Video Breakdown
- 0:00 Intro
- 0:57 Nike Demand
- 4:57 Retail Offsets Poor Decisions
- 8:35 Slow Sales and No Challenges
- 12:51 The Annual Air Jordan 11 Drop
- 16:30 Nike and Marketing
1.The Demand for Nike Never Stops
Right now, on Amazon, a Seller Central Account can open a Selection Recommendation for shoes currently in demand. The first 15 results of 141 suggestions show Nike at 1-13. At 14 is New Balance and 15 is Brooks Running. These aren’t sneakerheads or cool kids shopping. These are the everyday consumers and right now Nike is more in demand than any other brand on the biggest e-commerce platform in the world. When you consider they abandoned their pilot program on Amazon, Nike could take the easy path and use the platform for distribution. Instead they focus on DTC, but if they were smart they would move those options into family retail channels they shut down.
The compelling aspect of the 141 sneakers on the recommendation list is the average winning price. Contrary to what StockX and eBay 3rd party data is stating and against the sale tags hanging throughout sneaker retailers, every pair on this list is selling at SRP or higher with the number units a seller could move over the next few months at a minimum of 130 units per size (in the picture below each row is based on an individual size, not the full size run of a particular SKU).
2. Media, Amazing Store Concepts and Employees at the Retail Level Offset Poor Decisions from the C-Suite
The recent Nike Ginza Rise Store (pictured above) is evidence of a shifting Nike philosophy at retail. The digitally informed inventory and events hosted are built around community. Nike employees are loyal advocates of the brand who understand the product and love to discuss the brand with visitors to their retail doors. This means that confusing hires and decisions made by executives will be masked by the enthusiasm and ability for every Nike store to pick up sales even at the worst moment for the brand.
Nike’s doors are unique and when you consider the overlooked addition of Nike Fitness and Nike Strength (on Netflix and Nike gyms) moving Nike into a wider spectrum of sport beyond clothing, Nike is preparing for a future where the sale of footwear and the waste associated with overproduction will have to slow down. I’ve long stated media and additional ventures are where brands can make up the difference in revenue and it appears Nike is the only brand thinking way ahead. Nike isn’t just showing product, they are showing you how to be better in the product.
3. Even When the Brand Appears to be Stumbling with Product Sitting on Shelves, No Brand Really Challenges the Cool Factor Long Term
Nike product on shelves means more Nike product selling at a lower price. It will hurt margins, but inventory will be cleared, and this will eventually turn into fuller price sell through in less than a year. A Jordan Retro, Dunk and Air Force 1 will still be cooler than the most popular sneaker from your favorite brand and other brands seem to be lost in how to create something to compete.
The worst Nike sneaker is still cooler than the best sneaker from any other brand, and cool drives the market. As much as I love performance and the importance of elite athletes doing amazing things, when kids walk into a sneaker store, they go directly to the Nike wall, and it isn’t based on performance. It’s based on how they will be perceived. Nike hasn’t been focused on performance for years. When they begin to focus on the stories around the accomplishments of athletes and drive home those stories, they will begin to nab those wearing the shoes for sport again. Every other brand, even with the hype of a Fear of God for adidas or a JaeTips for Saucony and Joe FreshGoods and ALD for New Balance, every other brand is secondary and only considered when prices are better. A simple Google Trends search for each of the brands (below) shows how much bandwidth Nike absorbs.
While a limited collab for these brands generates social media likes and coverage, it does very little to move the needle when people are looking for sneakers.
Sneaker brands have to operate within their own windows. They can’t hope that people will turn away from the Swoosh and Jumpman. Does a collab build fans of the brand? Do those consumers become buyers of general release products? Nike doesn’t have to worry about the collab winning because when you have an annual drop like the Jordan 11, the brand is only one decision away from generating 175 million on one SKU.
4. The Air Jordan 11 Annual Drop
One sneaker can turn the tide for the Swoosh and Jumpman. In 2021 The Air Jordan 11 Jubilee made over 175 million dollars. 1 shoe. Nike has at its disposal the ability to satiate the entirety of a community that purchases more than one to two sneakers a year. Why is this important? While On Running, Hoka and Brooks are rising quickly and selling more running sneakers than they’ve ever sold, the consumers who buy those products buy 1-2 pair of sneakers a year. These are a few sneakers in Nike’s archives which could be delivered, and they would perform in a manner similar to that of the Air Jordan 11.
- The Air Yeezy 1 and 2 (renamed of course)
- Another remastered version of the Black or White Cement Jordan 3 (with Nike Air at the heel)
- The Air Max 90 Infrared (OG version)
- The Air Jordan 11 Concord or Bred
- The Air Jordan 4 Bred
- A truly premium all white Air Force 1
- The Air Max 270 Light Bone and Hot Punch
- The GT Cut 1
- The Kobe 9 Elite NOLA
- Nike Kobe 4 MVP
That’s just a start… and the list above includes both recent releases and of course retros. The brand hasn’t really played around with Jordans 16 through 23. In apparel consider the Nike Tech Fleece and how Nike’s product placement in shows like Top Boy could disrupt the Terrace Movement adidas is currently benefiting from. Nike does a poor job of marketing their apparel. They also overprice the apparel. If I wrote in this post that Nike was flooding Nike Clearance Store outlets with NOCTA and Travis Scott gear, every brand in the country would have to drop their prices to even get consumers to look their way. Which leads me to the real reason Nike can course correct.
5. A Marketing Correction Eliminates the Competition
Nike owns the MLB, NBA and NFL as well as USATF. 2024 is an Olympic year. Sport will dominate the media and fans of athletes will move from couch to 5K. Parents will sign their children up for lesser-known sports from gymnastics to track and next year breakdancing will be included. Adspend is going to break every brand, except Nike. Nike’s marketing budget is the size of the biggest sneaker companies in the world, outside of adidas. But here is the interesting statistic, during John Donahoe’s tenure, Nike’s adspend hasn’t grown in sync with revenue. Nike has always been considered an advertising company that sells sneakers. Nike’s revenue growth happened due to the Consumer Direct Offense and Nike Direct. There hasn’t been any memorable Nike marketing during Donahoe’s tenure because the brand appears to be focused heavily on SNKRS and Direct. (image via Statista)
Take the time to do a breakdown in percentages and there is a clear image painted of Nike’s decline in creating the amazing ads that gave the brand the ability to create stories around their products. In 2019 Nike’s advertising was 9.6% of revenue. In 2023 Nike decreased the budget to 7.9%. It’s important to note that almost every year of growth for Nike was supported by a consistent 9-10% of revenue being utilized to advertise. During Donahoe’s tenure air.jordan.com was removed. Prior to Donahoe’s tenure Nike controlled the narrative around their product. There were ad spots featuring Questlove and Kyrie. Black History Month collections were better. Nike Basketball had lost some relevance, but the most memorable moments for Nike since Jordan jumping through the air were the MVP Puppets, Kobe jumping over an Aston Martin, the Galaxy Pack… Nike’s insistence on Direct growth left holes in the advertising of sneakers and smaller brands utilized a combination of in-house campaigns and marketing to reach an all but forgotten running market. If it weren’t for ShaCarri Richardson sprinting would be owned by adidas and New Balance and distance would be owned by On Running and Hoka.
When Nike was able to focus on marketing as opposed to distribution, they were stronger and more agile. On December 21st Nike reports earnings. Expect reduced margins, but don’t be surprised by less inventory. Nike sneakers are still selling, even in this difficult retail environment. Expect Nike to highlight brand partners more than they have in the last 4 years. Nike must lean heavily on its brand doors to clean up the business, but until they stop attempting to be a Consumer Direct Acceleration brand and become what they’ve always been, a great wholesale partner and advertising wonder, Nike will continue to follow their fans instead of leading them.