Original Source Article: https://www.cnn.com/2021/03/22/business/nike-independent-shoe-stores/index.html
Full disclosure, I spoke with the writer of the article above prior to the post being delivered for readers. This is only the first article from CNN and there should be more on the way.
Nathaniel Meyersohn, of CNN Business delivered a post that reverberated throughout media. It landed in the lap of and was retweeted by prominent reporters and legends in sneaker culture. Many responses revolved around the idea that Nike’s CDA (Consumer Direct Acceleration) could potentially hurt the Swoosh long term because Nike doesn’t have enough of their own locations to serve the consumer. In the post, Meyersohn spoke with account holders who helped Nike to grow when the brand was in its infancy. Those account holders/mom and pop shops feel as if they are being alienated and left out to dry when they gave Nike a chance. Here is the problem with their logic. It assumes that the market never shifted and that the U.S. hasn’t been overrun and saturated with retail. As Nike built Futures, the brand was built on the number of orders they had with wholesale accounts.
Remember when Yeezy thought it jumped over the Jumpman?
That was the year Nike no longer reported Futures and they really began to push what would become their Consumer Direct Offense (DTC) strategy. Yeezy only jumped the Jumpman because sales reports didn’t include Nike’s own Direct Sales.
When retailers fail to deliver a dynamic in-store experience, Nike has decided to move on from those accounts. I’m sure someone is saying, “well FootLocker’s don’t look any different.” FootLocker has over 3000 doors to deliver Nike product. Many of those doors overlapped with mom and pop stores and other chains. Even with the number of doors they have FootLocker is still building the Power Centers an entirely new concept so of course FootLocker isn’t losing Nike. That doesn’t mean they are safe. FootLocker is going to begin functioning like a display room for Nike and Nike will fulfill some of their orders which is a problem long term, if you ask me. Also, FootLocker has had to close a considerable number of stores (while figuring out where to open other locations (working with Nike is a continual adjustment). Finish Line had to close a number of stores before being acquired by JD Sports. Let’s get back to the people who feel that Nike is making a mistake.
When the discussion around Nike begins, it’s extremely important to note that most people are missing information. In the article below, I delivered the following numbers:
Modell’s to Close All Stores After Bankruptcy Filing Continues the Reality of DTC
Nike’s DTC and Direct Revenue Growth and Store Growth
2014 (768 Nike stores)
2015 DTC 6.6 Billion (832 Stores)
2016 DTC 7.9 Billion (919 Stores)
2017 DTC Revenue 9.1 Billion (985 Stores)
2018 NIKE Direct revenues grew 12 percent to $10.4 billion
2019 NIKE Direct revenues were $11.8 billion, up 16 percent
In a report from Williams Trading’s Sam Poser last year he indicated that Nike was removing accounts from undifferentiated retail. The list he presented showed:
- 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
Sam recently delivered another list this week showing:
1. DSW (DBI-NR)- 519 in 44 States
2. Urban Outfitters (URBN – NR) – 522 stores in ~45 states
3. Shoe Show (Private) – over 1150 stores in 47 states
4. Duhnams (Private) – ~230 stores in ~20 states
5. Olympia Sports (Private) – 152 stores in New England & the Northeast.
6. Big Five (BGFV – NR) – 420 stores across the western U.S.
7. CORRECTION: Nike will no longer sell apparel directly to Macy’s (M-NR) -The Finish Line (JD/LN – NR) footwear business remains intact. (We previously mistakenly written that Finish Line AT Macy’s would no longer be sold Nike product, and that we had no information in regard to the Nike apparel sold at Macy’s)
What am I getting at for those people who see Nike removing mom and pop shops as wrong or potentially problematic. The data simply doesn’t show that this is the case. To wrap this up let’s take a look at more recent data than what I showed above.
Number of Nike Stores worldwide – Statstic
• Number of Nike’s U.S. retail stores 2009-2020 | Statista
Nike continues to open doors which will allow a stronger relationship with the consumer. As Nike develops these bonds they generate more revenue. While it definitely sucks that small stores suffer, it’s obvious that Nike doesn’t discriminate based on age of the relationship or size of the chain. Nike is an efficient athletic machine that has a mission to reach 50 Billion. Although Covid-19 has disrupted business, it has allowed for the surgeons inside of Nike to cut away tumors, both benign and malignant.
The only company capable of stopping Nike, is Nike.