Thieves ran off with $800,000 worth of Nike shoes and clothing after ransacking 20 trailers, according to the Memphis Police Department (MPD). Source: $800K of Nike shoes, clothes stolen
A few years ago, Nike began hiring Grey Market analysts. With the recent disclosure of a Nike VP’s son using his family relationship to build a booming resale business, Nike has had to improve loss prevention and grey market strategies due to internal issues. Nike’s heart and soul sits in Memphis, TN. Memphis is the distribution capital of the world. The city is the home of Fed Ex’s hub and Nike’s distribution, as well as companies like TJX and even Louis Vuitton had a private warehouse in the city. The logistics of any major company probably runs through Memphis. Warehouses dominate the commercial property landscape, and the city itself is dissected by railroad lines and highways with every lane filled by 18 wheelers.
Nike’s Consumer Direct Acceleration benefits greatly because of its location in Memphis. I discussed this in the post above. What does this have to do with the recent theft of Nike product which flooded StockX, GOAT and eBay? There has been a considerable amount of misinformation around what took place. For years Nike has dealt with loss prevention issues, but all retailers encounter these problems. Crimes are often inside jobs and a matter of opportunity. For Nike, the ongoing problems with the supply chain reared its head in this recent theft. Typically, Nike has been hit with smaller losses of 60 to 150K. This more ambitious theft happened not because Nike dropped the ball, but due to overcrowded rail yards and privately owned storage yards. Nike was a double victim of the supply chain’s disruptions from China and Vietnam to the ports. There is so much excess product in transit, Nike’s millions of square footage around their distribution centers, are overwhelmed with containers. The brand utilizes an industry standard “empty swap” process of bringing in new containers and unloading that product, then the trucker picks up an empty container. The backup of product in railyards led to the use of storage yards, and the timing of the Labor Day holiday weekend, provided an opportunity for this massive theft.
As the supply chain is still slow on the West Coast due to potential strikes because of unions preparing to fight for fairer wages, and the East Coast and Southern ports now being congested, topped off with more closures of facilities in Asia due to continued issues around Covid, Nike is using overflow facilities. What does this mean and how does it counter the commentary about what happened? In sneaker media the word is Nike’s distribution centers were hit. This was not a Nike loss prevention issue directly. It’s an issue that will continue to happen as the West Coast ports are finally evening out, but the East Coast and southern ports are facing the same issues:
- The theft did not occur on Nike’s property
- The theft took place at a Storage Yard near Nike’s Shelby Drive & Lamar facility.
- The facility has 1 security person at the gate and 1 rover
- The crime took place at 1 am in the morning
- The trucks were at an overflow parking lot because Nike can’t accept the delivery. Usually, Nike does what is called an empty swap, but they are so backed up, these Nike trucks were placed on a private storage yard.
- There weren’t any “locks” cut. Containers use Bolt Seals. (Bolt seals can be bought at any truck stop.) Below is a picture of a bolt seal. It’s basically a one-use identifier quickly able to show if a container has been tampered with.
- According to a truck driver who works near that storage yard, it’s not only Nike having issues with containers being tampered with prior to arrival at facilities. There are a number of trucks arriving with partial loads and replaced bolt seals.
