Asics Wants More Than Runner's High

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Lately, running shoes, which once dominated footwear sales globally, have been losing out to fashionable sneakers, known in industry-speak as low-performance shoes. In the U.S., for instance, less than a quarter of people who buy running shoes will actually train in them, according to NPD. They want comfort but not at the expense of looking nerdy, which is why fashion is now the key driver in the U.S. market for athletic footwear. Last year the U.S. market grew by 2.6% to $19.8 billion, but sales of running shoes flatlined at around $4.7 billion, NPD estimates. That's a concern for Asics, which sells more than $400 million-worth of merchandise, accounting for a fifth of total revenues, in the U.S.

A New Executive for Design

To demonstrate what's in Asics' future Oyama props one of his black dress shoes on the table and points to the sole. There's a tiny window there meant to show it's a direct descendant of Asics running-shoe technology, which the company hopes to replicate in other areas—such as walking shoes—targeting baby boomers. "We haven't expanded in this category in the U.S. or Europe, so there's potential for us to go into this casual sportswear category," he said.

Improving design is one of Oyama's pet projects. In the next year he hopes to create a design center at the headquarters in Kobe and hire a world-class designer who can give Asics products a hip makeover. No executive currently oversees design, he said.

Analysts have high expectations for Oyama. He is widely credited with diversifying Asics' European business in non-running sportswear before returning to Japan in 2005. Macquarie Securities' analyst Duane Sandberg figures brisk sales of running shoes and other footwear should lift the company's net profit 21.4% to $172 million next fiscal year through March, 2009, on an 18.5% gain in revenues to $2.5 billion.

Collision Course With Big-Name Brands

Even so, Oyama acknowledges, there are pitfalls. He cites New Balance as an example of a running-shoe company that got temporarily sidetracked by focusing on casual sneakers. A bigger challenge will be creating buzz. Asics tried to do that in the 1990s by signing up star athletes, but it lost many to a bidding battle with Nike, Adidas, and others.

A better strategy, said Oyama, is to open more directly-managed shops (now numbering 70) under specific themes, such as Asics walking stores or Onitsuka Tiger boutiques. Feedback from those shops in Tokyo, London, and Paris, might even spawn new product ideas. "I don't think we should try to compete with Nike," he said. Maybe not. But eventually Asics' transformation from technical athletic wear to fashionable sportswear could put it on a collision course with the big-name brands.

Hall is BusinessWeek's technology correspondent in Tokyo .