Nike Is Trying to Find a Spark
Over the Fourth of July weekend, I did something that I hadn’t done in years: visit a shoe store – one of those massive shoe emporiums in a retrofitted space previously belonging to a now bankrupt retailer. The store’s entire inventory, consisting of thousands of shoes, was positioned on the showroom floor, viewable to the public. It was an enlightening experience to see firsthand how dramatically the lifestyle shoe market has changed since the pandemic. My mind has since been stuck on Nike and where the company will go from here.
In the 17 months since we last talked about Nike, the company has seen progress adjusting to the marketplace. A recommitment to wholesale distribution has worked as intended for Nike. There was no shortage of those iconic orange boxes at the shoe emporium store that I visited. Wholesale revenue is trending up again as Nike goes back on its direct-to-consumer bet from a few years ago. Nike’s revenue for the fiscal year that just ended was approximately flat, a much better result compared to the 10% drop in FY25.
In what may come as a surprise to many, Nike is again seeing momentum in running, which suggests market share losses may be slowing. Some of that is likely driven by Nike simply having inventory available where people buy running shoes. Nike is also seeing momentum with football (soccer) and kids.
Nike’s broader doubling down on sports to create brand halos in non-sports markets hasn’t faired as well.
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Nike Needs Its Next Michael Jordan
The uncomfortable truth is that today’s youth don’t have the same connection with sports that prior generations had.
In the seven months since I last wrote about Nike, the company has undergone some changes. Elliot Hill, a long-time Nike executive, came out of retirement to replace John Donahoe as CEO. After a 60-day observation period, which involved talking with Nike’s various stakeholders, Hill’s diagnosis was that Nike had lost its “obsession with sport.” In addition to revised marketing, more sales-focused endeavors will include reinvesting in its existing brands to create demand.
In recent weeks, two items in particular exemplified Nike’s course correction.
Nike’s website looked dramatically different in the run up to the Super Bowl. The first thing one saw was “BIG RINGS DON’T COME EASY” in reference to the game. A short scroll led to all of Nike’s classic brands. I previously pointed out that such an emphasis was what Nike needed to do.
Nike unveiled a 40th anniversary Air Jordan ad that stood out from what we had become accustomed to seeing with Nike. With a storyline focused on what would have happened if Nike didn’t pay fines associated with Michael Jordon wearing his Air Jordan 1s in NBA games, the company was able to show just how powerful and influential the brand has been on culture over the past three decades.
While the Air Jordan ad was effective in grabbing attention, it drew attention to how far Nike has fallen in recent years.
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Nike’s Complacency
Nike has become a show-me story.
For those with an interest in business and branding, Nike is one of the more intriguing stories to follow in 2024. It’s an iconic brand with decades of experience left reeling by a marketplace penalizing complacency. Two weeks ago, Nike experienced its worst day on Wall Street with shares falling 20% and now trading at the same level as they were in 2018. Looking under the hood, Nike has become a show-me story as management continues to pledge to rethink most parts of the business. The company has no choice but to embrace technology as its future path places it in line with Big Tech’s inevitable march.
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