Next Tuesday I have to do an Insider Ties and I think what I will get into is the stream of Flagship Stores popping up from various brands and what this means to Nike.
First, what is a flagship store? From Reference.com: The most successful flagship stores share common key elements. Each store is usually the largest one in a retailer’s chain and is located in a prestigious location, especially in areas where there are upscale customers, and it stocks a more complete range of products. The design and location of the flagship store is determined by the combination of financial considerations, brand identity and brand strategy objectives.
While other websites are reporting the fact that Nike’s stock is down… The question has to be asked in relation to what? Yes the stock is down, but if we look at last year at this time the stock is basically the same price. This means that Nike is actually holding steady. http://finance.yahoo.com/quote/nke/history?ltr=1
So what exactly is being discussed about Nike’s stock? The fact is that Nike’s stock is down and this has happened fairly quickly since December 2015. Nike hit 68 in December and today they sit at 56! I won’t get into the Olympics and how this is usually a push for Nike. Let’s get back to Flagship stores.
In several YT talks I discussed what Nike has been doing and how it affected retailers. It seems that no one is looking at their DTC move and their push to get those extra reseller dollars as what has led to the problem with Nike.
If you click through the above video or go to the the page you click to parts that explain my theory: http://www.arch-usa.com/why-are-retailers-like-finishline-and-mom-and-pop-shops-going-out-of-business-the-nike-effect-youtube/
This 12 point drop since December is being reinforced by the fact that other brands have seen how important it is to get directly to your consumer so what do we have happening right now?
Adidas is launching a flagship store: http://news.adidas.com/US/Latest-News/ALL/adidas-originals-announces-new-flagship-store-in-new-york-city/s/982cac8d-b721-48fa-99ab-471259a27ccf Adidas is getting right at the heart of the city by opening a Flagship in Soho. New York is the fashion capital. They have tied into one of the dopest young emcees in Joey Badass to promote this venture. This means they have Kanye, Pusha T, and Pharrell. Nike is spending their money on Kevin Hart and their athletes.
New Balance has launched their Flagship in Boston: http://newbalance.newsmarket.com/LATEST-NEWS/ALL/new-balance-opens-first-u.s.-global-flagship-store-in-boston-landing/s/cbca8c59-2fa8-42c9-b2db-c2cf838fd17e While New Balance is not a threat to either of the Big 3 in UA, Nike or adidas, they are recognizing the benefit of a strong e-commerce and brick and mortar. This connection is further cemented by their opening of a distribution center in St. Louis.
Advantage New Balance
Not to be outdone at all, Under Armour just took over one of the most legendary locations in NYC: http://www.cnbc.com/2016/07/26/under-armour-moving-into-former-fao-schwarz-flagship.html By taking over FAO Schwartz UA is addressing a short coming in their sales due to the closure of Sports Authority.
Advantage Under Armour
Now if you compound this with the fact that retailers are recognizing what Nike is doing and they are no longer placing all of their money on the Swoosh and you get a situation that was created by Nike in their attempt to satisfy shareholders by increasing prices and dropping Nike Factory and Clearance stores in every damn city across the US.
I can’t wait to dive into this a bit more on Tuesday as evidenced by the fact that I should be doing something else at 10 on a Friday night, but I needed to write this real quick.
Further evidence that adidas is doing it right
Here are pics of the grand opening. Bananas! I simply couldn’t imagine Nike doing anything like this… although Drake and Eminem in Retro 4s is kind of a big deal.