Nike's Big Little Changes
Nike subtly realigns its orbit around boutique accounts as it works to get wholesale and brand heat back on track
First Name Basis: As announced in its recent earnings report, Nike has begun the task of repairing relationships among wholesale accounts at all levels. There are the more obvious moves like restoring allocation to Foot Locker and Shoe Show, but it’s also taking a different approach to how it launches more limited edition product.
On Nike’s December earnings call, CEO Elliott Hill specifically called out nike.com as a key issue, citing constant discounting as a major problem. “Entering the year, our digital platforms were delivering roughly a 50/50 split of full-price to promotional sales,” he said. “The level of markdowns not only impacts our brand but also disrupts the overall marketplace and the profitability of our partners.”
While the brand still views nike.com as a premium channel showcasing its “most complete assortments,” Hill said the brand plans to return to offering promotions “during traditional retail moments,” meaning week-long lifts on minimum advertised pricing (MAP) rules, aligned with key shopping events like Father’s Day, Labor Day and so on. When product sits, rather than discounting it, the brand will move it to outlet stores.
Hill then name checked the CEOs—using first names for almost all—and retailers, which he described as feeling as though Nike has “turned [its] back on them,” including “[executive chairman] Ed [Stack] and [CEO] Lauren [Hobart] at Dick's [Sporting Goods]; CEO Régis [Schultz] and [global managing director] Mike [Armstrong] at JD Sports; Mary [Dillon] at Foot Locker, [CEO] Heinrich [Deichmann] at the Deichmann Group[‘s Snipes]; [founder] Michael [Ashley] at Sports Direct; [CEO] Mr. [Wu] Yu with Topsports; and [CEO] Mr. Wang [Jun] from Pou Sheng; and [director of operations] Juan Carlos at Innova Sport.”
You First! As noted by the eagle-eyed X user @brandon1an, Nike has begun enabling boutique retailers to launch product first, ahead of SNKRS, a change from the past when wholesale and SNKRS either dropped on the same day or wholesale followed Nike direct.
Examples Brandon pointed out included the following:
Air Superfly, a 25-year-old low profile sneaker that Nike is relaunching, available starting January 27th at select Nike retail partners and February 7th on SNKRS.
Air Max Dn8, offered in a hyper pink colorway, will launch on SNKRS and at select retail partners February 6th. It’s slated to launch on nike.com and additional retail partners March 6th. However, Nike originally said the shoe would launch at wholesale on February 6th, and on SNKRS on March 6th, so for whatever reason, Nike snatched that launch back!
Air Max Muse, a new women’s silhouette, launched at select Nike retail partners like Net-a-Porter (where it’s available in all sizes), on December 11th and launched globally on SNKRS on January 10th, Sweetening the pot, Nike celebrated H. Lorenzo’s 40th anniversary by providing the West Hollywood, California, boutique with a limited edition Nike x H. Lorenzo silver case which included “custom shoelery.”
Knowing which side your bread is buttered on: Jordan’s wholesale brand reset is currently centered around the brand’s upcoming Air Jordan 1 ‘85 Bred (an affectionate nickname referencing the shoe’s black and red color palette.) The launch is part of the brand’s celebration of Air Jordan 1’s 40th anniversary.
I’m not a big fan of Jordan (my only pair is Melody Ehsani’s AJ1 Mid), but the amount of air being sucked up by the Bred launch combined with the various “Banned” campaigns (a reference to Michael Jordan’s first AJ1 being banned by the NBA, which, sorry to be a spoil sport, isn’t even true—he was wearing Air Ships and Nike wasn’t fined!) is kind of crazy and I’m not sure I recall an all out sneaker media offensive as intense as this one.
I am not the target of all of Jordan’s efforts so I will reserve judgement, but from what I’m seeing a lot of people are enjoying the shenanigans, and Jordan’s engagement has to be through the roof, so it’s hard not to view the effort as a win for building brand equity.
Nike said on its earnings call that it will pull back on the number of Jordan Retro pairs in the marketplace as part of an effort to protect its most potent franchises, though at the same time it’s continued to show love to sneaker boutiques—dubbed by the brand as Neighborhood (NBHD) accounts (formerly known as Tier Zero)—mirroring efforts made at the brand to prioritize accounts viewed as drawing trend-setting customers.
For the upcoming Bred launch, priced at $250, Jordan took to SNKRS to reveal a list of the 23 North American NBHD accounts receiving the shoe. Reflecting a resetting of the table, some of the accounts are veteran NBHD accounts and others are newbies. Timing for the North American launches will take place between February 7th and 14th, depending on the activation and the VIP level of the customer.
Thus far, it appears the Bred will not be sold on the SNKRS app. However, the app is making use of Sneakers Pass to hook up Chicago residents with pairs being sold at Succezz, a store co-owned by ex-NBA player Bobby Simmons.
In addition to North American stores, Sneaker News has a list of the European and Asian boutiques, which will launch the shoe on February 14th. The same pub has also reported that there will be a Bred in toddler sizes, priced at $75. Meanwhile Kicks Finder is reporting that the shoe is loaded on SNKRS Japan where sales “start” on February 7th.
Nike’s latest moves signals the recalibration of its wholesale relationships and product distribution strategies has begun in earnest. By prioritizing boutique-first launches, the brand is experimenting with an approach that elevates accounts known for establishing brand equity, an effort exemplified by the Air Jordan 1 ‘85 Bred rollout. Whether this approach will activate greater demand remains to be seen—turning a ship as massive as Nike takes time—but the brand is at least signaling a shift in how it navigates its wholesale relationships and product launches.