand and Russell Simmons's Phat Farm brand, among others, are gaining more and more space in department stores and stealing market share from menswear mainstays like Polo Ralph Lauren Corp. and Tommy Hilfiger Corp. Industry experts calculate that hip-hop fashion in the menswear category alone reached more than $2 billion in sales last year.

Rap's tales of drugs, guns and life on the edge are far from the glorified athleticism seen in campaigns like "Just Do It." But because rap and hip-hop are the dominant force in popular music, Reebok decided to depart from its traditional deployment of athletic endorsements to see if pop-music stars could help drive shoe sales. "What's happened here is that the world of basketball and the world of Rap have collided," says Mr. Pant.

Some in the shoe business worry that the lyrics and backgrounds of these artists will harm the industry's image. Both Jay-Z and 50 Cent (whose real name is Curtis Jackson) are former drug dealers. Jay-Z received a probation sentence for assaulting a manager, and 50 Cent bears scars from having been shot nine times.

Another development that makes the alliance risky is that these are not standard endorsement deals, where a celebrity is recruited to plug the entire brand. In their deals, Jay-Z and 50 Cent agree to promote only their shoe lines, meaning they're not barred from wearing competing brands in public. One Reebok official says a standard, more restrictive deal would have risked tagging its rapper allies as walking billboards for the corporation, hurting their countercultural appeal.

Executives from Nike and Adidas Salomon AG say they have seen both 50 Cent and Jay-Z wearing their gear, which Reebok says it can't confirm.

"The thing about artists is that you can sign them, but you really can't hold them," says Adidas Lifestyle Marketing Director Nicole Vollebregt.

Reebok, the second-largest athletic-footwear maker, concedes there are risks inherent in hip-hop but adds that they are outweighed by potential gains. Indeed, Reebok's growing appeal with the urban crowd can help it gain ground on Nike.

Nike says it isn't interested in any long-term signing of rappers. But 50 Cent says he received several calls from Nike executives promising to top whatever offer Reebok made. He says he wasn't interested. Nike denies making an offer.

People close to Jay-Z say that Nike grew "very interested" in the rap artist as Reebok grew close to signing a deal with him. Nike says it has had a long relationship with Jay-Z, stemming in part from the rapper's penchant for Nike's Air Force One line. Nike has provided Jay-Z with custom-made shoes, as it has with other celebrities, but the company denies making the rapper an endorsement offer.

Earlier this year, Nike came out with the limited-edition Air Derrty, named for an album by Grammy-award-winning rapper Nelly called "Da Derrty Versions"; the album included a song about Nelly's love for Nike shoes. All 1,000 pairs of the red, blue and white sneaker sold out in hours in June. Nike says all proceeds from the $120 shoes went to the charity of Nelly's choosing. Nike provided P. Diddy with shoes and training assistance to run in this year's New York marathon.

Reebok's endorsement contract with 50 Cent is a five-year agreement. The Jay-Z deal is a partnership in which the singer and footwear maker split the profits equally. That could translate into about $3 million for the rapper this year if the 500,000-pair rollout sells out, as expected. By comparison, Allen Iverson, the Philadelphia 76er, who is Reebok's No. 1 endorser, gets about $10 million a year from the company.

Both the G Unit and the S. Carter bear a similar look, and wearers will be reluctant to soil them. With their soft leather and flat soles, the low tops are a far cry from the rugged look of a performance shoe. The G Units will retail for $80.50 (with 50 cents going to charity), about $15 less than the S. Carters.

The pitches for both lines play down athleticism in favor of looking good, as reflected in a recent TV ad in which both hip-hop stars rhapsodized about their Reeboks. "Truth is I ain't got a jump shot but I got a left hook. I don't swing golf clubs but I sell like Garth Brooks," rapped 50 Cent.

During a current five-city concert tour, 50 Cent is performing in G-Units, which he tosses into the audience. Jay-Z will be plugging his new S. Carters in radio interviews later this month after the debut of his new album, "Black," which also happens to be the color of his new shoe.

"With athletes, they wear the shoes for the length of a basketball season," says Reebok's Mr. Pant. "With hip-hop, the publicity is intense but short, just like movies." And just like movies, he adds, "you'll know very quickly whether you hit or miss.


Write to Joseph Pereira at joe.pereira@wsj.com and Stephanie Kang at stephanie.kang@wsj.com



Corrections & Amplifications:

There isn't clear evidence that 40 pairs of S. Carter-brand shoes made by Reebok were stolen from a retail store in April. Based on information supplied by Reebok, this article on rap music stars endorsing athletic shoes incorrectly said the items were stolen from a store in Philadelphia.

Subsequent to publication, Reebok said the store actually was in New York City, and said its information had come from executives at a retail chain where the thefts supposedly took place. But an official with the retail chain said "no theft has occurred at our New York stores."

Note: This article first appeared in the November 14, 2003 edition of The The Wall St. Journal



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Friday, December 12, 2003

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