Nike's Struggle: Rebuilding Retail Relationships and Innovation

Nike struggles with market decline, digital shift, and competition, aiming for a comeback through innovation and marketing at the Summer Olympics.

### Nike Struggles to Maintain Market Dominance Amid Changing Consumer Trends
* 📉  Nike's market value has dropped by **over $100 billion** in recent years, while its main competitor Adidas has **fared better**.
* 🛒  The company's pivot to online sales during the pandemic led to a **decrease in traditional retail partnerships**, allowing competitors to **gain shelf space**.
* 👟  Nike's focus on lifestyle brands like Air Force Ones and Dunks paid off during the pandemic, but its lack of **fresh offerings** became apparent as trends shifted.
* 💼  CEO John Donaho aims to **rebuild relationships with retailers** and **inject more innovation into Nike's product line**.
* 🏃‍♂️  The company plans to **aggressively target the running and lifestyle segments**, where it has lagged behind competitors like Hoka.
* 🏅  The upcoming Summer Olympics are seen as a **crucial opportunity for Nike** to showcase its **brand and innovation** to a **global audience**.
* 📈  Despite its recent struggles, Nike remains the world's largest sportswear retailer and has a **strong foundation to stage a comeback**.
* 🗣️  Donaho stated, "It's going to take some time... but it's towards a **comeback for the brand**. It has already **started it**."

this should be a golden moment for Nike. Its iconic trademark adorning apparel worn by hundreds of athletes and immortalized on dozens of podiums. But off camera, the 60-year-old company is stumbling. Nike has been one of those growth companies that has really worked well. It's been a surprise to investors who hadn't really seen this coming. For the fiscal fourth quarter, it looks like a Miss pretty much across the board. This is the first real time that you're seeing Nike really struggle with competition. Nike's market value nosedived over the past few years and is worth more than a hundred billion less now than during The Last Summer Olympic Games. Meanwhile, arch nemesis Adidas, well, it's fared better, let's say, in spite of its own pretty serious public relations headaches. It's almost like an inverse relationship that we've seen at the two top at leisure Brands globally. It's such a competitive space. It's, it's as6, it's hoker. So how did Nike run into trouble? January 1964, it saw numerous influential births.

including Jeff Bezos and Michelle Obama, and slightly less literally Nike, and through Innovation Partnerships, and some iconic marketing, it's dominated sportswear ever since these three words made up the slogan to beat: just do it. Nike is very good with telling stories. They happen to have like great athletes on their roster. People felt good in it, and they felt like they were closer to their idols like Michael Jordan. And for much of Nike's life, that relationship relied on foot traffic in stores. But over the last decade, the company began to ask itself, Do we really need these guys? When Nike CEO John Dono started back in 2020, he was brought on to really modernize Nike's online operations. So that's the app, the e-commerce store, because Donaho came from eBay, that's one of the biggest e-commerce companies ever. But then when the pandemic hit, everything went online, right? So it was all e-commerce, it was all buying off apps, it was all Amazon, everything like that. I have this app called Sneakers app, and they release the limited releases.

were all dropped in this app, and in a few top-tier stores, people really moved toward more casual clothing, and that included sneakers. We stopped going to work; we didn't have to wear formal shoes anymore. High heels slowed down; these are things we didn't have to wear, and we didn't want to wear 'cause they're not as comfortable as casual sneakers. Products like these or these, comfortable, cool, and wildly popular with shoppers. Donaho pointed to the results as proof his strategy was working and started cutting those ties with retailers. But I think that Nike wanted to make digital be 60% of their business, and within their DTC, which is digital and stores, they wanted it to be more balanced. What that meant for a company like Foot Locker is that suddenly they need to become less reliant on Nike, and they have to go out and find other brands that'll fill that space. So like Hoka or an or Adidas or anything else that they can have that can take that shelf space and they can present to

Consumers, which was advantageous for smaller rivals trying to muscle in on an incumbent market share. And it's part of what's driven this surge in investor appetite for the shares of on and hoker parent company Deckers. As the world reopened, it turned out people still quite liked buying shoes in stores. But Nike just wasn't in as many of them. Now, instead, shoppers discovered those rivals and upstarts with fresh innovative new styles they've been craving. We know that there's a cyclical trend in retail away from bricks and mortar and towards technology. But it looks like Nike just pivoted too fast into tech. Nike's lean into lifestyle brands like the Air Force Ones and Dunks paid off during the pandemic. But its lack of fresh offerings also now became apparent. It started with the Dunk. At first, everybody wanted to have them. And then they started releasing them every day, almost in different colors. There was nothing new, just hundreds of different colorways. It was kind of like

done and uh the hip was done. This is a story of misfires being masked by a pandemic sales boom. Nike didn't bank on needing so many retail partners once lockdowns ended, and by sidelining them, the company freed up shelf space for rivals to show off the innovative styles it didn't have. That's what propelled Nike into such a position that it ended up issuing a profit warning early in 2024, prompting the biggest single-day drop in its share price on record. But here's the thing: the Nike brand is powerful, and the company is still the world's largest sportswear retailer. That gives it a solid foundation from which to turn things round. It started by rehiring 30-year veteran Nike executive Tom Petty, who retired 4 years earlier, and with one goal: rebuild relationships with retailers. And now it needs to give those stores something exciting to put on shelves. It's going to take some time, which is why Donaho told investors the next year will be a transition for the business.

but it's towards a comeback for the brand. He said has already started it. Just needs to bring forward more newness across its line of products, focusing more aggressively on running and lifestyle, because that is where it's lagged and where those pesky rivals, and hoker in particular, have been exciting leg-centric fitness enthusiasts. Donaho described running as a competitive battlefield, but one the company's going to fight with innovation and a major marketing push. It's one of the reasons this year's summer games are key for the company, or in Donoho's corporate speak, a pinnacle moment to communicate our vision of sport to the world. It's brand exposure to probably the largest viewership in history and of Nike innovation translating to medals. A bunch of its athletes, LeBron, Kevin Durant, these are the kinds of big names that need to win at the Summer Olympics for this to be a success for them. [Music] [Music]

How Nike Ran Into Trouble

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Nike's Struggle with Competition and Market Value Decline

Nike, a 60-year-old company, surprised investors with a fourth-quarter miss, struggling with competition for the first time.

The brand's market value has plummeted over the past few years, losing over a hundred billion dollars since the last Summer Olympic Games, while its rival Adidas has fared better in the competitive athleisure market.

Nike's CEO, John Donaho, was brought in to modernize the company's online operations, shifting focus to e-commerce, which became crucial during the pandemic.

The Impact of Changing Consumer Preferences on Nike and its Competitors

Nike's shift towards digital sales and lifestyle brands led to a decreased presence in physical stores, allowing smaller rivals like Hoka and Adidas to gain market share.

The surge in investor interest was driven by the success of these rival brands in meeting consumer demand for fresh and innovative styles.

On the other hand, Nike's focus on re-releasing existing products in numerous colorways highlighted a lack of new offerings, impacting its presence in the market.

Nike's Struggle with Retail Partners and Profit Warning

Nike's decision to reduce retail partners backfired, leading to a profit warning and a significant drop in share price.

However, as the world's largest sportswear retailer, Nike has a strong foundation to recover.

The company is now focused on rebuilding relationships with retailers and introducing innovative styles to regain its position in the market.

Nike's Comeback Strategy and Focus on the Summer Olympics

Nike is making a comeback by focusing on running and lifestyle products to compete with rivals like Hoka.

The company sees the Summer Olympics as a crucial moment to showcase its innovation and is counting on its top athletes, like LeBron and Kevin Durant, to succeed.

The goal is to communicate Nike's vision of sport to the world and translate its innovation into medals at the games.