Nike Fighting within the reality
By Satono Toyaba
September 27th, 2018
Nike. Inc was founded in 1964 by Bill Bowerman and Phil Knigh. It has been famous for a different kind of sportswear and its company is still going strong. Thanks to “athleisure”, the fashion became even popular comparing to the old days. In yet, Nike is still a strong company however, they are slowly facing several challenges with slow growth and sales.
The web Business Insider published an article “Nike is facing unprecedented headwinds” on July 4, 2016, by Mallory Schlossberg. The main purpose of this article was to tell the audience about people’s interests and how Nike is a lack of sale. In this article, they have mentioned three main reasons why Nike is having issues in their business; 1. Competition against other companies. 2. Inventory problems and 3. Basketball losing strength.
The article from Business insider simply explained the unprecedented headwinds. One of them was “Competition against other companies.” According to Morgan Stanley, he has specifically pointed a competition against Adidas and Under Armour. Both companies promised a strong partnership. Adidas already has success with rapper Kanye West’s Yeezys, and Under Armour an MVP basketball Player Stephen Curry. Therefore, other companies are rapidly increasing their sale growth and catching up with Nike.
Moreover, Nike itself has an excess inventory which has a negative impact on the company. Nike president Trevor Edwards mentioned, “As we go into the next quarter we expect clearly to remain in excess inventory through our factory stores and also through select third-party value channels,” Therefore, if there are more supply and less demand, the company cannot earn money thus they are not making the profit.
Finally, the company reported that their sales for basketball shoes dropped by 1% and the trend for basketball are slowing down. It is a major concern for Nike business because it accounts for 12% to 14%. Due to the fact of strong competition within other companies, inventory, and basketball trend, the issues raised in Nike is connected with cultural concepts. As a culture we have heightened our awareness towards appearance, therefore we value fashion. Adidas and Under armor supports/shares the same value of fashion called “Street style” which is very trendy among teenagers to adults. they have found a target audience in which they can successfully sell their products to, on the other hand, Nike still caters towards a more general audience and values the quality of the product and that is why they don’t have an effective consumer as other competitive companies.
In opinion, to succeed in Nike business the company should market themselves more. Comparing to other sports brands such as Adidas, according to Hypebeast, they spend more on marketing (pay more) than Nike. According to Reuters, “Adidas spent 12.4 percent of its 2013 on sales and marketing, up from 12.1 percent.”(Emma) As shown in the graph 1, Adidas has grown 67% in 12 months by marketing themselves more. In yet, Nike’s year overgrowth is there but it is just not as (percentage wise) as high as Adidas.(Matt) In theory, it is better to market your business for a long time because, it prevents from reputation rots, more customers and secures your company’s future. Therefore, I can see why Adidas started and pays more money for marketing.
All in all, I still think Nike is a successful sports brand and yet it still will be. They just need to figure out more on their target audience and how they like to sell and promote their business. By solving those problems, I think they can catch up on their sales with the others.
Archer, James. “Why Successful Companies Keep Investing in Ongoing Marketing.” Crowd Favorite, Crowd Favorite, 27 Sept. 2016, crowdfavorite.com/why-successful-companies-keep-investing-in-ongoing-marketing/.
(Graph 1) Peng, Matt. “Adidas Continues to Dominate Sales, Competitors Left in the Dust.”HYPEBEAST, HYPEBEAST, 8 Mar. 2017, hypebeast.com/2017/3/adidas-2016-sales-domination.
Schlossberg, Mallory. “Nike Is Facing Unprecedented Headwinds.” Business Insider, Business Insider, 4 July 2016, http://www.businessinsider.com/nike-is-facing-problems-2016-6.
Thomasson, Emma. “Analysis – Adidas Marketing Push an Uphill Battle against ‘Cool’ Nike.”Reuters, Thomson Reuters, 8 Aug. 2014, uk.reuters.com/article/uk-adidas-nike-rivalry/analysis-adidas-marketing-push-an-uphill-battle-against-cool-nike-idUKKBN0G81MR20140808.