Is this a US thing? In Australia all sports/shoe retailers have been stocking Nike the whole time. If I understand correctly folks are saying in the US Nike gave up its retail shelf space in favour of their own stores and online?
Can’t speak for worldwide, but in the US Nike decided to aim for exclusivity and basically pulled their shoes from a ton of retailers. It went… not how they hoped.
It would be great and funny to have access to the internal presentation about why they needed to pursue that and all the benefits. That kind of business decks are always so plastered with wishful thinking that really makes me wonder how business people can keep deceiving themselves like that in every single company they work.
Probably went something like - we need infinite growth to appease the stock market morons - we can’t raise prices any more for our shoes - what if we cut out the middlemen retail stores and disintermediated to save money - we will be digital native, COVID is here, the world is digital - RIP.
Also, ironically, the pitch was supposed to be a win win: If we cut out the middleman and stop spending so much on sponsoring athletes and sports, we can pass those savings on to customers, bringing us more sales at lower cost to consumers and higher margin for us because our cost structure is lower.
Turns out people don't always want lower-priced products.
They are a public company and the strategy was very VERY public. You can listen to the earnings calls. It's not like they wanted to hide it. It actually went EXTREMLY well for a year or so. I agree that it was a bad decision, but the logic wasn't stupid. Just a misunderstanding of what made the company valuable.
I always wonder why the monday morning quarterbacks who think these are such obvious choices in the moment aren't millionaires though. If it was that easy to see it was not good at the time, just buy some puts or short the stock or buy the stock of a competitor. Free money for 15 minutes of reading an article!
I'm not saying that I could do better but just curious about this specific case. I mean, I know that in the web bubble most of us thought that what COVID-19 brought was there to stay forever (shift to mostly online, 100% white collar remote work etc) but from a corporation like Nike which should have a different point of view, I would expect a different line of reasoning as well.
And I've been in enough companies to see that the pitches about "we are going to do this next" are always painted as a bright future and there is no "if it goes wrong we will do X instead", because it will never go wrong.
It went great because they started it in the pandemic when essentially all shopping shifted to online, and at that point, why not buy direct from Nike vs online from Macy’s or whatever.
I totally see why they thought the strategy was a hit but hindsight is 20/20 and it seems now that this was a correlation and causation mixup. They should have been asking why they were losing mindshare to their competition instead of asking how they could wring more profit out of the same customer base.
In my opinion, in US, they became more fashion than athletic. Without realizing athletic is a huge fashion trend. The talk of hoka and on taking share, is true, but it’s also an extension of the fashion trend for something new/fresh/unique/authentic in the athletic category. Apparel has seen similar shifts, newer entrants like Alo and Vuori have put Lululemon and other more established brands on their heals.
I suspect the danger of pivoting into a pure fashion design is that even in the fashion market people crave a little authenticity. Perhaps you never run but you like the idea and so buy running shoes. do you get the fake running shoes or the real ones?
The other one I have noticed is work boots. With a complex market interaction. Real work boots are expensive, built to survive in an adverse environment. However people crave something with substance. So there is a large customer base buying them for fashion. The manufacturer notices this and start to reduce quality(no need to build them so well if the customer won't notice) and you end up with an expensive boot that sucks. The (much smaller) real customer base, the workers, do start noticing and slowly start moving to a different brand, the fashion customers eventually pick up on this and follow. the whole process can take decades.
