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One of the many issues in the sneaker industry is where information comes from. When a company captures point of sales data, that information derives from previous quarters and attempts to tell the story of retail in real time. That’s an impossible task and it requires brands and retailers to hire analysts who will then break down the sale of products and attempt to predict what will be successful in the upcoming seasons. The problem is there isn’t any real science. The crunching of numbers arrives too late in a fashion driven industry that shifts quickly and abruptly.
I signed up for Susquehanna because the company provides predictions rooted in data and information delivered from the brand during conference calls. When a brand is holding it’s quarterly report, Susquehanna is typically first in line when the questioning starts. When I transcribe the conference calls Sam Poser is one of the first names I tend to hear.
Why is this important? Yesterday, Poser sent out a surprise report that was confirmation of the speed at which Nike is implementing its Consumer Direct Acceleration. In this report he explained:
Nike’s decision to no longer sell to 9 multi-branded wholesale accounts is positive for Nike, as it takes control of more of its own destiny. The decision is very good news for DKS, HIBB, and SCVL based on the locations of the closed retailers (see below). The decision is good news, or provides a potential break, for Famous Footwear (CAL) and DSW (DBI). Less distribution helps FL to some degree.
Our proprietary checks confirm that Nike will be closing the following wholesale accounts:
- City Blue: 20 store athletic fashion chain. Stores in PA, NJ, OH, and DE.
- VIM: 31 store athletic fashion chain. Stores in NY and NJ.
- EbLens: 48 store athletic fashion chain. Stores in NY, CT, MA, and NH.
- Belk: ~300 store chain. Stores in TX, OK, MO, AR, LA, MS, TN, KY, AL, GA, FL, SC, NC, VA, WV, and MD.
- Dillards: ~285 stores in 29 states.
- Fred Meyer: ~130 store chain. Stores in OR, WA, ID, and AK.
- Bob’s Stores: 30 store chain. Stores in NY, CT, MA, NJ, and NH.
- Boscov’s: ~50 store chain. Stores in PA, NY, NJ, DE, MD, OH, CT, and RI.
- Zappos
We are unsure over what period of time the aforementioned retailers will be weened from Nike product.
A few weeks ago I discussed the CDA, but did so by looking at whether Nike would begin to produce fewer shoes. It was my attempt at not seeming negative by addressing an issue I’ve been writing about since 2014, how DTC would diminish struggling retail outlets who have come to rely on the Nike wall. Below is the article I wrote on the CDA.
What I should have written when Nike announced the CDA was a message to small retail chains. What I should have delivered was a reminder of an article I wrote in 2017. In that article I made the following point:
What exactly is the “Nike Wall”? In footwear, retail stores are obviously made up of walls of shoes. When you walk into certain retail outlets brands are given space on the wall typically based on the sales growth. If a brand is hot, they get the spot at the front of the wall where browsers can see the shoes and potentially shop. This is why in outlets owned by the brand the shoes aren’t even at the front of the stores. The brand doesn’t need to attract you to the shoes, their shoes are the only ones there. In traditional retail footwear sells faster than apparel so stores display footwear.
In stores like Shiekh, City Gear, DTLR and Jimmy Jazz, Nike dominates the inventory. The lack of diversity has hurt all of these stores and Nike’s CDO isn’t going to help to correct it even as Nike begins to scale back production of footwear and make items more limited. I’ve said over and over that the next chain to succumb to the Nike Wall would be City Gear. Memphis only has one Shiekh Store and that location never was able to carry Nike shoes because it was in the mall directly across from City Gear. I forgot all about Shiekh Shoes, but this is the natural progression. DTLR and Sneaker Villa offset this issue by joining forces:
Shiekh Shoes Seeks Bankruptcy Protection | The Nike Wall In The CDO Era
That post from 2017 was surface. I dug deeper into the discussion when I wrote the book, Nike’s Consumer Direct Offense in 2019. Since I wrote this post City Gear was bought by Hibbett Sports and Modell’s has gone bankrupt. I could continue to link to past posts, but the bigger question becomes how will these chains make the adjustments needed to overcome the loss of Nike? Is it even possible to overcome losing the Swoosh?
I think it is, but it will require brands to rethink the design of stores and to build stores within the store for each brand delivering storytelling in an elevated manner around any brand that looks to capture the retail space Nike is abandoning. Nike’s removal of accounts wasn’t a surprise to me or anyone who follows this site. It was a genius business strategy that doesn’t take into account the lives affected which isn’t a good look for the Swoosh, but no one really cares and the brand continues to thrive.
