I’ve made a number of predictions on this channel and being correct isn’t often a good thing. This is not a prediction, but it’s a hypothesis. The goal is to engage in dialogue about what is happening within sneaker retail. This isn’t a case of something only taking place at one chain. I’ve begun going out on retail dives for buying and as research. It’s my routine to visit stores and gauge how a store is performing, or looking at the walls to learn which brands are performing well based on store layout.
The spike at urban retail from the COVID-19 stimulus package is over. The bad part about this is retailers ran sales once stores began to open again, which enabled consumers to buy more product at rock-bottom pricing. Those sales would have been fine if the stores had been able to replenish and adjust pricing. The problem is that the chains haven’t been able to replenish. Shipping from brands is slow. Nike is dominating and adidas is on sale at insane markdowns which has moved the brand to the back of the store in most cases and retailers are cancelling orders. The wall, in sneaker retailer chains, is a series of duplicate models to fill holes and brands aren’t delivering goods on time.
A recent example was a highly coveted Air Jordan 12 Retro in Black and Yellow. Many stores never received their allotments. I visited one store on a recent tax free weekend and they barely reached 9k in sales on a Saturday. The Jordan Brand wall is all takedown models and the adidas wall looks like this:
This picture is a week old. The prices have all been reduced an additional 20 dollars on all models. Yes, 20 dollars. UltraBoost at 54.99 and NMDs at 39.99. As I’ve said the Jordan wall isn’t fairing any better because the shipments haven’t been arriving. This leads me to my question:
Is there a forced contraction taking place?
Both Nike and adidas are touting their DTC growth in quarterly reports. Why would a brand deliver hot products that could be sold on their own platforms at a bigger margin? In larger stores product is showing up, so let’s reverse the question. Could retail chains be forcing contraction of underperforming stores by not delivering product to those stores? What is more likely here? Was the decision by retailers to offer discounts after 3-4 months of stores being closed done in haste? I’m not writing my thoughts and answers here. I’m not insinuating that brands are intentionally holding product or that chains are using COVID-19 to become more lean and remove underperforming stores. I’m raising a question that isn’t being discussed. Contractions are natural and lead to gains in athletes and in business. In some instances they don’t lead to better performance. They can lead to injuries. Is Nike and Jordan Brand intentionally slowing delivery?