LA Gear

Who wasn’t a fan of flashy, neon, high-tops during the late 80’s and early 90’s? LA Gear came screaming into the market during the late 80’s with a stock that everybody wanted a piece of. The company held close to its strategy: to “capture the LA lifestyle” and “be the brand that everybody admired”. There were certain values that management claimed to hold closely and that were aligned with their strategy:

• Stay on the cutting edge of fashion
• Produce high quality products
• Target high-end customers

The Wall Street Journal, Business Week, and Forbes all praised their success, often patting them on the back for their clear strategy and values. Then, in the early 90’s, fashion made a significant change from “glitter to grunge”. Founder and CEO Robert Greenberg was unable to leave his style behind and did not make the transfer to grunge. While trying to emphasize the performance of the shoe, several athletes were contracted to show them off. Things began unwinding quickly when a pair of LA Gear sneakers worn by a college basketball player literally fell apart on national television causing the basketball player to fall to the ground. It came out that several of their manufacturers were not being used by LA Gear’s competitor’s because they were know for their lack of quality. Finally, as inventory levels began to rise, LA Gear turned to any place possible to sell its shoes at a steep discount. High-end retailers became upset and refused to sell the brand because it has lost its image.

While the strategy and value of LA Gear appeared to be in excellent alignment, we learned that what the company said and did were very different from each other. They ended up going the opposite direction of the values that they claimed. This misalignment led LA Gear into a slow bankruptcy that was sold in 1997 for a fraction of its peak value.