Footwear Insight

Can Nike's new plan reinvigorate the brand and the many channels in which it trades? that. Ultimately, the consumer will decide where they want to transact." Joey Pointer, CEO, Fleet Feet Sports "We know that the way that brands are working with us continues to evolve. They are as challenged as all of us by the changing landscape and consumer behavior. The Nike brand is one of the most meaningful in the world and at their core, they are a running brand. Whatever success or challenges we may have had in the past with Nike, we're confident that we're aligned in our focus on the customer and on delivering great experi- ences and value at the grassroots level. Nike said something that really resonates with us, and that is that mediocre retail will be going away. As a country, we're completely over-retailed, and customers now more than ever have the opportunity to be discerning and purposeful when it comes to how and where they shop. That just means it's incumbent on us to continue to create exceptional retail experiences that provide lasting value that people want to participate in. It's less about selling products and stores, and more about creating productions and becoming great storytellers so that cus- tomers have a reason beyond commodity to interact with our brand." Matt Powell, analyst, The NPD Group "I think it's the right thing to do, but it's going to be painful for them. I keep coming back to the Sports Authority bankruptcy. [When we analyzed the sales figures], we were able to account for a third going to other retailers, a third going to the Web, and a third of the sales just disappeared. I'm not making the claim it would be a third, but if for every store you close you're not able to replace [a por- tion of ] that volume, quickly, how do you make that up? Especially if your core busi- ness is not very good right now. If you go back to 2015, Nike was 10 times the size of Adidas in the U.S. This year, they're 3.5 times the size. Is there a huge gap still? Yeah, but it's much smaller than it used to be. There's a retail malaise going on right now and Nike is the biggest factor. This is going to be very tricky to execute." Kris Hartner, owner, Naperville Running Co. "Nike's been doing this for years. A few years ago they went to basically 40 focus retailers in run specialty and we've been one of them. People want Nike and if our customer wants it, we're going to do our best to have it. As for the direct-to-con- sumer side, to me, if they keep reigning in the craziness that is the Web, I'd rather see them crank that DTC number way up and dial it in, and use some of that money to do things for the specialty accounts." Camilo Lyons, analyst, Canaccord Genuity "This was Nike's most definitive, explicit communication of its intent to focus on its own business. For them to make a public statement is really impor- tant, and the retail partners should be on notice. They've come to the conclu- sion – as has retail in general – that the vendors have a very viable, direct line of communication with the consumer, and they can keep the gross profit dol- lars to themselves. You would imagine that the best partners would do the best as the culling unfolds and there's more share that accrues to those remaining. On the flip side, Nike will work to allocate itself a larger quantity of premium inventory. This doesn't come from a place of executing flaw- lessly — they had a wakeup call, they got punched in the nose, and now they want to come thriving back. They need to transition the [products] that are in decline and speed up innovation for the platforms that will ascend and take up the volume. It's premature to say, but conceptually, they have have cracked, not the code of new retail but a large piece of the code of how con- sumers care to shop and be engaged." Roland Colt, owner, Burn Rubber Detroit "After hearing what the plan really is I don't know if it particularly pertains to the limited-edition stuff. But for Nike and Jordan, it's a pullback that needs to happen [and is] happening now. There's too much in the market and it took away that feeling that 'I have to get that.' Nike is still something that gets people in the door, and it's always a brand that makes people pay attention, but sales are down because Adidas is doing this and other brands are doing that. But the connection between the consumer and Nike hasn't changed much, if at all." Frank Gibbons, buyer, Sam's Outdoor Outfitters "They're underestimating the procliv- ity of Americans to go touch and feel and the Internet hasn't proven really good at that yet. And they're ignoring the digital divide, which on the street level in rural America is super real. There are places without cell phone service, without high-speed Internet, and at some point there's a certain portion [of shoppers] that will push back. Without your pres- ence [in stores] you will cease to be relevant to them. That could make way, especially in certain niche markets, for other brands." O Nike iD VaporMax Flyknit SE 18 • Footwear Insight ~ November/December 2017 footwearinsight.com ANALYSIS

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