Fila to sell wares online

Store on Internet called effort to raise brand awareness


May 20, 1999|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

Hoping to boost awareness of its brand, Fila U.S.A. Inc. will begin selling products directly to consumers over the Internet, the company said yesterday.

Tomorrow, the Sparks-based athletic footwear and apparel company will launch the Fila Store, along with a redesigned Web site.

Consumers have been unable to shop for products on Fila's current Web site, which has been up for about a year and a half. Products are sold in specialty athletic stores and department stores.

Internet retailing will enhance, rather than compete with, sales at retail stores, said Todd McDonald, Fila's manager of electronic commerce. Sales on the Web will likely account for only 1 percent to 2 percent of total sales, he said.

"We're not trying to get an advantage on our retailers," McDonald said. "It's a brand awareness tool. We're hoping people will come and look at the products, then go to retailers and shop for it."

For instance, instead of offering a full line of merchandise, the Internet store at will carry selected items of footwear and apparel for sports such as basketball, running, tennis and cross training -- about 65 items in all. The selected items, which will change periodically and be priced the same as in the stores, will typically have the weakest market penetration for Fila, McDonald said.

Adding the store and making the Web site more interactive should help Fila meet its goal of doubling the number of visits to the site, now about 2,500 a day, McDonald said. The enhanced site will include reader polls, contests, retail locations and interviews with Fila's endorsing athletes such as National Basketball Association star Grant Hill. Consumers also can track their orders. To entice shoppers, Fila will offer free shipping for at least a month.

Two of Fila's biggest rivals, Nike Inc. and Adidas America, also have begun selling products electronically. Nike launched a limited, three-month shopping site in February in the United States and plans a more ambitious site with a wider product mix this year.

"If it helps the product line or awareness, that's what you want. It's a positive step," said Mark Millman, president of Millman Search Group Inc., a national retail consulting firm in Lutherville. "Everyone is doing it. If you don't do it, you're dead in the water."

But it's unlikely to become a major generator of sales for the company, Millman said.

Fila has taken several steps recently to combat falling sales and fickle consumers and improve profitability.

In March, the company sold its headquarters and 120 acres of surrounding land to a Baltimore real estate developer and began leasing its office space. Jon Epstein, Fila U.S.A.'s chief executive officer, had said the move would allow Fila to devote more resources to product development. Later that month, the company announced that it would contract with Ryder Integrated Logistics Inc. in Miami for distribution in an effort to save about $10 million over five years.

Fila U.S.A.'s parent company, Fila Holdings SpA of Italy, reported a net loss of $8.7 million, or 32 cents for each American depositary receipt, in its most recent quarter, which ended March 31. Net direct sales fell 15 percent from the first quarter of 1998, with U.S. footwear sales off 51 percent to $38.8 million and apparel sales down 4 percent to $23.4 million. Chief Executive Michele Scannavini attributed the losses to a slow market in countries such as Italy and the United Kingdom as well as to a collapse in the basketball footwear market, the company's previous stronghold.

Fila has been planning its Internet store for the past seven months and invested about $300,000 in the venture. McDonald, formerly an Adidas analyst and sales representative, was brought in to lead the effort.

Pub Date: 5/20/99

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