Nike reduces its number of retailers

Translated by

Cassidy STEPHENS

Foot Locker recently inaugurated its new flagship on the Champs-Elysées in ParisProjectFreshKidSmileyAdidasNew BalancePumaConverseNike

Foot Locker’s new flagship in Paris – FNW

Although Nike still occupies the majority of the shelves in the store, the ball is clearly rolling. In fact Richard JohnsonFoot Locker

For several months, the American Foot Locker has been organizing itself around the “Nike Direct” strategy. At the beginning of the year, during the presentation of the group’s annual results, the leader announced his objectives. “We do not plan for any single supplier to account for more than 55% of our product spend. For comparison, that percentage is currently down from about 65% in the fourth quarter of 2021. This change reflects Nike’s efforts to transition to direct sales and Foot Locker’s efforts to diversifie its brands and categories. For the full year 2022, this would equate to a Nike concentration of approximately 60%, compared to 70% in 2021 and 75% in 2020.”

With its SNKRS app, Nike wants to captivate its customers directly through their smartphones – Nike

Nike had already announced in 2017 its plan to drastically reduce its number of resellers and concentrate on marketing its flagship products through its own network as well as about forty major partners in the world. A drastic measure bought on by the crisis following the Covid-19 pandemic.

Assertive direct sales strategy

“Two years ago, we introduced a bold new phase of our Consumer Direct Acceleration strategy. In the early months of the pandemic, we didn’t just navigate through short-term volatility,” detailed Nike CFO Matthew Friend at the global sports giant’s annual results. “Instead, we set a clear vision by building our digital advantage, envisioning the future of the market and creating deeper, more direct relationships with consumers. Today, Nike’s continued momentum shows that our strategy is working.”

For the executive, the group is structuring its future around three axes: its worldwide presence, its digital transformation that aims to build a direct link with the consumer and the development of its infrastructure to best meet the expectations of its customers. The leader also said that the group’s digital business has more than doubled since the beginning of the Covid-19 pandemic, to exceed 10 billion dollars annually. This has been especially achieved through the brand’s SNKRS application that allows it to be in direct contact with its customers, mostly for its limited edition “drops”.

Encouraged by the Nike Direct results, which according to the group should soon represent more than 60% of its activity and allow it to reach a gross margin of 40%, the group has accelerated its plan.

Nike has secured strong partnerships with key players such as Dick’s Sporting Goods in the United States and ZalandoJD

A situation related both to the strategy of tightening distribution and Nike’s decision to prioritize its direct sales while its product quantities were limited due to factories in Vietnam closing and transporting products from Asia being difficult. The situation does not benefit Adidas particularly, seeing as the German giant has also opted to focus on strengthening its direct relationship with the consumer.

For the time being, the major distributors continue to work with the two leaders. “Nike has certainly favored certain markets such as the United States and its direct sales,” explained Jacky Rihouet, IntersportDiadora

At CourirFaguo

New Balance and Puma are gaining ground with independent retailers

New Balance, as well as Puma, which saw its footwear jump 30% in the last quarter compared to last year

New Balance applies a marketing strategy that highlights its sports roots and accentuates its fashion statement, notably by recruiting the talented American Aimé Leon Dore – New Balance

At Foot Locker, a partnership agreement with Adidas has been signed but the overall strategy at global level is clearly to dedicate more and more space to new brands.

“We continue to see significant progress on brands like Converse and VansCrocsBrooksAsics

Puma gets back to its basketball roots with the launch of Lamelo Ball 2 – Puma

The brands Asics, Hoka One OneSalomonSaucony

“We can see that there is a real demand,” says Franck Gunther, owner of the Five O Five showroom in Paris, which sells Saucony’s urban lines. “Retailers are noticing or anticipating Nike’s policy. For us, it’s perfect because Saucony has relocated its product creation to Italy with an offer that has very clearly moved upmarket. This is of great interest to independent multi-brands, some of whom have been cut off from the best Nike products.”

Expansion of product categories or responsible approach

By not being referenced directly by multi-brands, Nike leaves the field open to some of its competitors.

The French brand Moea, with its sneakers made of biomaterials, is positioned among the more responsible alternatives – Moea

“It began with minimum purchases imposed on multi-brands, then gradually the stores were excluded from the Nike offer. For some, it represented 10%, 20%, 30% of their offer. For others, what was the added value to having the same products that Zalando or Sarenza

N’Go Shoes, which claims an ethical approach to its production, has just launched its new Hué model for pre-order on the Ulule platform – N’Go Shoes

Therefore, it no longer seems impossible to do without the sector’s world leader. Since the summer season, Le Bon Marché and Galeries LafayetteVejaBapeComme des Garçons, but also Y3, New Balance, Axel Arigato, 0-105 and Suicoke.

On Running advances in the fashion world with a first collaboration with Loewe – OnXLoewe

Above all, the two department stores compensate for ending their direct commercial relationship with Nike with the entry of a second-hand player and exclusive products. At Galeries Lafayette, the company OP 2.O offers a selection of vintage Nike, JordanYeezy

Another strong player in this market is We The New that is also discussing the possibility of proposing its offer with retailers. “The drastic restrictions imposed on distribution by Nike are rather an asset for us,” explains David Benhaïm, co-founder of the resale platform We The New with Michael Holzmann. “Our sellers go to Nike for exceptional pieces or have privileged access to ‘drops’. The more Nike restricts access to its catalog, the more opportunities it creates.”

OP 2.0 offers its selection of models for resale at Galeries Lafayette Champs-Elysées – OP 2.0

Taking advantage of its dominant position ($28 billion in footwear sales, twice as much as Adidas in 2021), Nike intends to impose its commercial approach on the market. And the American giant does not seem to be about to give up its position. Nevertheless, there is a great opportunity for other players, brands or retailers, to emerge in a more segmented market, whether with new trends, especially running and outdoor, or more responsible approaches. It remains to be seen which players will stand out in this reshuffling of the cards.